Debasement
Debasement is the deliberate reduction in the value of a money.
Debasement is the deliberate reduction in the value of a money. For commodity money such as gold or silver coins, debasement is usually achieved via a reduction in the gold or silver content of a coin. For digital or paper money, debasement can be achieved simply by creating more money.
Debasement is usually enacted by governments to fund their endeavors at the cost of their citizens. Debasement is an alternative to direct taxation and is less obvious to most citizens. For these reasons, governments from the Roman Empire to the United States have debased their currency.
In 1965, the United States government reduced the silver content of the silver half-dollar from 90% to 40% while legislating that both coins were worth the same amount. In this case and many others, debasement triggered the effects of Gresham’s law.
Debasement is a monetary concept that describes properties, forms, or dynamics of money and currency systems. Onramp's glossary explains Debasement to help investors understand how Bitcoin compares to and interacts with traditional monetary systems.
Frequently Asked Questions
What is Debasement?
Debasement describes a fundamental aspect of how money and currency systems function. It is a key concept for understanding the historical evolution of money and Bitcoin's role as a new form of monetary technology.
How does Debasement relate to Bitcoin?
Bitcoin was designed to address many challenges described by Debasement. With a fixed supply of 21 million coins and decentralized issuance, Bitcoin offers an alternative to traditional monetary systems.
How does Onramp help investors understand Debasement?
Onramp's glossary and educational resources help investors understand monetary concepts like Debasement and how they inform Bitcoin's value proposition as a long-term store of value.
