Reply to post: Re: Phew that was close!

Re: Phew that was close!

Just because some of the world's major currencies are controlled by countries with armed forces (Dollar, Renminbi, Sterling, etc.) doesn't mean the two are in any way linked. I don't see the Icelandic Króna under threat because Iceland has no standing armed forces, and unless you're one of those that believe that by leaving the EU, we somehow dodged the bullet of being conscripted into a fictitious EU army, the Euro isn't backed by armed forces either.

Like it or not, most fiat currencies are accepted because users of them mostly don't have a choice (try buying a pint of milk with shiny pebbles, and you'll find the shopkeeper much more likely to accept Sterling), and, to varying degrees, trust the issuers. The stability of the GBP is backed by the stability of the Bank of England, not the British armed forces. Control of supply is also a big part of this. Anti-forgery techniques have grown in sophistication since the original hand-written pound notes.

Interestingly, Bitcoin, and some other "cryptocurrencies" are designed to be cryptographically secure in a way that controls the supply (there will only ever be a finite number of Bitcoins, Ether is another matter), and prevents "forgery" (network consensus on the blockchain means that you can't make a so-called "double-spending" attack without controlling more than half of the entire network).

Assured value is a definite weakness of BTC, but at the same time, fiat currencies sometimes spiral into hyperinflation too. All it takes is reckless management from the currency's central bank, and to be honest, in this country, all it would take is for Johnson to appoint Dido Harding as the head of the Bank of England.

There are valid arguments against cryptocurrencies, but the argument that they have no inherent value, whilst fiat currencies do, is questionable at best. If you don't believe this, I'd be happy to exchange 1 trillion Zimbabwean Dollars* for 1 BTC. Even with Bitcoin dropping in value like last week's warm sausagemeat, that would still net me a millionfold profit...

*The old ones, not the current Zimbabwean currency, which hasn't (yet) caught fire.