If transferable sudoku bragging rights have durability, portability, divisibility, uniformity, and limited supply, then sure I'll call them sound money. No weirder than a yellow, malleable, ductile metal with 79 protons or the calcium carbonate exoskeleton of an invertebrate.https://twitter.com/obadzz/status/1040024130911981573 …
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The prior owner of "burned" money is made whole thanks to collateral held by central banks. That's the key about "fiat", for every unit of money, there's a unit of anti-money which can be used to extinguish the money. Not so with crypto: it's all liability and no assets..
Umm...it is just not the case that fiat is fully backed by central bank assets. Also keep in mind that US bank assets are denominated in USD - you can't back money with assets denominated in that money - both go to zero together.
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Base money is backed by central bank assets. Retail bank liabilities are backed by retail bank assets. The existence of the secondary layer isn't so relevant to the story.. The fact that the collateral is denominated in the same currency is an interesting wrinkle... 1/2
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... but if you follow the argument through it turns out not to matter (though that won't fit in a tweet). The best cb assets (and simplest to analyze) are overnight repos (collateralized loans). The collateral to these loans can be anything but in general it's treasuries.
End of conversation
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