absolutezero wrote:Urbandreamer wrote:absolutezero wrote:Currencies have value because the State that issued them backs them up.
Commodities have value because they are used for industrial processes.
....
What are crypto currencies backed by? What gives them value?
Other than someone else being (temporarily) willing to pay you more than you paid?
Sure.
https://en.wikipedia.org/wiki/Venezuelan_bol%C3%ADvar
2008, devalued
2018. devalued
Does that currency have value because the state backs it?
Excellent. Pick a failed state as an example.
How about Weimar Germany or Zimbabwe next?
Let's use proper countries, thanks.
I take it that you haven't read this book.
https://www.amazon.co.uk/This-Time-Diff ... 0691152640
The problem is FAR more common than you presume. China devalued recently. Italy in 1992. The UK did it in the 60's. Clearly non of them were "proper" countries.
As it happens I do feel that Venezuela, Zimbabwe and China are good examples though not Welmar Germany, Italy or the UK. The difference is that in each of these cases it would not have been too difficult for people to use a cryptocurrency to limit reliance on the state currency. I'm not the one who claimed that state backing gave a currency value. I simply pointed out an example where it clearly wasn't true.
By the way, I'm not sure that many of the examples are "failed states", they still enforce laws.
Greece actually defaulted on it's debt in 2015, clearly another "failed state" and not a "proper country".
There may indeed be many better investments than crypto. Personally I don't own any crypto. That fact however has nothing to do with the "value" of a states currency or for that matter if crypto's are a valid investment.