Thinking about the nature of Bitcoin is something that has really led me to thinking about the nature of money. It’s all about a society-wide consensus on a medium of exchange. The only reason Monopoly money doesn’t have value is because society has decided not to use it to represent value for real purchases. (But it has value in the game, because in that “world” everyone agrees to use it as money!)
Bitcoin has enough people agreeing that it has value for it to have a value, however, it’s an arbitrary value that changes daily. Interested to see what you have to say about how taxes factor into determining value. My guess was that stability is related to the size of the community that contributes to creating a consensus value. But I’m very much intrigued by this idea of the influence of taxes!
I like the way you're thinking, but this isn't correct. Fiat money has value because government demands it in taxes.
I've actually written an article (and done a YT video) precisely on this subject. Me and a friend of mine believe the value of BTC can be explains by comparing it to how taxes function. You can check it out here: https://steemit.com/bitcoin/@volsci/taxes-explain-the-value-of-bitcoin-what
I totally didn't understand "fiat has value because of taxes" when you first commented this. But then I heard this sociology professor tell the actual historical story of money and coins, and it all made sense! I had been believing the economist's story of money - that it developed because of a need for a common unit of exchange - which isn't actually historically accurate and leads to a real misunderstanding.
It reminded me of this convo and I had to come comment. I think it's a very important misconception to correct if you're going to talk about how fiat has value bc of taxes.