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Well, not quite. It has inherent value since fiat is guaranteed to be backed by the full faith and credit of the backing nation. That is, by holding fiat, you t

Well, not quite. It has inherent value since fiat is guaranteed to be backed by the full faith and credit of the backing nation. That is, by holding fiat, you trust that the country issuing that fiat doesn't default (and will hence guarantee that value). I don't see a similar parallel with crypto, though I'd love to be corrected.

jstanley 5y ago
> you trust that the country issuing that fiat doesn't default Doesn't default on what? A dollar isn't a claim on a percentage of the productive output of the USA, it's just a dollar. If dollars aren't worth anything, it's not worth anything.
- labster 5y ago
  Dollars do have inherent value, because I need them to keep the government from throwing me in prison for tax evasion. That is a very useful property.
  - koonsolo 5y ago
    This is such a stupid argument that keeps being repeated on HN. People are not obliged to be paid in dollars. This means people could decide to be paid exclusively in some cryptocurrency. So government collects taxes in dollars... what are they going to buy with that?
    - labster 5y ago
      If the argument keeps being repeated it must have inherent value.
  - GoblinSlayer 5y ago
    That's not inherent value, that's a social contract.
miracle2k 5y ago
Since I can't exchange a dollar for a piece of faith and credit, it's not really backed in the traditional sense of being a backed asset. Neither is it backed by the US military or the ability to pay taxes. The fact that the dollar is in widespread use in a country that has a track record of stability, a well-managed economy, trusted institutions and a strong military all mean that if you want to put your faith into an arbitrary and made up asset, the US dollar is an excellent choice; but its value is a collective illusion nontheless.
- jw1224 5y ago
  Not sure why you’re getting downvoted. This is an accurate and realistic observation.
serverholic 5y ago
Crypto is backed by the strength of the network and the algorithms that run the network. As far as real-world value, all that's needed is for the value to be "bootstrapped" if you will. When ethereum was first released all it took was for someone to say "I'll buy your 1 Eth for X dollars" and boom the value of Eth is bootstrapped because we can attach the value of an Eth coin to a real world item. After that bootstrapping, the value of today's Eth is governed by supply/demand and the value it had yesterday.
karaterobot 5y ago
When currency inflation gets out of control, there is often not much the issuing country can do to stop it.
- lottin 5y ago
  Central banks can always stop inflation. How do you suggest they wouldn't be able to stop it?
  - jw1224 5y ago
    > Central banks can always stop inflation The central banks of Austria, Bolivia, Brazil, China, France, Germany, Greece, Hungary, Peru, Poland, Venezuela, and Zimbabwe have all failed to stop hyperinflation.
    - lottin 5y ago
      Are you sure? What did they try to stop it that didn't work?
      - mardifoufs 5y ago
        What could the central bank of zimbabwe have done to stop inflation? I agree that central banks can almost always stop inflation...as long as they are controlling a reserve currency that actually has international value. Otherwise there is actually very little a central bank can do when your currency isn't used for imports, exports, international trade etc and foreign dollars/euros/RNB are needed to do almost any economical meaningful transaction.
        lottin 5y ago
        They could have stopped flooding the country with Zimbabwean dollars and hyperinflation would have stopped immediately. Of course, the central bank of Zimbabwe was never independent from the government, but that doesn't change the fact that whoever was in charge of the monetary policy could have stopped hyperinflation at any time, had they wanted to.
dcist 5y ago
Also, you can pay taxes with fiat currency.
- spiralx 5y ago
  And use it to participate in the economy to obtain little things such as housing and food. Not to mention a computer and an internet connection.
  - olalonde 5y ago
    Intrinsic value in this context would mean something's value outside of its exchange value. Both fiat and Bitcoin have arguably very little to no intrinsic value within that definition.
    - spiralx 5y ago
      I was talking about its utility, not value. The whole point of a currency is being useful, not in being valuable.
- mahogany 5y ago
  You must pay taxes with fiat currency.
- bluecalm 5y ago
  Taxes and especially paying loans back starting from banks, businesses to mortgages.

jstanley 5y ago

> you trust that the country issuing that fiat doesn't default Doesn't default on what? A dollar isn't a claim on a percentage of the productive output of the USA, it's just a dollar. If dollars aren't worth anything, it's not worth anything.

labster 5y ago
Dollars do have inherent value, because I need them to keep the government from throwing me in prison for tax evasion. That is a very useful property.
- koonsolo 5y ago
  This is such a stupid argument that keeps being repeated on HN. People are not obliged to be paid in dollars. This means people could decide to be paid exclusively in some cryptocurrency. So government collects taxes in dollars... what are they going to buy with that?
  - labster 5y ago
    If the argument keeps being repeated it must have inherent value.
- GoblinSlayer 5y ago
  That's not inherent value, that's a social contract.

miracle2k 5y ago

Since I can't exchange a dollar for a piece of faith and credit, it's not really backed in the traditional sense of being a backed asset. Neither is it backed by the US military or the ability to pay taxes. The fact that the dollar is in widespread use in a country that has a track record of stability, a well-managed economy, trusted institutions and a strong military all mean that if you want to put your faith into an arbitrary and made up asset, the US dollar is an excellent choice; but its value is a collective illusion nontheless.

jw1224 5y ago
Not sure why you’re getting downvoted. This is an accurate and realistic observation.

serverholic 5y ago

Crypto is backed by the strength of the network and the algorithms that run the network. As far as real-world value, all that's needed is for the value to be "bootstrapped" if you will. When ethereum was first released all it took was for someone to say "I'll buy your 1 Eth for X dollars" and boom the value of Eth is bootstrapped because we can attach the value of an Eth coin to a real world item. After that bootstrapping, the value of today's Eth is governed by supply/demand and the value it had yesterday.

karaterobot 5y ago

When currency inflation gets out of control, there is often not much the issuing country can do to stop it.

lottin 5y ago
Central banks can always stop inflation. How do you suggest they wouldn't be able to stop it?
- jw1224 5y ago
  > Central banks can always stop inflation The central banks of Austria, Bolivia, Brazil, China, France, Germany, Greece, Hungary, Peru, Poland, Venezuela, and Zimbabwe have all failed to stop hyperinflation.
  - lottin 5y ago
    Are you sure? What did they try to stop it that didn't work?
    - mardifoufs 5y ago
      What could the central bank of zimbabwe have done to stop inflation? I agree that central banks can almost always stop inflation...as long as they are controlling a reserve currency that actually has international value. Otherwise there is actually very little a central bank can do when your currency isn't used for imports, exports, international trade etc and foreign dollars/euros/RNB are needed to do almost any economical meaningful transaction.
      - lottin 5y ago
        They could have stopped flooding the country with Zimbabwean dollars and hyperinflation would have stopped immediately. Of course, the central bank of Zimbabwe was never independent from the government, but that doesn't change the fact that whoever was in charge of the monetary policy could have stopped hyperinflation at any time, had they wanted to.

dcist 5y ago

Also, you can pay taxes with fiat currency.

spiralx 5y ago
And use it to participate in the economy to obtain little things such as housing and food. Not to mention a computer and an internet connection.
- olalonde 5y ago
  Intrinsic value in this context would mean something's value outside of its exchange value. Both fiat and Bitcoin have arguably very little to no intrinsic value within that definition.
  - spiralx 5y ago
    I was talking about its utility, not value. The whole point of a currency is being useful, not in being valuable.
mahogany 5y ago
You must pay taxes with fiat currency.
bluecalm 5y ago
Taxes and especially paying loans back starting from banks, businesses to mortgages.