I don't think this link can help: http://www.oxfordlearnersdictionaries.com/definition/english/premise?q=premise+

"Big banks by attacking the very premise and the valuation of Bitcoin. Early in the week, for instance, J.P. Morgan Chase & Co. leader Jamie Dimon called the digital currency a “fraud,” and a “tulip bulb.”"

Source: https://www.forbes.com/sites/panosmourdoukoutas/2017/09/14/why-big-banks-attacked-bitcoin/#2083d4926c53

  • "The very basic idea that underlies Bitcoin", "the very reason according to which Bitcoin exists". Bitcoin is based on the premise that such a currency would be more stable and resistant to adverse events than the usual government-printed currencies. Comparing Bitcoin to "tulip bulbs" attacks this very idea, by presenting Bitcoin as an intrinsically unstable currency. Sep 15, 2017 at 5:02
  • 2
    Tulip bulbs have a special place in investment history. The Dutch in the early 17th century were obsessed with tulip bulbs (called "Tulip mania"), and people were over-optimistic and invested heavily in the industry. Thus, there was a huge market bubble and eventual crash that caused financial ruin for many. You can read about it here: en.wikipedia.org/wiki/Tulip_mania
    – Ringo
    Sep 15, 2017 at 5:15

1 Answer 1


The value of money is founded on the premise that people accept it as payment for goods and services. If no one takes your paper money, maybe you could start your BBQ with it, but that's about it. If it is not intrinsically precious, if it is not actually made of something valuable, the only value money has is that it is an accepted medium of exchange.

Why do we accept something with no intrinsic worth in payment for goods and services? Because others must accept it from us. Governments require entities over which they have control to accept their currencies as legal tender.

So-called cryptocurrencies enjoy no such government mandate. Nor do they have a treasury department, as nations do, controlling the amount of currency in circulation: the US Treasury, for example, sets the funds rate on the reserves commercial banks deposit with it and sets the interest rate on so-called "reverse repo" transactions in which it borrows money from private commercial institutions. These actions are meant to increase or decrease the amount of money in circulation. A cryptocurrency caps its supply instead; however, it is subject to dilution by competing cryptocurrencies.

Cryptocurrencies are not backed or collateralized by anything, but neither are currencies like the US Dollar, which has not been backed by gold since 1934. US Treasury notes are backed by "lawful money".

All of these considerations combined are the premise of a currency, the foundation on which its value rests.

  • You give great examples of usage, but no actual definition. Maybe say 'the basis of a proposition'?
    – MarkTO
    Jan 25, 2019 at 18:27
  • @MarkTO: I do give a definition, final sentence, ...the foundation on which its value rests.
    – TimR
    Jan 25, 2019 at 18:52

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