ameri9ja:


Centuries? Don't forget I got google:

Is U.S. currency still backed by gold? 

No, when the United States stopped selling gold to foreign official holders of dollars at the rate of $35 an ounce in 1971, it brought the gold exchange standard to an end. In 1973, the United States officially ended its adherence to the gold standard. Many other industrialized nations also switched from a system of fixed exchange rates to a system of floating rates. In August 1974, President Ford repealed the prohibition on the public's owning gold or engaging in gold transactions. Today, no country bans private ownership of gold. 

ameri9ja:


Well, he was head of Fed Reserve. Don't u think he should know. Currency has to be tied to something, be it foreign reserve or whatever and they generally lose slight value over the years. Bitcoin is the opposite: the value is tied to nothing (except speculative supply and demand) and has been all over the place, but has generally gone up.

JustCryptos:


Go ahead then.

rookidmart:

I posit that bitcoin isn't a currency, per second, but a digital commodity, i.e digital gold.

What is gold backed by?

Bitcoin has intrinsic value, same as gold.

rookidmart:

You get the point.

The Federal Reserve prints money out of thin air.
Who is he to talk?
https://mobile.nytimes.com/2009/03/19/business/economy/19fed.html?referer=

ameri9ja:


How dare u compare bitcoin to gold. Gold can be used to make shiny things of lasting beauty that never rusts or fades.

People would be willing to batter things for gold without ANYTHING else involved. Nobody would give u a dime for a bitcoin with nothing else involved, which was it's initial value. In other words gold by itself has real-life use while bitcoin has absolutely none.

ameri9ja:


I find this interesting:

HOW US REPLACED GOLD WITH OIL AS BACKING FOR THE DOLLAR

The French President de Gaulle and other leaders from other countries wanted back their gold in exchange for USD at $35 per ounce, as agreed earlier. This is where the US gold reserves got reduced and the US was scared, so that it wanted to get out of Bretton Woods agreement. In 1971, Nixon announced that the US would no longer give its gold in exchange for USD and the latter has value by itself. Basically, the US printed so much money that its gold couldn't back even a small portion of USD supply.

So, the US basically reneged on the agreed upon international gold standard. Under these conditions, the inflation would have gone so high that the US dollar would lose the biggest part of its value. But this can’t happen when smart guys manage the US. So, while the US dollar was not backed by gold and the US decided its dollar can be a floating currency (fiat money), the US decided to make some agreements with Saudi Arabia.
The US would give Saudis a lot of stuff (much of which is secret till today) and all the Arabs had to do was this:
The Saudis agreed to price all of their oil sales exclusively in USD.
The Saudis would be open to investing their surplus oil proceeds in US debt securities
Soon, more OPEC (oil producers) countries joined and they benefited from US protection in exchange for selling their oil exclusively for USD.

So the US prints paper and can buy as much oil as they want with that paper. Also, the US could print paper to buy all the stuff on earth. How this happened? Well, think about China - it’s a big big country that required huge investments in infrastructure. In short - it required “infinite” oil. So, China would go to the Arabs and would ask for oil - the Arabs would say they sell only for USD - the Chinese would go to the US and would ask for USD so that they could buy oil from Arabs - and finally, the US could print its money and buy everything China has to offer. The same is true about Japan and many other countries that don’t have oil. So, since Japan and China needed so much oil, they said to the US - let us sell all of our stuff to your country so that we could accumulate more paper (USD).
This is why, for example, the US is called a consumption economy (consumption accounts for 70% of the US GDP) while China is called a production economy (consumption accounts for only 34% of Chinese GDP)
JustCryptos

rookidmart:

Is that the intrinsic value of gold?
The fact that it can be used to make "things of beauty"?

rookidmart:

When last have you bought something with gold?
Are you living under a rock?
You can buy things with bitcoin

rookidmart:

WTF am I reading?
Dude, the USD is not backed by any oil.
It's backed by the "full faith and credit of the united States government"

rookidmart:

Is that the intrinsic value of gold?
The fact that it can be used to make "things of beauty"?

When last have you bought something with gold?
Are you living under a rock?
You can buy things with bitcoin

ameri9ja:


Of course "backed" is in quotes. Does that have to be spelt out? It simply means that it derives much of its power from Oil. I mean the Naira is also backed by "full faith and credit of the Nigerian government" but u can't buy oil with it.

ameri9ja:

Emphatically, YES.
Here is definition of "intrinsic value":
"The intrinsic value of something is said to be the value that that thing has “in itself,” or “for its own sake,” or “as such,” or “in its own right.” Extrinsic value is value that is not intrinsic."

