4 ms·

How is BTC objectively worthless (I'm guessing you mean "intrinsicly worthlesss"?) as opposed to USD or other major currencies?

anothernewdude 1y ago
Other currencies get their value because the governments that provide them make people pay taxes. If you want to pay the tax the US government charges you, you're going to need some USD - so there's guaranteed demand, and hence intrinsic worth. There's also other debt that the US government provides in USD - which provides value as well, in the form of bonds. BTC has no such driver of wealth. Except perhaps money laundering/transfers without AML provisions.
- nwienert 1y ago
  People value a way to store money securely in a place that can’t be physically robbed, that can be sent internationally with low fees quickly. You don’t need anything else. For years the haters on here would screech “but it’s volatile” - not really anymore. I wonder what they’ll decide to hate it for now, rather than changing priors.
  - FabHK 1y ago
    According to your theory, all the thousands of shitcoins are valuable. But they're not. There must be further reasons, then, that the price of Bitcoin is so high. And they're purely sentiment, I'd argue. If that changes, there's little to prevent the price from going down very far very fast. Unlike fiat.
    - samdoesnothing 1y ago
      No, according to their theory a coin can be valued for its intrinsic properties, not that it will be.
    - nwienert 1y ago
      I mean i mentioned its volatility has gone down. People use stablecoins as well for the same reasons. Shitcoins are different.
    - anothernewdude 1y ago
      It's brand name value. The same reason there's one basic OS, one internet search, one social network, one VOD site. People can tolerate few names for things and tend towards the default as a safe choice.
- logicchains 1y ago
  >Other currencies get their value because the governments that provide them make people pay taxes That's demonstrably false, because countries like Zimbabwe and Venezuela experienced hyperinflation (the complete devaluation of a currency) in spite of the fact that their governments were still forcing people to pay taxes with those currencies. So clearly that alone is not enough to provide intrinsic worth to a currency.
  - PartiallyTyped 1y ago
    The reason for that devaluation is that trust was eroded. GP's premise is correct, that fiat has value because of governments, but the reasoning here is not fully correct. The value is in the trust that the government and the institutions will continue to function properly.
  - notahacker 1y ago
    Countries like Zimbabwe and Venezuela printed those currencies in vast quantities to pay bills instead of raising [most of] that money through taxes. Taxes owed in previous quarters were worthless compared with the new trillion dollar notes Zimbabwe's central bank issues to pay government officials, and most private transactions were black market so they weren't seeing them returned in taxes. Zimbabwe and Venezuela are the defining example of how a currency which isn't backed by mountains of debt and taxes is reliant entirely on speculators' confidence...
- andy99 1y ago
  Yeah bitcoin is (at best[0]) a kind of consensual hallucination, worth something because people believe it is. Fiat is someone with a Navy telling you it's worth money, it's very different. [0] in practice there's a difference between the idea of a distributed digital currency and the ponzi schemes they give rise to I'm real life. Bitcoin is some greater fool thing, it's not a medium of exchange.
- analog31 1y ago
  This doesn't explain why the currencies of different countries behave differently. In my view, money is a technology. People use a technology if they find it to be useful. I know this sounds circular, but bear with me. A "major" currency is designed to be useful as a medium of exchange, temporary store of value, and tool of government economic policy. For it to serve these purposes, a government has to moderate its own behavior to some extent. Thus my view is that the value of a major currency is based, not on the expectation of paying taxes in the future, but on more general expectations of the future behavior of the government. With that said, paying taxes is good use for money that's a short term store of value, because you rarely need to hold onto your tax money for more than a year before paying it.
PartiallyTyped 1y ago
It's not backed by a government, and while some may say that's a good thing, I think it is not. Without institutional backing, crypto is just a number in a database that people agree is worth something—for now. If that collective belief evaporates, there’s no court, no army, no tax base, and no GDP to catch it. Contrast this with fiat currency, which—while not backed by gold—is backed by coercive power and taxation. Let’s start from something even more fundamental. How do you bootstrap trust? Suppose two pseudonymous entities online want to exchange money for services. Such a system will likely need a reputation system to establish the trustworthiness of entities. That system needs to be tolerant to Sybil attacks (i.e., forging multiple identities), while also ensuring the service provider isn’t exploited by a buyer who refuses to pay after receiving the work. But this exposes a deeper issue: trust cannot be bootstrapped from scratch. It needs either: A shared history (which pseudonyms lack), An external authority (which decentralization avoids), or A system of credible, enforceable consequences (which requires identity or stake). Without these, any trust system collapses into a prisoner’s dilemma. Each actor is incentivized to defect (cheat) unless: There’s a future cost to cheating (reputation loss that