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Sure those things help give value to the dollar by increasing its demand. Whether of not this constitutes "backing" depends on the definition of backing. Ther

Sure those things help give value to the dollar by increasing its demand. Whether of not this constitutes "backing" depends on the definition of backing. There is no underlying asset that directly backs the dollar, which is the whole point of fiat currencies. The fundamental source of demand is the requirement that US Taxes must be paid in dollars. The utility of using dollars to trade with the US economy is simply a consequence of this fact.

em3rgent0rdr 9y ago
If such a loose definition of "backing" is going to be used, then one could also say that bitcoin is "essentially backed" by its utility as a medium of exchange. That utility is a consequence of: (1) the infaliabilty of its public ledger (which means it is especially useful where trust is low and where trust is needed). (2) The ease of making a transaction.* *Aside: since the bitcoin transaction volume currently exceeds the limits it was specifically designed to handle, that means that transactions currently either cost a lot of money or take a long time to be confirmed. But those are issues that could be resolved either with lightning network (or other off-chain solutions), side-chains, forks (soft and hard), or even by a whole new variation of the blockchain concept. Although bitcoin transactions admittedly currently aren't cheap or fast doesn't mean blockchain necessarily will always be like that.
- lurr 9y ago
  > (1) the infaliabilty of its public ledger (which means it is especially useful where trust is low and where trust is needed). Except when they roll it back because people with more money than you demanded it after they got screwed somehow.
  - em3rgent0rdr 9y ago
    How can they possibly "roll it back"?
Retric 9y ago
You must pay US taxes in USD which collectively must equal a large percentage of the US economy. So, the USD is backed up by everything made in the US. The downside is the US government's outlay is larger than it's income, but in practice that's less important than you might think.

em3rgent0rdr 9y ago

If such a loose definition of "backing" is going to be used, then one could also say that bitcoin is "essentially backed" by its utility as a medium of exchange. That utility is a consequence of: (1) the infaliabilty of its public ledger (which means it is especially useful where trust is low and where trust is needed). (2) The ease of making a transaction.* *Aside: since the bitcoin transaction volume currently exceeds the limits it was specifically designed to handle, that means that transactions currently either cost a lot of money or take a long time to be confirmed. But those are issues that could be resolved either with lightning network (or other off-chain solutions), side-chains, forks (soft and hard), or even by a whole new variation of the blockchain concept. Although bitcoin transactions admittedly currently aren't cheap or fast doesn't mean blockchain necessarily will always be like that.

lurr 9y ago
> (1) the infaliabilty of its public ledger (which means it is especially useful where trust is low and where trust is needed). Except when they roll it back because people with more money than you demanded it after they got screwed somehow.
- em3rgent0rdr 9y ago
  How can they possibly "roll it back"?

Retric 9y ago

You must pay US taxes in USD which collectively must equal a large percentage of the US economy. So, the USD is backed up by everything made in the US. The downside is the US government's outlay is larger than it's income, but in practice that's less important than you might think.