Crypto-Currencies and the Fate of the Dollar

by James Rickards
Daily Reckoning

At various times in history, feathers have been money, shells have been money, dollars and euros are money. Gold and silver are certainly money. Bitcoin and other crypto-currencies can also be money.

People say some forms of money, such as Bitcoin or U.S. dollars, are not backed by anything.

But that’s not true. They are backed by one thing: confidence. If you and I have confidence that something is money and we agree that it’s money, then it’s money. I can call something money, but if nobody else in the world wants it, then it’s not money. The same applies to gold, dollars and crypto-currencies.

Governments have an edge here because they make you pay taxes in their money.

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