[Simon_says]

The correct analogue of cryptocurrency is not USD (because of the bullets and bombs you mention), but rather precious metals, particularly gold and silver. Yes, the metals do have practical applications, but that does not account for the majority of their price (value?).

[CraigRood]

You're gonna have a bad time if you are comparing cryptocurrency to metals. There are dozens of currencies that are widely used at the moment, and I'm willing to bet over the next 2-4 years we will get into the hundreds. Your cryptocurrency isn't valued because its rare, it's because everyone else is buying into the same coin. It only takes one new currency to come in and be better than YOURS to reduce its demand and subsequent value - no matter how rare your coins are. It's a stock market not a gold coin collection.

[Simon_says]

Well, not me, because I use the analogy to metals to not invest in crypto currency either. They're non-productive assets. I stick to stocks, bonds, and real estate.

[zeusk]

USD was last valued in gold in the 1970s, it is a free floating Fiat currency since Nixon took down the Bretton Wood's gold backing.

USD is now viewed as obligations of the Government of the United States which gets its revenue from taxing its economy (a function of GDP) and is secured by the bullets and bombs parent writes about.

[MR4D]

USD is _currently_ valued in Gold. Roughly 1238 USD = 1 oz of gold.

I think you meant "backed" by gold?

[zeusk]

No it isn't, Gold is valued at 1238 USD per ounce.

It is also priced/valued against other major sovereign currencies like the euro, renminbi, yen, aud with enough spread for profitable arbitrage across exchanges when trading hours overlap for Sydney, Hong Kong, Beijing, Mumbai, Frankfurt, London and New York.

[joejerryronnie]

This would be true if people were creating new types of precious metals everyday