If everyone stay at home and start to buy coins, the price will rise and they will get extra income on paper and feel more confident. And if they don't sell everything they invested later on, they indeed can make some profit in a few months

What can we learn from this? Why in a crisis, almost everything is dumped in exchange for the crappy fiat money that most of the people jokes about here?

There can be 2 possible reasons:

1. The liquidity of cryptocurrency market is very low, thus a little heavier sell pressure would trigger a big crash

2. Most of the traders in market are speculator, they are in it just for making fiat money, and they are always prepared to cash out to fiat money at slightest sign of danger


Anyway, it seems the religion (or the trust) on fiat money is much stronger than we had expected, although you have so many stories about hyperinflation in Germany and Zimbabwe, people still regard USD as the ultimate store of value, regardless how much helicopter money FED gives

It is time to research where does this religion on USD coming from and how to establish a stronger religion on cryptocurrency. I think it all boils down to the fact that USD is used as a standard unit to count value, this is unconsiously ironed into everybody's mind since they were born, but the effect is much stronger than Bible: As long as people unconsiously use USD to measure value, its value automatically maintained regardless of the crisis or QE

It is too late this time, but he will learn the lesson that always have some bitcoin saving that can last him a few months. For now, the most practical solution is to take emergency loans that he can get, I suppose the government will come out with a such facility soon

It is helping people killing their time at home

This crisis just told everyone that do not hope that banks will bailout you in a crisis, you should start to save/invest a security buffer against economy shock, and cryptocurrencies are one of the best saving medium

In your example of beef vs bean, the beef's benefit falls into second category: It reduces your energy loss more than a can of bean do, it makes you feel fresh and have more nutrition, all makes you more energized. Of course that is also a personal thing, it would be opposite for vegetarian person, that feeling is subjective. So eventually the value will be decided by the production energy input: Beef takes much more energy to make, e.g. it contains more energy input, thus become more valuable

But if you take a supply and demand approach, then the price of beef and bean will be decided by who has more money: Meat eating person or vegetarian person. Then it get distorted

The ironic thing is, at such a critical time, with tons of helicopter money, banks are refusing to loan to the company that most needed money, simply because their forecast showing that those companies are losing order dramatically and are on the brink of bankrupt

Similarly, commercial banks in my country are not interested in getting those QE loans from central bank, since central bank asking for collateral, and they have to buy collateral from central bank at an unfavorable rate, means central bank want to get a cut from this crisis too

It is totally corrupt at the top in today's financial system, and that's why people are embracing bitcoin and self managed cash flow, instead of becoming killed by the bankers at such a moment

This is also a first mover advantage thing. People need something as a standard unit to measure value of anything, it used to be cattle, grain and gold, now fiat money has took that place. Once it took that place, its value become relatively stable automatically, since everything else's value is going to be counted by fiat money, this is pure psychological

It is not the same, you can see that in panic, everything is dumped for fiat currency, because fiat money is considered as a standard unit of value, thus its value never changes. Although this is just an illusion ironed in everybody's mind, but it works quite well and almost everyone has become the slave of it

As I said, destroy of the central bank money is a very special case since the debt based money appears in 1971, other historical currency like gold and silver coins do not have this property, they never get "liquidated" by your definition. And other financial products like stocks also never get liquidated, or to say, their life cycle can be decades or centuries

In economy books, they tell you that "value" is decided by supply and demand together. That is a too abstract and flexible definition

I took a more scientific approach that using energy to measure the value of one object: One object has value, because of mainly 2 reasons:

1. It contains useful energy that can be burned (like food, electricity or petroleum)
2. It can reduce your energy loss (like cloth or house that protect you from excessive energy loss in cold weather,  or computer to reduce the physical paper work)

Since all living things burns energy through metabolism and other activities, anything that satisfy these two criteriea can be regarded as having demand from living things, thus have some value basis, no matter how large the supply is

This theory contradict with traditional economy books, but I have observed this theory is more close to reality in some cases: Even with almost unlimited supply of food, no one dares to say that food is of no value: Human has a tendency to value things based on its energy content

From this view, bitcoin does not contain useful energy that can be burned, so its value must come from the second demand, that it can reduce the energy loss

What kind of energy loss that is reduced by using bitcoin?
1. Energy loss due to inflation (fiat money can be regarded as a store of energy, but it is constantly losing energy content)
2. Energy loss due to friction in international value transfer (due to the high fee now, this only applies to countries that have capital control, for example if you want to get large amount of money out of China)
3. Energy loss due to inefficient and unstable financial infrastructure (confiscate your money, freeze your account, haircut etc...)

