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The US government accepts payment for taxes in USD. Even if an American wants nothing to do with USD, and conducts all their exchanges through bartering, they w

The US government accepts payment for taxes in USD. Even if an American wants nothing to do with USD, and conducts all their exchanges through bartering, they will need to acquire some at some point in order to make tax payments. The value of USD can't fall to 0 as long as the federal government retains the ability to impose taxes.

Udik 7y ago
That sounds like a strange argument. Nobody can pay their taxes in gold, still gold has a value, right? And on the other hand, the value of the USD can fall to practically zero, as it happened to many other currencies before, despite the governments of the respective countries imposing taxes in those currencies. Bitcoins are, of course, nothing. But it's a nothing that is pretty guaranteed to stay, to be in rigidly limited supply, and that is easily exchangeable. People give it a value that depends on their expectations of other people's willingness to buy them. Would you buy 10 bitcoins from me at $1000 each? I bet you would without hesitation. We're talking of giving a $1k value to something that is useless and completely immaterial, yet you just know it's an excellent deal.
- pmiller2 7y ago
  Gold has value because it’s useful, among other things. That base level of value is why people started making coins out of it in the first place. It’s properties as a physical metal make it easy to store, transport, and protect, all of which are good properties to have as a currency.
  - mopsi 7y ago
    Industrial demand is only half the story. The value of gold also lies within the fact that unlike fiat currency, it cannot be created out of thin air. Global stockpiles of gold are well known, annual production is small and predictable. This means that if you sell a car for gold, you can expect that gold to be worth the value of a car a year or two from now. Fiat money does not offer such assurance, it can lose most of its value almost overnight if government turns on printing presses or fucks up in some other way (see Turkish lira or Venezuelan bolivar). Cryptocurrencies mimick the same properties of gold. Their "base value" comes from the speed/ease of transactions and other useful features (eg cannot be confiscated). Their supply is algorithmically limited and well-known in advance.
    - pmiller2 7y ago
      Industrial demand isn’t the entire source of gold’s value, that’s true. I was more referring to it’s usefuln being the source of its value 2700 years ago when people started making coins out of it. I would argue that, beyond industrial demand and use in jewelry, the thing driving the price is primarily speculation. > ...if you sell a car for gold, you can expect that gold to be worth the value of a car a year or two from now. What you’re saying is that the car to gold ratio should be constant if your understanding is correct, right? I don’t have data for cars, but I do for houses, and your conclusion is false: https://www.jmbullion.com/investing-guide/pricing-payments/us-house-to-silver-ratio-us-home-to-gold-ratio/ https://www.jmbullion.com/investing-guide/pricing-payments/u... Re:your criticism of fiat money, I would accept that if I lived in Venezuela, Zimbabwe, or Turkey. But, I’m talking about specifically the USD and other established currencies such as GBP and EUR. There is literally no danger that the US, UK, or EU is going to experience hyperinflation short of near total governmental collapse. Oh, and if you think BTC can’t be confiscated, I have news for you: https://www.theblockcrypto.com/2018/11/07/analysis-the-u-s-has-seized-nearly-200000-bitcoins-to-date-global-confiscations-are-up-to-453000/ https://www.theblockcrypto.com/2018/11/07/analysis-the-u-s-h...
