[ur-whale]

> The only thing that maintains the value of any asset (or currency) is the collective belief in that asset or currency.

The only thing that maintains the value of any asset is the demand for it.

Where that demand comes from may or may not be belief.

Water has value because there is a clear demand for it, not because anyone believes in it.

As long as there is someone who wants an asset, it has value. Belief is but a cog in the machine.

[hgomersall]

Indeed. The demand for most currencies comes from states requiring payment of taxes in said currencies.

[smaryjerry]

This is precisely why bitcoin adoption is not higher. By categorizing bitcoin as a security and not accepting bitcoin as a denomination for taxes or any calculation of taxes due it is effectively an extra unnecessary cog in every single system it is a part of. Any company doing legitimate business has to record every transaction they make in the denomination of their governments chose currency. It goes from a simple “I sold 5 pencils for X dollars” to “I sold this pencil for 1 bitcoin which is equal to X dollars on the date I sold it then made/lost Y dollars by converting back to dollars at a later date in order to pay taxes and buy more pencils, and spent Z dollars to trading fees in doing so.” So really at minimum we’ve gone from a single clear amount, to now having at minimum 3 separate records to make the same transaction. Bitcoin can never be as simple and efficient as an actual currency when you have to convert it anyways at some point.

[RandomLensman]

I'd say the demand for most large currencies comes from the ability to buy stuff with them and being able to speculate on changes in value amongst them. The daily trillion dollar in FX trades are not tax motivated.

[mywaifuismeta]

Agreed. In the special case of currencies, demand follows belief. If people believe in an assert they will accept it for trade, which may in turn crate demand. This leads to a cycle where more demand often strengthens the belief.

The issue with most crypto tokens is that its demand only exists within the closed crypto ecosystem in the form of liquidity, not in the real world. This makes is much easier to shake belief.

[notahacker]

The main thing is that "belief" alone is a pretty useless source of demand because its extremely mutable.

Having a reliable long term income stream attached, an actual use for the asset and/or a supply which shrinks in relation to the fall in demand is a much more sustainable source of demand.

[HelloNurse]

The "belief" that value depends on is the belief that there is demand, so the good can be exchanged if desired. The "trust" is that people are going to want the good tomorrow, similarly to today.

[throwaheyy]

This seems an overly pedantic distinction. Demand is simply a result of belief in an asset’s value. If people didn’t believe an asset was valuable, they will not demand it.