[tim333]

My house is valuable to me even if there isn't a collective belief in it. Most financial assets are backed to some extent by real assets.

I'm happy enough to put value in USD or imaginary-coin if I can swap my holdings in them for a nice house/car/jet. You don't really need "economic, military and even cultural might" - just for the currency to be accepted somewhere where you can buy real assets and for the supply to be limited so it doesn't inflate to nothingness.

[tlb]

The collective belief that you own your home is a crucial part of its value. If you come home and find a bunch of people partying in your kitchen, you can tell them to leave, or call the police and they'll drag them out. That's all due to the collective belief that you own your house.

Without that collective belief, owning anything is a huge effort to defend it against whoever else it might appeal to.

[mettamage]

Yep, ultimately it's all belief. The fact that we have countries is a collective belief as well.

It's feels very similar to a game. A serious one at that, with real consequences. It does not have a clear winning and/or losing condition though.

[abakker]

It is a game! Hence “game theory” and other reductive, useful abstraction used to describe and model the real world.

[galaxyLogic]

There's a big difference. Everybody may believe that you own your house. And everybody may believe you own 100 bitcoins. At issue is what is the exchange rate between bitcoins and say US dollars. If that goes to zero then you've lost the value of your bitcoins. You have not lost the ownership of your bitcoins, they have lost their value.

Whereas for your house, no matter what its market value would be you still have the right to live there and prevent others from doing so.

[DoughnutHole]

That is entirely still a societal norm and a statement of personal belief about specific rights. You might believe those rights to be inalienable and that your property is necessarily yours, but that doesn't actually translate to to a guarantee of maintaining that possession in the absence of the institutions that currently protect that ownership.

Anyone who's lived through a massive societal upheaval, collectivisation, dictatorship etc can attest to this - your ownership of property only means anything in as much as it's protected. If the state fails, or if society's understanding of private property radically changes then your investment is only valuable if you can hold on to it.

Even in the private-property loving West the value of an individuals property can often turn out to just be the amount that the state decides to pay them when they seize it via eminent domain.

[galaxyLogic]

All true but still I think there is a clear difference. Assets can and are traded in exchanges. Their value goes up and down based on what is the "shared belief" of their expected value. Laws are not traded. They can change but do so many orders of magnitudes less frequently than the value of assets on the market. Laws are not beliefs they are societal contracts.

[zikzikzik]

> Laws are not beliefs they are societal contracts.

Societal contracts are just collective beliefs. When the number of people upholding a particular societal contract goes to zero it ceases to exist. Just as any other belief, it requires believers to exist. Unlike, for example, the space rock that some group of sentient organisms decided to call Mars.

[galaxyLogic]

it is not about "believing a societal contract". It is about believing that other people follow it or not. Contract is not a belief.

[smaryjerry]

Pretty sure when Detroit went bankrupt they were basically paying people to come back to the city. There are ghost towns for a reason, because homes do lose value, even for the person who can still live there. Bitcoin right now is in the middle of nowhere like these ghost towns that can fail if the one company supporting them fails or the farmers just give up. It’s becoming a bigger city, to continue the analogy, but is still in the gold rush phase, where all the miners have come out looking for something. Maybe the city becomes San franscisco or maybe we find a ghost town in 100 years once everyone realizes the gold ran out.

[galaxyLogic]

I'm a crypto-sceptic myself. Crypto is a currency. The value of most currencies goes up and down based on the expected production/export capabilities of countries supporting their currency. But crypto is not associated with any country, so there is no country whose economic output could make crypto stronger or weaker. Perhaps this is a naive viewpoint but I think best way to look at crypto is as a currency and think what makes some currencies strong and some weak.

[kuramitropolis]

Rights are constructs, let's talk capabilities.

If the value of _dollars_ goes to zero, the house doesn't collapse. The social consensus and enforcement mechanism that protects your right to live there probably does though

[tim333]

Well such is the way of the world that you may have to defend your property or have someone do it on your behalf. Animals have homes and territories that they defend in nature too so it's not unique to human belief systems.

