The Basics of Bitcoins and Blockchains: An Introduction to Cryptocurrencies and the Technology that Powers Them

by Antony Lewis

In fact, the dollar, as with almost all government currencies, consistently loses value by design, driven by policy. We can predict, more or less, that the USD will lose its purchasing power by a few percentage points each year. This is known as price inflation

the ‘store of value’ function of money, it is more the short-term predictability of value, or spending power, that is relevant: I need to know that a dollar tomorrow or next month can buy me more or less the same thing as a dollar today and will settle immediate debts. But for long term preservation of value, perhaps housing or land or other assets may be more reliable.

Stability is determined more by the liquidity of a market (how many people are willing to buy and sell at any price point), than the price of an asset.

stable coins are very hard to produce because essentially you are trying to peg the price of something dynamic to something else with a different dynamic, and as we will see in the next section about history of money, no one has ever been

The definitive writing on the subject is A History of Money from Ancient Times to the Present Day by Glyn Davies

The two underlying factors in Bitcoin that create demand are: 1.It is the most recognised instrument of value that can be transmitted across the internet without needing permission from specific intermediaries. 2.It is censorship resistant.

The debasement of all forms of money that is not commodity money seems to be a common theme in the history of money.

Quentin P. Taylor, Professor of History, Rogers State College in a fascinating essay “Money and Politics in the Land of Oz.”

1976: The gold standard was abandoned in the USA: The US dollar became pure fiat money.

Note that the USD moves in the USA, not in the UK or in Singapore. Currencies (in electronic form) stay inside their domestic zone