Isnt all investment essentially gambling? Only difference is that some things are more or less risky.
this post was submitted on 23 Nov 2021
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Yes and no. Stable coins exist, and at this point I feel as though bitcoin has somewhat proven its longevity. That being said, it has no protection and could be theoretically devalued within hours.
theoretically devalued within hours.
stablecoins based on the USD seem to be experiencing inflation, so that also is a risk
The US dollar is experiencing inflation right now, so that is to be expected. However, it is nowhere near even a severe devaluation, just a slightly elevated rate that is likely to taper off in the year or two. Stablecoins have numerous safeguards to keep them near the US dollar, so they should really only collapse if the US dollar collapses. That is unlikely to happen any time soon.
Yes. When you look at the value of fiat currency, its value is fundamentally tied to a set of tangible assets. Specifically, it is tied to the value of the economy of the issuing authority. So when you have a dollar, you are tapping into a $23 trillion GDP and a country's emergent value from factories, roads, residents, etc. This is similar to how a stock is slice of a company, with its worth determined by its individual assets being one entity.
Most cryptocurrencies are on much shakier ground. They frequently have no backing asset, with a valuation that is determined by mood. If demand collapses, the market will collapse.
In the end, there is a major question that needs to be answered: what is crypto for? If it's for an investment, that makes it an outlier. Currencies are made to serve as an abstract, convenient store for value instead of trying to barter sacks of potatoes. They're not for stuffing in a wallet forever. If on the other hand crypto can be used to make transactions more convenient, that would make more sense to me.
You could potentially use some of them as money. Shocking, I know.
The first time you make a crypto transfer is when you realize banks are dead. It's like sending your first email or first time using a smart phone. Why would you think that technology is a gamble?