matters), There’s a benefit to cooperation over time (e.g. recurring jobs), Or there's a credible mechanism to enforce fairness (e.g. escrow and arbitration). But even escrow only works when dispute resolution is possible and trusted. And dispute resolution requires either a neutral arbitrator (who must have their own identity and incentives) or hard-coded, binary rules, which rarely capture the complexity of creative or service work. More fundamentally, trust-based systems are built on recursive assumptions: You trust X because X has a good rep. X has a good rep because others say so. You trust those others because…? Eventually, without a root of trust—whether a state, a court, a verified identity, or long-standing social capital—the entire structure becomes circular. There’s no ground truth. Just reputation built on sand. And so, the real limitation isn’t crypto per se—it’s that trustless systems don’t exist. At best, we shift trust: from institutions to code, from names to keys, from legal consequences to probabilistic deterrents. But the requirement for trust itself never goes away. In a pseudonymous setting, the cost of betrayal is minimal. A buyer can stiff a seller and vanish. A seller can deliver garbage or nothing. Reputation can be reset at will unless there’s an expensive cost to identity creation or a strongly linked personal history—which violates pseudonymity. Thus, bootstrapping trust in such environments is not just technically hard—it is philosophically incoherent without compromising at least one of the pillars: privacy, decentralization, or enforceability. It follows that if you can’t bootstrap trust, you can’t bootstrap anything that depends on it—including money. Money, at its core, is a social contract, a belief system upheld by collective trust. We accept currency in exchange for goods or services because we trust that others will accept it from us in turn. That belief is reinforced by institutional structures: central banks, governments, legal systems, and ultimately, enforcement mechanisms. But the moment that trust breaks down, the system unravels. If people no longer trust that their money will hold value tomorrow, they will try to offload it as fast as possible, converting it into hard goods, foreign currency, or anything perceived as more stable. This behavior accelerates inflation—sometimes catastrophically. We’ve seen this repeatedly in history: In Weimar Germany, the collapse of political and institutional trust after WWI led to hyperinflation, with prices doubling every few days. In Zimbabwe, trust in government policy collapsed alongside the economy, and the currency became worthless. In Venezuela, rampant inflation was fueled not just by bad economic policy but by the public’s loss of faith in any institutional ability to right the course. The underlying mechanism is always the same: money ceases to function as a store of value when the population no longer trusts the system that issues and manages it. Once the shared illusion cracks, even fiat currency—backed by laws, taxes, and armies—can become just colored paper. Now contrast that with crypto. Cryptocurrencies claim to solve this by removing central authorities and placing trust in mathematics and distributed consensus. But this is not true trustlessness—it's merely replacing institutional trust with collective belief in code and game theory. And the cracks are showing: when confidence drops, as in market crashes or protocol failures, value disappears just as quickly—if not faster—than in fiat regimes. So the uncomfortable truth is this: Money only works if you believe it will still work tomorrow. Without enforceable trust, money becomes unstable. Without shared trust, money becomes meaningless. And that brings us back to the core issue: you cannot build a functioning economy without some root of trust. Whether that root is institutional, social, or cryptographic, it must be anchored, persistent, and costly to betray. If it’s not, the system becomes inherently fragile. The reason I used pseudonymous here is exactly because we assumed govs are bad. If govs are good, then crypto degenerates to just a slower system for transactions.
lottin 1y ago
The expected discounted value of all bitcoin's future cash flows is zero. This is because the only cash flow that a bitcoin investor can expect from an investment in bitcoins is the revenue from selling the bitcoins in the market... and the market value of something that has no use case and is held for speculative purposes only (i.e. has no intrinsic value) will tend to zero in the long run. A fiat currency that is issued by the government has no intrinsic value either, but there's one crucial difference compared to a cryptocurrency: in the case of a government-issued fiat currency the central bank will intervene the market, by making use of its prerogative to conduct monetary policy, to ensure price of the currency doesn't drop to zero.
- amjnsx 1y ago
  And this has proven successful in many countries such as Zimbabwe, Venezuela, and Argentina
  - lottin 1y ago
    Generally speaking it has been successful, more so than the gold standard. It's true that sometimes states fail, but that's not something a monetary system can prevent from happening, or insure against.
    - immibis 1y ago
      And the Bitcoin blockchain is just another state, with just another monetary system, which you can diversify into or not, and it can fail or not.
      - lottin 1y ago
        A blockchain is not a state. A state is a political entity that rules a territory through the monopoly of violence.
        immibis 1y ago
        https://write.as/no-time-like-tomorrow/a-blockchain-is-a-state https://write.as/no-time-like-tomorrow/a-blockchain-is-a-sta...

