This is another common misconception: that the value of Bitcoin/gold is *purely* social. A big part of it is social, but to get there, the monetary asset needs to have the required properties first. Most importantly, unforgeable costliness. Other reqs exist such as portability.https://twitter.com/belowsearcher/status/1046486502954463237 …
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Another way to put it is the value of money is half-objective (independent of the opinion of people, on the basis of energy cost & unforgeability) and half-subjective (monetary premium that people assign to the asset for its useful monetary functions: SoV, MoE, UoA).
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Assets who meet the required properties compete to become money, and over time tend to reduce to one single standard, due to strong feedback loops & network effects. cc
@real_vijay who has written a lot on the subject.3 replies 0 retweets 8 likesShow this thread -
Replying to @hugohanoi @real_vijay
Do you think this theory can apply to cryptocurrencies that have inherent protocol limits? Or do you think the demand side of money will necessitate that multiple cryptocurrencies exist to serve different demand cases?
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That's a great question. I do think feedback loops/network effects will still play a very strong role (BTC forever king). But I also agree with the view that cryptocurrencies are inherently limiting because of Nakamoto consensus AND because they're software protocols. We'll see.
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