Cryptocurrency in simple details.

[HappySkeptic]

To paraphrase Lewis Black, nobody knows how the fuck economics works, so explain this to me: what is the advantage of a commodity-based currency over fiat currency?

Boru

For a currency to work, it has to have a limited supply, or people won't value it (or you get inflation).

For fiat currency, the limit is placed by the government.  Bitcoin has a hard limit.

There are problems with both.  With fiat currency, a government can be tempted to print too much.  With bitcoin, the limited supply incentivizes treating it as an investment and not a currency.

For any currency to work, people have to believe that it will have similar buying power a year from now that it has today.  If it goes down too much, it becomes worthless to hold, and if it goes up too much, it becomes risky to spend.