anothernewdude 1y ago

Other currencies get their value because the governments that provide them make people pay taxes. If you want to pay the tax the US government charges you, you're going to need some USD - so there's guaranteed demand, and hence intrinsic worth. There's also other debt that the US government provides in USD - which provides value as well, in the form of bonds. BTC has no such driver of wealth. Except perhaps money laundering/transfers without AML provisions.

nwienert 1y ago
People value a way to store money securely in a place that can’t be physically robbed, that can be sent internationally with low fees quickly. You don’t need anything else. For years the haters on here would screech “but it’s volatile” - not really anymore. I wonder what they’ll decide to hate it for now, rather than changing priors.
- FabHK 1y ago
  According to your theory, all the thousands of shitcoins are valuable. But they're not. There must be further reasons, then, that the price of Bitcoin is so high. And they're purely sentiment, I'd argue. If that changes, there's little to prevent the price from going down very far very fast. Unlike fiat.
  - samdoesnothing 1y ago
    No, according to their theory a coin can be valued for its intrinsic properties, not that it will be.
  - nwienert 1y ago
    I mean i mentioned its volatility has gone down. People use stablecoins as well for the same reasons. Shitcoins are different.
  - anothernewdude 1y ago
    It's brand name value. The same reason there's one basic OS, one internet search, one social network, one VOD site. People can tolerate few names for things and tend towards the default as a safe choice.
logicchains 1y ago
>Other currencies get their value because the governments that provide them make people pay taxes That's demonstrably false, because countries like Zimbabwe and Venezuela experienced hyperinflation (the complete devaluation of a currency) in spite of the fact that their governments were still forcing people to pay taxes with those currencies. So clearly that alone is not enough to provide intrinsic worth to a currency.
- PartiallyTyped 1y ago
  The reason for that devaluation is that trust was eroded. GP's premise is correct, that fiat has value because of governments, but the reasoning here is not fully correct. The value is in the trust that the government and the institutions will continue to function properly.
- notahacker 1y ago
  Countries like Zimbabwe and Venezuela printed those currencies in vast quantities to pay bills instead of raising [most of] that money through taxes. Taxes owed in previous quarters were worthless compared with the new trillion dollar notes Zimbabwe's central bank issues to pay government officials, and most private transactions were black market so they weren't seeing them returned in taxes. Zimbabwe and Venezuela are the defining example of how a currency which isn't backed by mountains of debt and taxes is reliant entirely on speculators' confidence...
andy99 1y ago
Yeah bitcoin is (at best[0]) a kind of consensual hallucination, worth something because people believe it is. Fiat is someone with a Navy telling you it's worth money, it's very different. [0] in practice there's a difference between the idea of a distributed digital currency and the ponzi schemes they give rise to I'm real life. Bitcoin is some greater fool thing, it's not a medium of exchange.
analog31 1y ago
This doesn't explain why the currencies of different countries behave differently. In my view, money is a technology. People use a technology if they find it to be useful. I know this sounds circular, but bear with me. A "major" currency is designed to be useful as a medium of exchange, temporary store of value, and tool of government economic policy. For it to serve these purposes, a government has to moderate its own behavior to some extent. Thus my view is that the value of a major currency is based, not on the expectation of paying taxes in the future, but on more general expectations of the future behavior of the government. With that said, paying taxes is good use for money that's a short term store of value, because you rarely need to hold onto your tax money for more than a year before paying it.

