I'm not a bitcoin maximalist, but you have to acknowledge that in this day and age that your definition pretty much applies to USD as well. People believe it's worth something. And so it is.
USD holds value because the government says it does. The government holds authority because they have a monopoly on violence. Or, if your less pessimistic, it's because people believe in the government.
The people in Lebanon and Venezuela trust that the US government will continue to exist and that they will either meet with people who want to do business with it, or will meet people who assume they will meet people who will, etc. So they have value.
That's the only thing that gives Bitcoin value. So, in a crisis it can become false for some people, then spread to the people they know, etc.
With dollars, all Americans need them. So do international companies that transact with Americans. If you think the US government will hold, then that belief will be true, it's only a question of the number of steps.
can't edit anymore, the point is Iranian Rial is accepted by 90 million people in Iran, all the Iranian businesses and the Iranian government, there are much less bitcoin users, technically there are a lot more accounts, but that doesn't mean real people or real businesses.
Not surprisingly Iran and Russia are teaming up to create a new stablecoin and not adopting BTC, because using BTC right now is literally the best way to get caught (for example infringing sanctions).
The people that can afford to trust and use bitcoins for exchanges are the people who do not have to fear the surveillance of State actors/secret services/national agencies(NSA,FBI,Europol,China's central bank,...)/etc and that would be much better off using another FIAT currency (USD, EUR, etc.)
But then you have to explain why gift cards are worth something. The answer is, because someone will give you something for them.
Meanwhile there are a large number of entities that have already entered into long-term contracts denominated in cryptocurrencies and any of them would pay you something for it when they need to satisfy their obligations.
That doesn't mean the value never changes, but that's also true of government-issued currencies. That's what inflation is.
gift card
noun [ C ]
uk /ˈɡɪft ˌkɑːd/ us /ˈɡɪft ˌkɑːrd/
a card that can be exchanged in a shop or on a website for goods or services of the value that is printed on it
it's literally the same thing as cash, a check or a voucher.
it is also entirely dependent on the same external factors of cash, vouchers and checks: inflation, exchange rates, etc.
because it's simply a certification that you can spend that amount of money, in that currency, in that shop and that's it.
Also: a Patek Philippe is buying power as well
everything that can be exhchanged for something else can be defined as "buying power"
but an American Express or a gallon of water in the desert are buying power too.
an interest free loan, that's why it has "gift" in the name.
It works the same way as lending the money directly to a person, gift cards are simply more convenient to handle and are safer than cash, but other than that it's just a gift in the form of cash, no matter how many intermediaries are between the sender and the receiver, the input and the output will always match exactly.
If, for example, I give my friend Alex $20 to buy something for his little daughter but Alex uses it to bet on a football match and loses it, Alex has to take some money from his pocket and then buy the gift with his own money. Which is not different than saying he spent his money on the bet and bought the gift with the money I gave him.
If otherwise Alex wins, he will still buy the gift, but he will also have increased the initial sum by an x% which he can keep (or maybe try his luck again)
Buying a gift card is the same process, the company holding the money at one point has to give back something of the same exact value, it doesn't matter what they do with the money in between, what matters to the sender and the receiver is that the amount printed on the card is fully available at the check out (which is just lik getting the amount in cash and then paying with that)
Some of them do. Suppose the issuing company gets into some trouble and people fear they won't be able to make good, but then later they take care of it.
For that matter some government-issued currencies do that too.
when you say up and down you are referring to buying power. And yes, the buying power of a $20 grocery store gift card has gone way down the last few years. Consider how much milk and eggs you could buy in 2018 compared to today.
Yes, this is the key dimension of the "currency" front. But bitcoin "advocates" (a term I'll use for diplomatic purposes) say that within a context that implies that is somehow a low bar to clear or just a consquence of the monopoly of force or somehow morally questionable. But becoming something people trust (or at least have some amount of confidence in multiple dimensions in) is one of the most difficult things for any new asset class or medium of exchange.
Some of the main ways currencies and commodities get there are value stability (sticking within a certain band with <100% annual swings), wide acceptance and utility. After 10 years of many techno-smart people trying to engineer cryptos to become that we are nowhere near any of these promises being fulfilled.
In general yes, but with the difference that the dollar (or other "real" currencies) are encoded in law to have a value with the whole state backing it.
Yes that is one small dimension of why the dollar is valuable. But a far bigger part is the fact that using dollars enters you into the US financial (and by extension legal) systems which has been far more stable, reliable and predictable than other systems over the last century. For a point of reference consider Switzerland, whose currency is a minor reserve currency and whose banking and legal systems are globally appreciated, despite the fact that they have no power projection and a tiny population in comparison to their financial markets. The Swiss central bank has even deviated from their usual stable policy since 2008 and yet still they see inflows.