      - mopsi 7y ago
        > What you’re saying is that the car to gold ratio should be constant if your understanding is correct, right? No. I am aware that the value of gold fluctuates, but it is safer than many national currencies, stocks of failing companies or overvalued real-estate. The amount of gold in the world is known and stable and there's no way to massively "print" gold to crash its value. This stable supply is mimicked by algorithms built into cryptocurrencies. As long as there is demand for a something, and there is limited supply of it, it will be worth >0. Cryptocurrencies satisfy both requirements: they are limited in supply and have demand because of their usefulness (fast & cheap transactions). > Re:your criticism of fiat money, I would accept that if I lived in Venezuela, Zimbabwe, or Turkey. But, I’m talking about specifically the USD and other established currencies such as GBP and EUR. There is literally no danger that the US, UK, or EU is going to experience hyperinflation short of near total governmental collapse. No need for hypotheticals. The government of Cyprus confiscated 47.5% of all holdings above 100 000 EUR in 2013 during its banking crisis. https://eu.usatoday.com/story/money/business/2013/07/29/bank-of-cyprus-depositors-lose-savings/2595837/ https://eu.usatoday.com/story/money/business/2013/07/29/bank... Cyprus is full member of the EU and Eurozone, so these risks are not limited to corrupt and failing third-world countries. > Oh, and if you think BTC can’t be confiscated, I have news for you: Most cryptocurrencies cannot be confiscated by network nodes like traditional banking institutions can freeze or rewrite payments and accounts (see Cyprus above). Only the one who has private keys controls the assets. This is a major feature.
  - Udik 7y ago
    You didn't answer my question. Things have a value because people value them. Nothing has an "intrinsic" value, not bitcoins, not gold, not dollars, not food. I am not a bitcoin fanboy, but I find strange that many seem unable to grasp the fact that most of the value of anything lies in the willingness of other people to give us something in exchange for it, not in the good itself.
    - pmiller2 7y ago
      Things do have intrinsic value based on their utility. Would you say food has value because it keeps you alive, or does your life also have no value? Could it be that you’re willing to trade USD for a quantity of food because the food is more useful?
      - Udik 7y ago
        > Would you say food has value because it keeps you alive Sure. So I suppose you invest in groceries: I mean, everybody needs food, right? Sure money. https://www.youtube.com/watch?v=_pDTiFkXgEE https://www.youtube.com/watch?v=_pDTiFkXgEE So, can I sell you those 10 bitcoins?
        pmiller2 7y ago
        I never said food was an investment. I said it has value. Big difference. As for buying BTC, you’re clearly not paying attention to my comments here. ;) The only reason I would want 10 BTC is to immediately sell them to some sucker for more than I paid for them. So, yes, I would buy 10 BTC from you at a very steep discount, but not at the market price.
mopsi 7y ago
So do cryptocurrencies acquire their value through market demand. For example, XRP is the cheapest and fastest way of sending money between the EU and China. Standard wire payment would not arrive before Monday the earliest, but XRP is there in seconds for a fraction of a cent. In military, even a pack of cigarettes functions well as a currency. It does not need to be government-backed. It needs some kind of useful property to ensure demand.