[mihaic]

That feels to be reductionist beyond the point of usefulness. Treating physical objects and violence as abstract concepts seems to always lose something, although I find it difficult to pinpoint exactly what.

[doctor_eval]

I'm not an expert in this, but I think that it basically starts with the political concept of legitimacy [0] - government, with the consent of the governed - which leads to the monopolisation of force (police, army etc), which provides a concrete means of enforcement for the collective belief of "property".

That is, the reason that you can call the cops when strangers take over your kitchen is because we have a very real police force, whose are permitted (even required) to use force in order to protect your property. Property may have started out as a collective belief, but the processes put in place over the last few centuries - especially the concept of Rule of Law [3] - have made it very real.

But ISTM that crypto works outside of these norms. From what I can see, it has no effective rule of law; no possibility for the creation of an effective enforcement body. There appear to be no consistently applied consequences of cheating, either intentional (eg, rug-pulls) or not. People seem to steal money using crypto scams all the time [1]; from what I've seen of it, the world of crypto seems to pretty much embody my personal, nightmare interpretation of anarcho-capitalism [2].

So while I agree that property is a collective belief in theory, in practice it has the rule of law, the legitimacy of the state, and the monopolisation of force supporting it. Crypto seems to have none of these things supporting it; I'm yet to be convinced that it is even, actually, property.

[0] https://en.wikipedia.org/wiki/Legitimacy_(political)

[1] https://web3isgoinggreat.com

[2] https://en.wikipedia.org/wiki/Anarcho-capitalism

[3] https://en.wikipedia.org/wiki/Rule_of_law

[pfraze]

Ethereum has intentional soft and hard forks; whatever that process is, that’s it’s government. Whether that government chooses to address problems which challenge Ethereum‘s legitimacy is up to them.

[doctor_eval]

But that government is not legitimate, in the political sense. There is no mechanism for the population of users, as a whole, to vote.

In a sense, it sounds like a political party that splits in two. It’s not democratic; maybe it’s technocratic.

[pfraze]

I think that’s the right follow up question to explore - what establishes political legitimacy. Or perhaps more accurately, what best establishes political legitimacy. There’s arguably a vote in the sense that users of the network choose which fork to adhere to. This isn’t a perfectly distributed vote; you depend on the miners, the validators, the client developers, and the exchanges to establish a concept of the “current fork.” (God help us if all the exchanges ever decided differently than Vitalik what “ethereum” is.) Regular users have a minimal voice in that decision, but it’s theoretically possible for anyone to start a new fork and campaign for its adoption.

Personally I think the question of political legitimacy doesn’t make the notion of blockchain governance wrong; it just highlights that the system as constructed may have problems.

[foobarian]

> From what I can see, it has no effective rule of law; no possibility for the creation of an effective enforcement body.

In early crypto days there was a general feeling that the "power of math" (i.e. how hard it would be to break various hash/public key algorithms) is the enforcement body and the reason you don't need a government and a police force. Maybe smart people saw through that, or maybe the experiment just had to be done to see how this actually turns out in practice.

Your points are why I thought an official US crypto coin could work. But there is not that much net added value compared to what credit cards offer.

[jqpabc123]

This "collective belief" is somewhat more than mere "belief".

It has been translated into laws and social contracts backed by established enforcement that is sufficiently effective and has been demonstrated to the satisfaction and judgment of most people.

It's true that in the event of nuclear war, this could all evaporate --- but this probabilty is low enough for most people to reasonably ignore. Labeling this a "belief" is thus somewhat disingenous in the fact that it is reason rooted in logic and judgment and probability.

[tlb]

The claim that major elements of the social contract can be derived through logic and reason is controversial.

If you find yourself believing that our own social contract is the only logical & rational one, or at least the likely result of social progress, you might try reading Graeber and Wengrow's The Dawn of Everything. It covers a very wide range of alternatives that all made sense to the people in those societies at the time.

[jqpabc123]

The claim that major elements of the social contract can be derived through logic and reason is controversial.

The "logic and reason" here has to do with the fact that the social contract is sufficiently real and functional enough to transcend mere "belief" in most people's lives.

