Is Bitcoin different from US Dollar?
This morning I was talking to someone and he said that he doesn't trust Bitcoin because it is not backed by anything. Its a imaginary item created by code. While that is true, it is no different from USD today.
USD used to be backed by gold and silver but since 1971, US dollars are backed by the “full faith and credit” of the U.S. Government.
What that means, if you take a 100$ bill to US treasury and ask for 100$ worth of gold, they can choose to deny that request. USD is a legal tender which means it is backed by GDP. Which is all the goods and services of a country.
GDP = C + I + NX + G
where:
“C” is equal to all private consumption, or consumer spending, in a nation’s economy
“I” is the sum of all the country’s businesses spending on capital
“NX” is the nation’s total net exports, calculated as total exports minus total imports. (NX = Exports – Imports)
“G” is the sum of government spending
Looking at all the perimeters above, you can say today our GDP is mostly derived by govt. spending and if everyone was to return there dollar bill in exchange for something tangible, they will go home empty handed.
So whats the difference between USD and bitcoin, bitcoin was created after way more difficult process called mining, while dollar was a picture printed on a green paper.
What do you guys think?
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