What Is Bitcoin Backed By?

What Is Bitcoin Backed By?



Folks usually say: “bitcoin can’t be cash, it is not backed by something.” That is an previous mind-set that originated with paper cash. Previous to paper cash, individuals used valuable metallic cash (comparable to gold) as a result of they maintained sturdy financial properties: shortage, sturdiness, divisibility, portability, fungibility, and acceptability (the six financial properties).

Paper grew to become cash as a result of it was superior to gold by way of divisibility and portability BUT it lacked shortage. Folks reasoned that we may benefit from the better divisibility/portability of paper cash so long as it was redeemable in a type of cash that was scarce. That is when cash wanted to be “backed” by one thing.

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