PartiallyTyped 1y ago

It's not backed by a government, and while some may say that's a good thing, I think it is not. Without institutional backing, crypto is just a number in a database that people agree is worth something—for now. If that collective belief evaporates, there’s no court, no army, no tax base, and no GDP to catch it. Contrast this with fiat currency, which—while not backed by gold—is backed by coercive power and taxation. Let’s start from something even more fundamental. How do you bootstrap trust? Suppose two pseudonymous entities online want to exchange money for services. Such a system will likely need a reputation system to establish the trustworthiness of entities. That system needs to be tolerant to Sybil attacks (i.e., forging multiple identities), while also ensuring the service provider isn’t exploited by a buyer who refuses to pay after receiving the work. But this exposes a deeper issue: trust cannot be bootstrapped from scratch. It needs either: A shared history (which pseudonyms lack), An external authority (which decentralization avoids), or A system of credible, enforceable consequences (which requires identity or stake). Without these, any trust system collapses into a prisoner’s dilemma. Each actor is incentivized to defect (cheat) unless: There’s a future cost to cheating (reputation loss that matters), There’s a benefit to cooperation over time (e.g. recurring jobs), Or there's a credible mechanism to enforce fairness (e.g. escrow and arbitration). But even escrow only works when dispute resolution is possible and trusted. And dispute resolution requires either a neutral arbitrator (who must have their own identity and incentives) or hard-coded, binary rules, which rarely capture the complexity of creative or service work. More fundamentally, trust-based systems are built on recursive assumptions: You trust X because X has a good rep. X has a good rep because others say so. You trust those others because…? Eventually, without a root of trust—whether a state, a court, a verified identity, or long-standing social capital—the entire structure becomes circular. There’s no ground truth. Just reputation built on sand. And so, the real limitation isn’t crypto per se—it’s that trustless systems don’t exist. At best, we shift trust: from institutions to code, from names to keys, from legal consequences to probabilistic deterrents. But the requirement for trust itself never goes away. In a pseudonymous setting, the cost of betrayal is minimal. A buyer can stiff a seller and vanish. A seller can deliver garbage or nothing. Reputation can be reset at will unless there’s an expensive cost to identity creation or a strongly linked personal history—which violates pseudonymity. Thus, bootstrapping trust in such environments is not just technically hard—it is philosophically incoherent without compromising at least one of the pillars: privacy, decentralization, or enforceability. It follows that if you can’t bootstrap trust, you can’t bootstrap anything that depends on it—including money. Money, at its core, is a social contract, a belief system upheld by collective trust. We accept currency in exchange for goods or services because we trust that others will accept it from us in turn. That belief is reinforced by institutional structures: central banks, governments, legal systems, and ultimately, enforcement mechanisms. But the moment that trust breaks down, the system unravels. If people no longer trust that their money will hold value tomorrow, they will try to offload it as fast as possible, converting it into hard goods, foreign currency, or anything perceived as more stable. This behavior accelerates inflation—sometimes catastrophically. We’ve seen this repeatedly in history: In Weimar Germany, the collapse of political and institutional trust after WWI led to hyperinflation, with prices doubling every few days. In Zimbabwe, trust in government policy collapsed alongside the economy, and the currency became worthless. In Venezuela, rampant inflation was fueled not just by bad economic policy but by the public’s loss of faith in any institutional ability to right the course. The underlying mechanism is always the same: money ceases to function as a store of value when the population no longer trusts the system that issues and manages it. Once the shared illusion cracks, even fiat currency—backed by laws, taxes, and armies—can become just colored paper. Now contrast that with crypto. Cryptocurrencies claim to solve this by removing central authorities and placing trust in mathematics and distributed consensus. But this is not true trustlessness—it's merely replacing institutional trust with collective belief in code and game theory. And the cracks are showing: when confidence drops, as in market crashes or protocol failures, value disappears just as quickly—if not faster—than in fiat regimes. So the uncomfortable truth is this: Money only works if you believe it will still work tomorrow. Without enforceable trust, money becomes unstable. Without shared trust, money becomes meaningless. And that brings us back to the core issue: you cannot build a functioning economy without some root of trust. Whether that root is institutional, social, or cryptographic, it must be anchored, persistent, and costly to betray. If it’s not, the system becomes inherently fragile. The reason I used pseudonymous here is exactly because we assumed govs are bad. If govs are good, then crypto degenerates to just a slower system for transactions.

lottin 1y ago

The expected discounted value of all bitcoin's future cash flows is zero. This is because the only cash flow that a bitcoin investor can expect from an investment in bitcoins is the revenue from selling the bitcoins in the market... and the market value of something that has no use case and is held for speculative purposes only (i.e. has no intrinsic value) will tend to zero in the long run. A fiat currency that is issued by the government has no intrinsic value either, but there's one crucial difference compared to a cryptocurrency: in the case of a government-issued fiat currency the central bank will intervene the market, by making use of its prerogative to conduct monetary policy, to ensure price of the currency doesn't drop to zero.

amjnsx 1y ago
And this has proven successful in many countries such as Zimbabwe, Venezuela, and Argentina
- lottin 1y ago
  Generally speaking it has been successful, more so than the gold standard. It's true that sometimes states fail, but that's not something a monetary system can prevent from happening, or insure against.
  - immibis 1y ago
    And the Bitcoin blockchain is just another state, with just another monetary system, which you can diversify into or not, and it can fail or not.
    - lottin 1y ago
      A blockchain is not a state. A state is a political entity that rules a territory through the monopoly of violence.
      - immibis 1y ago
        https://write.as/no-time-like-tomorrow/a-blockchain-is-a-state https://write.as/no-time-like-tomorrow/a-blockchain-is-a-sta...