More can be added

Good observation. And this pandemic already demonstrated that when in panic, everything is sold for USD, which is long been regarded as a worse currency than BTC by people here

The root for this is planted long long ago in everyone's mind: Since we were born, we got used to use USD to measure value, USD is like foot to measure length or lbs to measure weight, it is a standard unit to measure value, and its value never changes, just like foot or lbs. We received  this concept from our parents and grand parents, and there is no way to get rid of this way of thinking easily, unless you travel a lot between countries and use many different currencies

So, in panic, BTC would only be kept by those people who don't use fiat money to measure value, they are highly knowledgeable in economy and money theory, and they are very few

If people can measure value without using fiat money, e.g. they can understand that everything's value is relative and fluctuating, including fiat money, then BTC will become fiat money independant. For example, if people start to use energy unit like kwh to measure value (since everything valuable essentially are some form of energy or made by input some energy), then bitcoin's value will be related to its mining energy input, instead of USD

On the other hand, you can see that the idea of a standard unit of value (fiat money) have deep effect on people's prespective and behavior, so that no matter how much more USD is printed, people still regard its value unchanged, they actually become a life-time slave of that cognition

I guess his "liquidation" means totally consumed/destroyed and quit circulation, not normal usage of the word "liquidation" (sell). But that obviously does not apply to many financial products like stocks, funds etc... they could exist for decades and still in circulation

They are very different

Every company or even private person can issue bonds, since that is just an IOU note for borrow USD. But not a single person can issue USD, only central bank can do (commercial banks do not issue USD, they only take USD deposit from other people or borrow USD from central bank, then lend out those USD)

And for the central bank part, they create USD to buy government bonds, thus give USD to governments. When the bond matures, the government return those USD to central bank and take back those bond papper. Government can return USD to central bank, not because they have provided goods and services for public in exchange for average Joe's USD, but because they collected taxes and sold new bonds to central bank for new USD

So I think the theory of 3 phase have its origin in consumable goods, where phase 3 is consumption. But trying to apply the 3 phases theory to financial products becomes difficult, thus your explanation of USD is complicated and not really reflect the reality. It just happened that USD get destroyed when government payback their loans from central bank, and you use that special case to match your 3 phase theory. In fact , USD never get destroyed when a commercial bank loan is repaid

Another example is gold, most of the gold never get consumed, neither liquidated, it stays in circulation forever, once produced, and no one call gold a ponzi/pyramid scheme. Cryptocurrency is very like gold, once made, forever in circulation

Government will print trillions of dollars of money and try to rescue, so no worry. It is a fact that any business that has something to do with physical personal contact will get much less customer, but the virtual economy like online gaming or cryptocurrency basically unaffected, can even get a boost in number of customer, since now everyone must stay at home and go on internet

Great! OP you seems to be able to do some independent thinking, lets discuss it

Your theory that fiat money also have phase 3 is difficult to grasp: When you liquidate bond, you get fiat money (if that is what you call "received value"), but what you get when you liquidate fiat money? What kind of "received value" you get from liquidating fiat money?

I think that the usage of the word "liquidate" in your definition is a bit strange. Normally liquidation means selling one product in exchange of more liquid assets, typically USD. You never liquidate USD, at least I have never heard about such terms

Since the transportation and production capacity are limited, I think there will be a huge spike in the price of almost every consumable things. However, since the income of many people have reduced, they have to sell every asset to cope with the rising costs, again, only who have access to newly created money will buy assets cheap

In theory, such drastic measures by FED will make every assets price rise, but this time the market did not react. Simply because after 2008, everyone knows that the trick is to first send money to banks and let them decide who should get money later. Without a guaranteed policy ensuring money will flow to the one that most needed, everyone's best bet is still sell

And even with a new policy in place, it is difficult to see which company will rise, since that is totally up to banks to decide. Unfortunately in such a skrewed system, people still want fiat money

Nothing is going down, just fiat money suddenly get a pump. Value is all relative, when EUR/USD exchange rate crashed, you can't say if it is EURO get cheaper or USD get more expensive

The real problem is that people use fiat money to count value, thus fiat money automatically become the stable store of value without government doing anything. Once this mindset is changed, things will be interesting, but so far, almost no one have the ability to understand this

If all the countries can take a coordinated action (self-isolation like all the people did in China) and contain the virus in each persons home or hostpital, then virus will die in two weeks, either killed by the man they infected or by time, which is no more than a few days)

However, some countries like England and Sweden are taking a normal approach, let it spread, only cure the infected people, then it will jump from person to person, lasts much longer, eventually reaching everywhere and it will take months or years to stop it