RE: How Does Crypto Stack Up to Aristotle’s View of Money?
The problem is that there is no intrinsic value, the value is given by man.
Nothing is more useful than water; but it will purchase scarce anything; scarce anything can be had in exchange for it. A diamond, on the contrary, has scarce any value in use; but a very great quantity of other goods may frequently be had in exchange for it.
Adam Smith, The Wealth of Nations.
What water does not have more intrinsic value than a diamond?
No, because the value is given by scarcity, that is, the supply/demand in the market. If people stop demanding FIAT then it loses all its value, because the supply is greater than the demand. In the same way if the offer is very small, that is, there is scarcity, then the value is higher. Both the FIAT, the gold, and the cryptos, and any other means of exchange, are the same in this point, in fact, any good or service is also the same.
Although I do agree with this argument and that the social structures that buttress fiat or even material currencies like gold and oil have untenable values theoretically, I think this perspective underestimates the immediate productive' value of certain goods. There will likely be no point in the near future where water doesn't have constant demand since it is at the very least a biological necessity. Even if the world were to go full Noah's ark, there would still be a market to transport and distribute the commodity. I guess the argument for other forms of currency - gold, oil, land, gems - is along the same lines since they're backed by a diverse variety of market needs, not just reliant on how many people own and use them. So while I agree that fiat will have little standing in the future and crypto will be an easy global alternative, standing by the current argument that crypto is 'good' because its weaknesses are shared by other forms of currency is a poor current foundation.
Cheers @vieira!
Well, I don't think this is a weakness, neither of cryptos nor of any other currency, the fact is that all goods and services also base their value in this way.
What I am saying is that there is no intrinsic value, and as such, because the value is inconsistent in essence, we should not have it as a determining factor. We should look at the usefulness of the currencies, and the benefit in correlation with their peers, which is where the cryptos have a real advantage.
Cheers!