Udik 7y ago

That sounds like a strange argument. Nobody can pay their taxes in gold, still gold has a value, right? And on the other hand, the value of the USD can fall to practically zero, as it happened to many other currencies before, despite the governments of the respective countries imposing taxes in those currencies. Bitcoins are, of course, nothing. But it's a nothing that is pretty guaranteed to stay, to be in rigidly limited supply, and that is easily exchangeable. People give it a value that depends on their expectations of other people's willingness to buy them. Would you buy 10 bitcoins from me at $1000 each? I bet you would without hesitation. We're talking of giving a $1k value to something that is useless and completely immaterial, yet you just know it's an excellent deal.

pmiller2 7y ago
Gold has value because it’s useful, among other things. That base level of value is why people started making coins out of it in the first place. It’s properties as a physical metal make it easy to store, transport, and protect, all of which are good properties to have as a currency.
- mopsi 7y ago
  Industrial demand is only half the story. The value of gold also lies within the fact that unlike fiat currency, it cannot be created out of thin air. Global stockpiles of gold are well known, annual production is small and predictable. This means that if you sell a car for gold, you can expect that gold to be worth the value of a car a year or two from now. Fiat money does not offer such assurance, it can lose most of its value almost overnight if government turns on printing presses or fucks up in some other way (see Turkish lira or Venezuelan bolivar). Cryptocurrencies mimick the same properties of gold. Their "base value" comes from the speed/ease of transactions and other useful features (eg cannot be confiscated). Their supply is algorithmically limited and well-known in advance.
  - pmiller2 7y ago
    Industrial demand isn’t the entire source of gold’s value, that’s true. I was more referring to it’s usefuln being the source of its value 2700 years ago when people started making coins out of it. I would argue that, beyond industrial demand and use in jewelry, the thing driving the price is primarily speculation. > ...if you sell a car for gold, you can expect that gold to be worth the value of a car a year or two from now. What you’re saying is that the car to gold ratio should be constant if your understanding is correct, right? I don’t have data for cars, but I do for houses, and your conclusion is false: https://www.jmbullion.com/investing-guide/pricing-payments/us-house-to-silver-ratio-us-home-to-gold-ratio/ https://www.jmbullion.com/investing-guide/pricing-payments/u... Re:your criticism of fiat money, I would accept that if I lived in Venezuela, Zimbabwe, or Turkey. But, I’m talking about specifically the USD and other established currencies such as GBP and EUR. There is literally no danger that the US, UK, or EU is going to experience hyperinflation short of near total governmental collapse. Oh, and if you think BTC can’t be confiscated, I have news for you: https://www.theblockcrypto.com/2018/11/07/analysis-the-u-s-has-seized-nearly-200000-bitcoins-to-date-global-confiscations-are-up-to-453000/ https://www.theblockcrypto.com/2018/11/07/analysis-the-u-s-h...
    - mopsi 7y ago
      > What you’re saying is that the car to gold ratio should be constant if your understanding is correct, right? No. I am aware that the value of gold fluctuates, but it is safer than many national currencies, stocks of failing companies or overvalued real-estate. The amount of gold in the world is known and stable and there's no way to massively "print" gold to crash its value. This stable supply is mimicked by algorithms built into cryptocurrencies. As long as there is demand for a something, and there is limited supply of it, it will be worth >0. Cryptocurrencies satisfy both requirements: they are limited in supply and have demand because of their usefulness (fast & cheap transactions). > Re:your criticism of fiat money, I would accept that if I lived in Venezuela, Zimbabwe, or Turkey. But, I’m talking about specifically the USD and other established currencies such as GBP and EUR. There is literally no danger that the US, UK, or EU is going to experience hyperinflation short of near total governmental collapse. No need for hypotheticals. The government of Cyprus confiscated 47.5% of all holdings above 100 000 EUR in 2013 during its banking crisis. https://eu.usatoday.com/story/money/business/2013/07/29/bank-of-cyprus-depositors-lose-savings/2595837/ https://eu.usatoday.com/story/money/business/2013/07/29/bank... Cyprus is full member of the EU and Eurozone, so these risks are not limited to corrupt and failing third-world countries. > Oh, and if you think BTC can’t be confiscated, I have news for you: Most cryptocurrencies cannot be confiscated by network nodes like traditional banking institutions can freeze or rewrite payments and accounts (see Cyprus above). Only the one who has private keys controls the assets. This is a major feature.
- Udik 7y ago
  You didn't answer my question. Things have a value because people value them. Nothing has an "intrinsic" value, not bitcoins, not gold, not dollars, not food. I am not a bitcoin fanboy, but I find strange that many seem unable to grasp the fact that most of the value of anything lies in the willingness of other people to give us something in exchange for it, not in the good itself.
  - pmiller2 7y ago
    Things do have intrinsic value based on their utility. Would you say food has value because it keeps you alive, or does your life also have no value? Could it be that you’re willing to trade USD for a quantity of food because the food is more useful?
    - Udik 7y ago
      > Would you say food has value because it keeps you alive Sure. So I suppose you invest in groceries: I mean, everybody needs food, right? Sure money. https://www.youtube.com/watch?v=_pDTiFkXgEE https://www.youtube.com/watch?v=_pDTiFkXgEE So, can I sell you those 10 bitcoins?
      - pmiller2 7y ago
        I never said food was an investment. I said it has value. Big difference. As for buying BTC, you’re clearly not paying attention to my comments here. ;) The only reason I would want 10 BTC is to immediately sell them to some sucker for more than I paid for them. So, yes, I would buy 10 BTC from you at a very steep discount, but not at the market price.

mopsi 7y ago

So do cryptocurrencies acquire their value through market demand. For example, XRP is the cheapest and fastest way of sending money between the EU and China. Standard wire payment would not arrive before Monday the earliest, but XRP is there in seconds for a fraction of a cent. In military, even a pack of cigarettes functions well as a currency. It does not need to be government-backed. It needs some kind of useful property to ensure demand.