[jedberg]

If you're invested I wish you the best. But here is why I think all cryptocurrency is worthless: It is backed by nothing.

The USD is backed by the courts of the USA, which in turned are backed by people with guns (law enforcement and the military). The YEN is backed by guns. The GPB is backed by guns.

What is BTC backed by? If someone literally steals your BTC, what recourse do you have? There is no court to go to, no one to back it up.

Even the most hard core Libertarians acknowledge the need of a court system and force to back up contract law.

So I will never invest in cryptocurrency because of that. Maybe I'll be wrong and miss out, but that's a risk I'm willing to take.

Distributed ledger is a good thing, but it isn't a store of value in and of itself.

[xorcist]

What are you talking about? If someone steals your gold, your recourse is the police force upholding civil law. The situation with Bitcoin would be identical.

When people speak about military backing of currency value, they do not imply that you can expect Her Majesty's Royal Navy to come out in full force should your British Pounds get stolen.

Of all the criticisms about Bitcoin, that was an unusual one. There are no special courts for stolen cars, cattle or currency. There's just the regular ones.

[andrewla]

If someone literally steals your BTC, you have the same recourse as if someone stole your golf clubs. The mechanism of law enforcement and the justice system will try to get your BTC or golf clubs back, and this has happened numerous times already. If they take my golf clubs or BTC or USD through fraud then the rules are slightly different, but all of them will be treated the same way by the justice system.

Now it is backed in the sense that if I say that I will not accept USD in payment of a debt, then I am pretty much out of luck. If someone borrows my car and destroys it, and they offer to make restitution in fair value in USD, I cannot say no to that (except to complain about how fair the value is), or demand that they give me a new car in exchange if they are not willing.

There are more subtle differences; if someone takes my USD then they can return the same number of USD, any old bills will do; whereas for golf clubs or BTC the situation may or may not be different.

All of this is just the justice system, though. I fail to see how the military figures into it, except that if another country decides to start printing dollar bills, then our military will get involved, and the cost of maintaining that threat is part of the cost of maintaining the currency. Fortunately, that's a moot issue with cryptocurrency, which has much better anti-forgery systems that do not require the use of guns.

The whole notion of any currency being "backed" by anything dried up a long time ago -- the closest we have now is casino chips, which are backed by the relevant currency and the faith and credit of casinos.

[jedberg]

> All of this is just the justice system, though.

Only if you're in the USA. USD is subject to the US legal system regardless of where the transaction takes place.

[andrewla]

If someone steals my wallet and the USD inside in Germany, the FBI isn't going to be knocking on anyone's door. I'm not sure what your point is here.

[zodiac]

What precisely do you mean by "The USD is backed by the courts of the USA"? Do you literally mean "if someone takes my USD by force I can sue them"?

[jedberg]

Exactly. There are laws and rules about moving USD from one person to another, and if someone violates those rules, you have recourse in the courts. And if they don't follow the court order, someone with guns will come and force them to follow it.

[zodiac]

If that's your definition, I could say that my Bitcoin is backed by mathematics and proof of work because "violating" the rules (by taking my coins without my consent) requires either guessing my secret key or mounting a 51% attack on the whole network

[jedberg]

Don't be silly. We've already seen multiple examples of stolen coins with no recourse -- exchanges taking the money and going bankrupt, people issuing new coins and then just taking the money, etc.

And I don't have to guess your secret key -- I just have to steal your computer. Even if I get caught stealing your computer and have to give it back, if I've already compromised your wallet and moved the coins, there is nothing you can do to get them back.

[zodiac]

I'm not saying such "extra-protocol" theft of coins is unlikely. I'm saying that it is possible to prevent them (eg I run the key generation algorithm in my head, memorize the secret key, then accept some coins at the public key). I don't place them in an exchange. The only way to get it is to kidnap and torture me, and the US police will try to prevent that from happening, and I can sue you for assaulting me.

The point is not that doing something like this is practical for anyone, it's that in that case, my coins seem to be backed by math and PoW (and the infrastructure that prevents people from getting kidnapped). Basically, it seems weird to argue that the USD is "backed by courts" by your definition because suing someone to get your USD back is only necessary because it's possible to steal USD from someone in ways it's not always possible to steal cryptocurrency from someone.

Also, by your argument, the USD is not fully backed by the courts either; I can steal your wallet, take your USD, sell them for gold, and then abscond to North Korea. Then there is nothing you can do to get them back.

Also I don't completely appreciate the name-calling - I find both cryptocurrencies and "traditional" currencies (monetary policy, how it's linked to state power, metallism vs chartalism, the historical gold standard) fascinating - and I expect we can have an interesting conversation about the latter (specifically, trying to rigorously understand how the USD gets its value) in good faith

[trymas]

https://en.wikipedia.org/wiki/Mt._Gox#Bankruptcy;_stolen_bit...

[zodiac]

Thanks - see my reply at https://news.ycombinator.com/item?id=16135718

[yarauuta]

It is backed by its own price in the market and ubiquity.

You completely ignore the service that crypto currencies can provide.

I don't want to have a bank account, or if i really have to, i want banking services to be fast, simple, automated, cheap and lean.

[stale2002]

What if someone comes to your house and steals your gold bars in a vault?

That's the same thing as stealing your Bitcoin.

If my private keys are in cold storage in a vault, it isnt any easier to steal that, than if my Bitcoin was instead gold bars.

[jedberg]

Gold bars in a vault are at least something of value, and not just bits on a drive. The physical gold can be used to make things. What can you do with the bits on a drive?

[astrange]

That's not the reason gold is a popular reserve. It's just hard to inflate, and we've decided to pretend it's valuable because the alternative would be inconvenient. Like Amazon shares and the concept of web advertising.

[sharemywin]

That argument could be made for any intellectual property and it would be wrong.