In other words, by this definition, bitcoin has no intrinsic value.

But what someting can buy at a given point in time is not it's intrinsic value, which is what we are discussing. It's intrinsic value is what it is still good for if no one would accept it as payment. Hence the intrinsic value of a $100 note is about 10 cents, or that it can be used to role a joint or sniff coke or put on a wall as art.

Bitcoin on the other hand, if everyone stops accepting it as payment, would have no real-life use - it would be worth zero, which was it's original worth.

ameri9ja:


I think this illustrates the meaning of "intrinsic" well:

Fiat money 
is a currency without intrinsic value, established as money by government regulation. It has an assigned value only because the government uses its power to enforce the value of a fiat currency. It was introduced as an alternative to commodity money and representative money. Commodity money is created from a good, often a precious metal such as gold or silver,
which has uses other than as a medium of exchange (such a good is called a commodity). Representative money is similar to fiat money, but it represents a claim on a commodity (which can be redeemed to a greater or lesser extent).

The first use of fiat money was recorded in China around 1000 AD. Since then, it has been used by various countries, usually concurrently with commodity currencies. Fiat money started to dominate in the 20th century. Since the decoupling of the US dollar to gold by Richard Nixon in 1971, a system of national fiat currencies has been used globally, with freely floating exchange rates between the national currencies.

rookidmart:

You can clearly see here that the USD is not backed by anything.
Yet the federal reserve keeps printing trillions.

Now compare above to what your dear friend Greenspan says:
"You cannot tell me that you can create, out of nothing, something which has a medium of exchange value without bringing into the analysis the fact that sometimes people are a little bewildered,” he said."

rookidmart:

You still haven't said explicitly what Gold's intrinsic value is.


Tell me what gives gold intrinsic value and i will tell you what gives bitcoin its intrinsic value.


So you agree -- finally! -- that fiat currencies have NO intrinsic value


Bitcoin has intrinsic value.
I'll tell you what it is if you tell me the intrinsic value of gold, and we'll compare both.

rookidmart:

This makes no sense at all.
Don't try to be smart by half.
Did you read the original declaration?
It was in the post you quoted.
Read it many times.
If you do not understand it then ask and I'll explain it to you.
The gist Is that the USD is no longer backed by gold, but by "full faith and credit of the US government".
Period.
Do not put backed in quotation marks or asterisks or anything.


Make a list of all the fiat currencies of each government and tell me what they are "backed" by.

ameri9ja:


I have to admit u have a point. Funny that Greenspan was completely oblivious of the fact that, in describing bitcoin, he also just described USD exactly.
EXCEPT, there is a difference: USD is backed by US govt while bitcoin is backed by nothing.

ameri9ja:


USD is backed by the fact that it is about the only currency u can exchange for oil (which is really the true world currency ). Of course bitcoin can replace it in that regard, hence the title of the thread.

ameri9ja:


I told u already: gold's intrinsic value is that it can be used to make beaitiful, durable things. That's the intrinsic value of gold. Unless u have a weird definition of "intrinsic".

I never said fiat has much intrinsic value. But fiat may have quite substantial intrinsic value, depending on what it is made from. If it is hard currency made from gold for example, then it does have substantial intrinsic value. Under no circumstances can bitcoin have any intrinsic value.

rookidmart:
PS Merry Christmas!

rookidmart:

That's the point.
Nothing has intrinsic value.
Value is subjective.


Bitcoins have intrinsic value as they "power" the bitcoin blockchain.
It's durable, scarce, deflationary, uncensorable money.
Does that count as value?

rookidmart:

What about other currencies?
I want to know what they're "backed" by.

rookidmart:

Bitcoins have intrinsic value as they "power" the bitcoin blockchain.
It's durable, scarce, deflationary, uncensorable money.
Does that count as value?

ameri9ja:


Like I said: weird definition of "intrinsic".
Here is real-world definition of "intrinsic":
What something can be used for BY ITSELF.
$100 bill can be used to roll a joint.
We r not talking about value, but about INTRINSIC VALUE.

ameri9ja:


U r making a rather foolish argument. What u should be saying is that intrinsic value is irrelevant in a case like bitcoin. Just as someone should not be worrying about the intrinsic value of a $100 note. What u should be saying is that bitcoin CAN be very useful and valuable and CAN be used to represent just about any unit, not that it has intrinsic value, which it clearly doesn't.