202.2 Lesson - durability

Screen: durability

Headline: Durability is an important attribute for a good store of value

Reward: 2

Text: The good used as money should not be perishable or easily destroyed. Gold is known for its durability and is often considered the "king" in this regard.

A large portion of the gold that has ever been mined or minted, including the gold of the Pharaohs, still exists today and is likely to remain available for many more years. Gold coins that were used as money in ancient times still hold significant value today.

Fiat currencies and bitcoins are digital records that may take physical form, such as paper bills. However, it is not the physical manifestation of these currencies that should be considered for their durability, but rather the durability of the institution that issues them.

Many governments and their currencies have come and gone over the centuries, while others, such as the US dollar and British pound, have survived for a longer period of time. Bitcoins have no issuing authority, so their durability depends on the network that secures them. While it is still early to draw strong conclusions about the durability of bitcoins, there are signs that the network has displayed a high level of "anti-fragility" despite attempts to regulate it and attacks by hackers.

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QUIZ

Question: Which of the following is an important factor in determining the durability of a good store of value?

Answer: The network that secures the currency

Feedback: You got it right. The network that secures the currency is an important factor in determining its durability, especially for digital currencies like bitcoin. Did you know that bitcoin has displayed a high level of "anti-fragility" despite attempts to regulate it and attacks by hackers? That's quite impressive for a currency that's still in its early stages

Correct: true

Answer: The physical manifestation of the currency

Feedback: Nope, sorry! The physical manifestation of the currency is actually not as important as the institution that issues it or the network that secures it. Don't worry though, you're not alone in making this mistake. Even the Ancient Greeks used to mint their coins out of perishable materials like bronze and copper

Correct: false

Answer: The institution that issues the currency

Feedback: Close, but not quite! The institution that issues the currency is actually an important factor in determining its durability. But hey, at least you're not alone in this mistake. There have been many governments and currencies that have come and gone over the centuries.

Correct: false