A question to the crypto crowd: How will the big crypto's get their value determined in a fiat collapse?
Still trying to figure out exactly how safe the crypto's are for wealth storage and two questions keep coming up:
If the fiat currency paradigm collapses globally because of a global bond bubble blow-out - which I'm personally sure will happen at some point, how will Bitcoin, Ethereum and Litecoin get their own value set, when there are no viable fiat currencies around up against which a perceived value of them can be determined? If the US dollar goes, all other currencies will go too as the dollar is the stem of the global currency tree and all the branches define their value up against that stem, so if the global fiat currency tree itself comes down, I see a systemic risk for huge losses for holders of digital fiat whose value is measured up in the perceived value of paper fiat.
And when a new global reserve currency comes up, how will revaluing of the crypto's be done? I see big risk of enormous losses there too.
If/when fiat collapses, then crypto will likely take on an additional characteristic of money, becoming a "unit of account". This means that goods and services will then be priced in crypto just like they are now proved in dollars or yen or...whatever. So, the value of crypto won't then be determined by how many dollars or yen it can be converted into but rather by how many Big Macs or Starbucks coffees or Tesla cars one can buy with it.
I still don't see how the value of that "unit of account" will be determined. Something costing "two bitcoin" is meaningless if people do not have a reference point up against which they can determine what it's actually worth. It's like good and evil, you can't define one without the existence of the other.
On my second question: Imagine having bought Bitcoin at two grand a piece, The fiat system collapses, a new one comes up with a new global reserve currency (which could be the SDR) and a sandwich ends up costing the equivalent of 8 Bitcoin.
How does any free market determine its price?? Its a natural function of the free market. Prices will be all over the place at the beginning. How much was a Kilo or pound of rice at the first free market exchange??? I have bitcoin how much rice will you give me for $0.00002 bitcoin?? Perhaps merchants will prefer gold or silver instead. Have some of each.
Sorry, I don't see a good answer in your reply. A kilo of rice was traded by coin with intrinsic value.
I believe your over thinking it.
Keep in mind that when the current fiat currency collapse, there will already be in place another fiat currency to replace the ones that we have and are using thus far...Do I smell SDR's? To answer your question though, I would say the crypto that has established a base of support and trust that is backed by gold or silver would most likely be the crypto that would be used, and since we have 1000's of years to base off pricing using gold and silver, this mostly would be what would happen.