[snikeris]

In other words, the belief is pragmatic.

[jqpabc123]

As pragmatic as your "belief" that you own the computing device used to make your post.

[mrpopo]

> It has been translated into laws and social contracts backed by established enforcement

So, the "long dick" of the US government that grand-parent was talking about. Society creates value.

[jqpabc123]

Not just the "US" government --- most governments around the world do the same.

[hapiri]

"beliefs" here is a sarcastic term but of course they refers to the written legal contracts.

[afiori]

> if I can swap my holdings in them

The reason people are willing to give away their house/car/jet in exchange for crumpled is the existence of the market protected by that "economic, military and even cultural might".

Trust here is not in that the some big guns are protecting your cash, it is rather about you trusting that the next day/month/decade people will want that cash about the same as today.

[coldtea]

>My house is valuable to me even if there isn't a collective belief in it.

That's because it also has use value (and land use value), etc. Crypto coins don't have any.

>Most financial assets are backed to some extent by real assets.

Negligibly so in modern economy.

[silon42]

House is only valuable as long as the US military has enough $ to defend from Russia/China (taken to extreme, but not if you were in Ukraine).

[floodle]

You're confusing having value to others with having value to yourself.

I can be happy with a nice rock I found on the beach if I really love it and it's important to me. However, what we are taking about here is are assets which have a wider value on an open market.

[tim333]

Yeah but if it has value to me it probably does to others. These kind of things, good houses, land, gold etc. have a good record of retaining some sort of value over long periods of time.

[KptMarchewa]

>My house is valuable to me even if there isn't a collective belief in it.

If people suddenly stopped believing that living in your location makes sense, the value would drop very much. See ghost towns.

[tonyarkles]

To a certain degree yeah, but that has an interesting balance of, not being a finance guy, intrinsic vs extrinsic value? A great example is my rural property; my wife paid $1 for the land 20 years ago, and I paid $300 for the 40 year old mobile home we put on it. On the market, it probably wouldn’t be worth a whole lot, but to us it is an absolutely wonderful place that we treasure very much. It’s exceptionally unlikely that anyone would ever offer us a price that would convince us to sell. No one really wants to live in the area we live in! (Although Starlink has had a disproportionate effect on that, now that we’ve got wonderful internet out there)

A different belief shifting, though, would change the equation dramatically: either a shift towards less exclusive property ownership (e.g. theoretically requiring any non-primary residence to be rentable or something crazy like that) or dramatically higher tax burden for non-primary residences. If the annual upkeep costs were to increase, the external value wouldn’t change much (it’s already pretty close to zero), but the intrinsic value for us would drop dramatically and we might consider dumping it.

[gitfan86]

I would happily use Tether, Shib, beanie babies, USD as medium of exchange if I trusted that the exchange took place in a timeline I wanted. I'm not comfortable holding tether for more than a few minutes, and I'm not comfortable holding USD for more than a few years.

The problem is getting stuck holding the asset for a long period of time. USD will lose 80% of it's value over the next 50 years. Tether likely will lose 100% in that time frame.

[NikolaNovak]

>>My house is valuable to me even if there isn't a collective belief in it.

Right. I believe the point of the post you replied to is that while it may be "valuable to you", it also may or may not "have value" (which I interpret as being exchangeable / interesting to other parties), which requires common belief/faith that it has value (basically a circular definition). I could be misinterpreting one or both :)

[baq]

the point is your belief is not relevant, it's the belief of the counterpart to any transaction that may involve your house ("the market").

[ajross]

> My house is valuable to me even if there isn't a collective belief in it.

It surely is, but this is just a semantic play on the word "value". You mean something like "personally important" in that sentence, the comment you were replying to was using it under its well-established economic definition.

In fact, your house is *not* valuable (in the economic sense) if there isn't a collective belief in it's equivalent in currency. Rather: it is exactly as valuable as the market is willing to pay, which is just a statement of the definition of "market value". That's what "collective belief" means in this context.

[usrn]

You probably don't own it outright and without the collective belief in its value the mortgage would be under water.