Why crypto is pinned to fiat

corather

There are several reasons why fiat currency will never go away and it shouldn’t. There will always be a need for a trade medium that is pegged to a set value. You need this baseline to judge the value of anything, shoes, loafs of bread, swimming pools, oil for example. And the value of goods/services must fluctuate on supply/demand/political etc. Without this pegged line, there would be no way of judging based on these values.

All crypto currency is a commodity. It can never be a straight currency as it doesn’t have a set value, but a value that can purposely fluctuate based on economic factors.

I don’t know why I wrote this. I work too much for too little and I need a nap.

Maybe it’s the other way round… The value of Fiat is pegged to crypto’s, good’s and services. To be honest, for the time been, fiat is the most widely accepted, so yes, at the moment it’s needed. Pay [size=1pt](bills)[/size] in fiat or pay the consequences [size=1pt](jail)[/size].

There will however, be a point in time when crypto’s will be accepted wherever fiat is accepted…
In the end, it will be the governments and banks left holding their devalued money.

Fiat does not have a set value.

I honestly think in the end, there will only be crypto’s.

For the time been though, you’re right. Fiat is not going anywhere anytime soon.

mirrax

FIAT price looks stable in short period of time, but it is only an illusion. In long term FIAT purchasing power is going downhill fast ;)

eaxvac

[quote name=“mirrax” post=“51145” timestamp=“1389335711”]
FIAT price looks stable in short period of time, but it is only an illusion. In long term FIAT purchasing power is going downhill fast ;)
[/quote]

Yeah just 5 years ago I could go to the supermarket with a full bag of groceries at $50.
Now I can hardly purchase anything…

My assets are diversify to mostly in bonds/stocks/property, and 5% in crypto right now. I only have some in flat as a backup against any financial crisis like 2008, from there I can grab cheap stocks around…

Wellenreiter

To be honnest, it depends in what currency you earn you money.

If your whole income is based on cryptos, you start calculating prices in crypto and decide to buy or not to buy goods and services based on their cost in crypto, and therefore you don’t need the FIAT anymore.

But as long as we all get our salary in FIAT the cryptos must be pinned to FIAT