Bitcoin is worthless (but so is your “real” money)


Hi, my name is Xavier, and when I talk about
cryptocurrencies, I often get comments saying
that Bitcoin, Ethereum, and others aren’t
worth anything.
That people are just artificially creating
its value.
And you know what, that’s true.
I also hear that they’re not real because
it’s only virtual money, not physical.
That’s true as well.
But in this video, I would like to put these
into context.
I’m not trying to convince you to buy crypto,
just putting things in context.
So let’s start with the argument that cryptocurrencies
only exist in the virtual world and that if
all computers were wiped out, none would be
left.
That’s undoubtedly true, but the same can
be said for the currencies that we use in
our day-to-day lives.
Take the dollar for instance: there are about
14.4 trillion US dollars in existence, but
only 1.7 trillion of those exist in a physical
form (that is coins or banknotes).
That’s just 11%.
The remaining 89% is just virtual money, stored
as a number in the databases of financial
institutions.
So that makes our “real money” not so different
from cryptocurrencies.
The second thing I’d like to address is that
people seem to be under the impression that
paper money is worth something because it’s
backed by a commodity like gold.
We call this the “gold standard.”
A system in which a currency is tied to a
certain amount of gold.
Doing this has two implications: first of
all, it fixes the value of a currency to the
value of gold.
That’s believed to be good because gold prices
aren’t volatile.
And secondly, the supply of a currency is
now limited to the amount of gold you have.
If you want to create more money, you have
to acquire more gold.
The gold standard was in use for quite some
time, but the system was abandoned in 1971
after president Nixon decided to end the dollar’s
convertibility in gold.
That meant the value was no longer fixed to
gold, and the dollar was allowed to “float.”
It also allowed the government to control
the supply of money by printing more whenever
needed.
This could be done to limit the impact of
an economic crisis, for instance.
Other countries soon followed, and the world
switched over from the gold standard to what
we call “fiat money”: a currency without
intrinsic value.
In fact, currencies only have value because
governments have declared them to be legal
tender and because we all agree that it’s
worth something.
That’s it.
Our modern monetary system is only held upright
by our belief that money has value.
We’re willing to go to work every day to get
payed because we believe that someone else
will exchange our hard-earned money for something
else, like for buying food or renting a home.
It’s actually a self-fulfilling prophecy.
We all trust that our money has value and
therefore it has.
If we stop believing in the value of money
or the government can no longer guarantee
it, we see hyperinflation.
The value of money drops and the prices of
goods increase substantially.
We’ve seen this a few times in history.
For instance, in Germany after the First World
War.
Prices of goods doubled every two days.
At one point people burned their money because
it was cheaper than buying firewood.
So if our money has no real value, we should
all start buying gold, right?
Well, we could take it one step further and
ask ourselves: why is gold considered to be
valuable?
I mean sure, it’s a shiny metal with useful
properties.
But is that enough?
Could we say that gold has no real value either?
That we all believe and agree that it does?
Well, yeah!
That’s completely true.
Throughout history, gold has been considered
as one of the most valuable materials out
there, probably because of its unique look.
But that’s about it.
The only thing that gold has going for it
is that’s relatively rare, and that’s it crucial
for some industries like electronics.
But other than that, gold is just like money.
Worth something because we believe.

Alright, time for a conclusion.
People are right when they say that cryptocurrencies
have no value and are worthless.
But they’re wrong to think that the Dollar,
Euro or Yen are any different.
We created them, and each of us is keeping
the idea alive that it’s valuable.
So that was it for this video.
I hope this brought some clarity to the topic.
Let me know your thoughts in the comments
below.
If you liked this video, consider subscribing
and as always: thank you so much for watching.

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