[philwelch]

Any economic system works because people choose to believe in it. Specifically, people with guns. For instance, I have US Dollars, and I can exchange US Dollars for goods and services because everyone agrees to let me do so. I don't have them on me though--my bank has a record of how many US Dollars I have, and if they suddenly decide I don't have US Dollars for a sufficiently bad reason, that's some type of embezzlement, and I can go through a process involving highly trained professionals arguing on my behalf in front of someone wearing a black robe, and eventually men with guns will force them to give me my US Dollars back.

Likewise, we also all choose to agree that the owner of a car or a piece of land is whoever holds legal title to that car or piece of land according to some records maintained by some government office. If you think you own my car, and you make a duplicate set of keys and drive away in my car, I can get men with guns to go try to stop you from doing that because the official record says it's my car. But if you're the repo man, and I miss enough car payments, you can get the men with guns to take your side instead of mine, according to a similar process involving trained professionals arguing in front of someone wearing a black robe.

So yeah, the actual value isn't on-chain. What the chain replaces is the system of implicitly trusted institutions keeping records and adjudicating disagreements. Sure, out there in the real world, you have my car, but it's the record keeping that helps the men with guns decide whether to let you keep it or throw you in a cage for the next few years.