Ep. 18 - What is Distributed Ledger, Cryptocurrency, & Blockchain w/ Isaac Arthur
CRYPTO 101
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The Difference Between Borrow and Commodity Money
In bit coin, the money is not tied to any specific commodity like gold or grain. It simply exists and floats around in value. Commodity money might seem the same as borrow at first, where people just exchange items that have worth. But it differs from borrow because one type of item ends up being what everything else gets valued in. Often you will see a commodity currency arise, cigarettes being the classic example from prisons. This follows from something called gresham's law, which holds that if you have two commodity currencies in play that people have to accept, pretty soon the one that is seen as more valuable, more good, will disappear from circulation.
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