Dollars are just worthless bits of paper. The government prints them to pay the bills. The supply always goes up. Why would you give any value to these notes which will end up beinig in infite supply? You might as well value the sand on the beach.
You value them because everyone else does. You can spend them. The guy who receives them believes they are valuable too.
If you are alone on a desert island with dollars, they’re worthless. You can’t eat them, or buy anything. If there are 100 natives who only trade in Cowrie shells, your dollars are still worthless. Your dollars still have no believers.
The obvious way to give your dollars some value is create some price volatility. Set up a stall quoting $2 for a Cowrie shell, on day one, $10 on day two, and $5 on day three, and you will soon have some native willing to try and take advantage of your crazy pricing. As soon as the first native takes your dollars for Cowrie shells, all your dollars have a value.
(See my next posting on bitcoin. It’s the volatility which gives it value.)
Hi, @swissclive! Thank you for a really cool and easy to understand example. You just increased my understanding of how money works.
Brilliant.
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Not only money, but the stock market as well. Keep changing the price and people will want to play with it.
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Right, and of course! On another note, I used your example yesterday to explain this to a friend, with great success. He just couldn't (and wouldn't) grasp how cryptocurrencies could have any value at all, without being scams. When I finally told him this story, it seemed like a lightbulb went off.
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yeah... it's actually WORSE than worthless... something of no worth... does not leave those who use it in debt.
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it's the absence of value ... now... with even less value than that! lol sold at reserve banks near you...
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Thanks for sharing us this post..i resteem tour post sir..once check my profile.
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@sumonsha I checked your profile as requested. You make alot of spammy comments like this. I will flag the next one.
Please don't SPAM... take a look in this before hurting your reputation.
https://steemit.com/steemit/@miti/newcomers-minnows-and-spammers-this-post-will-save-your-reputation
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The very good words ;)
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Please don't SPAM... take a look in this before hurting your reputation.
https://steemit.com/steemit/@miti/newcomers-minnows-and-spammers-this-post-will-save-your-reputation
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Wow! I'm so interested in your next post
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well they at least dnt involve risk of getting hacked.....3 days back i lost about 800k satoshi bcoz my niceash miner crashed that wont hppn wit dollars
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Yes, it's the reason US$ are the most important currency in the world. But things could change in the next years thanks to some of the new players to have arrived on the international trade relations scene are involved.
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It's very interesting, but if everyone thinks the hundred most valuable currency ... The question is, how do we make everyone believe in this?
I am a regular reader of yours, all your articles bear a huge meaning, write more often.
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Thank you for your post! Though the only reason why we are putting value in this paper money is because we are caught up in this system that was created, where we trade this paper money for goods. But with crypto, i am still trying to see how it will totally replace the system we have now. Do we have to have everyone onboard for it to finally have a mark to break the current system? I still i cant make sense of it but thank you for sharing a simple example of how value is created :)
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