Hard currencies are used as a hedge against weaker currencies or currencies with high volatility or devaluation.
For instance, someone with Argentina Pesos might want to hedge against devaluation of their own currency by buying US dollars or Euros and using them as a store of value for this purpose. Companies and banks often hedge foreign exchange risk. In these instances, hedging involves different currencies, not necessarily hard currencies either.
The ‘problem’ with Bitcoin in comparison to another proposed currency or store of value is that it provides higher scope for tax evasion, is harder to track and can more easily be used for relatively anonymous purchases (done privately) which can be used in criminal activities.
Diem will not be anonymous, it’s created by Facebook and will be easier to monitor.
Thanks for the context.
Absolutely, if I was in Zimbabwe earning Zim bucks which is well known for is huge devaluation, I will hold USD just like many do there today.
For business use I may ‘hedge’ currency for 3mths at a time to avoid short term market swings but that is very different to outright currency devaluation. I posted on here that the major countries all peg somewhat to the USD. When central banks do it in unison you won’t see these wild currency vs currency swings. what you will see is shares rocket up along with other asset classes the QE seeks out. Eg if I print 5% more Mayday bucks and you print 5% more Griff bucks our exchange rate remains the same. This is why all the US QE isn’t killing your dollar.
I’d wager 99.99% on here use metals, shares, property to hedge against local currency. Today, None of us would keep 500k in the bank in any currency vs holding an asset. I think we probably understand each other on this one yeah?
For tax evasion on BTC sure it can be done but it’s not as easy as people think. Once you are in you’d pretty much have to stay in. You can’t put BTC into exchanges (transactions are reported) and you can’t ‘cash out’ as bank accounts are reported. One would have a personal wallet or use cold storage and assume someone selling something you want to buy will also being evading taxes in order for you to make a tax free purchase, not something I can do today.
I can’t see the tax issue being large enough when today govts are concerned about no wage inflation and growing long term unemployment. They are currently testing basal income which is the exact opposite of taxes. No need to worry about average joe avoiding tax if you are paying them directly.
