alt Hacker NewsOr if you read Sapiens you'll know money is a story we tell each other. You can't literally do much with a coin or bank note or numbers on a screen but as long as we all believe it has value, it does. It becomes part of the culture, as you say.
Crypto also has to tell a story about why it's valuable. There was a lot of anti government rhetoric and fear mongering (from libertarians) but the public never really believed the story was true. It was a lot of FOMO.
NFTs failed completely to sell their story but crypto is still hanging on among its supporters. AI is telling a similar story about the value of tokens which is being well received
Replies
"but as long as we all believe it has value, it does".
Would one argue that an airplane is a _story_ ? If no one believed in the technology and lost faith in all pilots no one would fly. But that doesn't change the reality of the technology and competence of the pilots.
I get the sentiment, but I am not sure _story_ is the right word.
> but crypto is still hanging on among its supporters
From what I last heard about crypto miners, the price of mining is not enough to justify price of rig + electricity, so they are quietly switching to AI.
Wonder how long the second scam will last.
> There was a lot of anti government rhetoric and fear mongering (from libertarians) but the public never really believed the story was true.
The public never believed it because it runs squarely into the basic fundamentals that underpin the global financial system.
The finance industry learned long ago that currencies have to be stable and predictable in order to be trusted, and therefore NOT financial instruments to speculate heavily on. There's been this reality distortion field that crypto can be both a currency and speculative asset, but that hasn't borne out. If your digital dollar can gain/lose 5% of its value in a day, how do you trust it to transact with?
Crypto has been speed-running into many lessons we learned decades ago from the "Free Banking" era before the Fed, back when states ran their own banks, currencies, etc. Government got involved in banking management as a way to improve the stability and security of the financial system since things like fraud were rampant.
Honestly as much as people complain the US Federal Reserve really just proved their enormous value and thoroughly vindicated fiat currency. The financial crisis of 2007-8 should have been a new Depression and it wasn't. Instead we've seen uninterrupted growth for close to 20 years. Markets have really internalized that the US economy is indestructible and the Fed will always protect us from disaster. Will it last forever? Of course not. But like Keynes said, "in the long run, we're all dead".
Fiat currency isn't just a matter of belief or stories. If you interact with the US financial system in any significant way then you're likely to end up owing some income taxes, and those can only be paid in US dollars. If you don't pay then eventually law enforcement officers will seize your assets (real estate, cattle, gold, cryptocurrency, whatever) by force and auction them off to settle your tax debt. And if you try to stop them then they'll shoot you. Overall this is a good and stable system. The cryptocurrency clowns never seem to address the sovereign taxation issue.