[dools]

> Fiat currency holds value because it is backed by a sufficiently large group with guns.

Yep that's what I said: payment of taxes.

> Crypto currency holds value because it is backed by a sufficiently large group with encryption.

I disagree. There is no reason for bitcoin to hold its value. Miners expend real resources (which they pay for) to obtain bitcoin because they speculate that someone will pay more for it further down the line.

People buy bitcoin for the same reason.

The price of bitcoin could go to zero without any compromise of the underlying encryption.

The purchasing power of a currency issued by a soevereign can only go to zero as a result of the collapse of sovereignty (ie. no more guns, or being outgunned). This is the very definition of hyper inflation in terms of a currency: when a government cannot provision itself in exchange for that currency.

[halfcat]

> they speculate that someone will pay more for it further down the line

The greater fool is not required when one asset is inflationary and the other is deflationary. A falling denominator is all you need.

> There is no reason for bitcoin to hold its value.

It holds its value for the same reason as fiat. Because the chance of anyone executing a successful attack on it is prohibitively small.

And if someone does, as you said, then it goes to zero.

In your view, how would bitcoin go to zero without a compromise in encryption?

[Ekaros]

Now what makes bitcoin special and different from any other coin? Take something like Litecoin, far below previous peaks. Surely it is not worse with encryption than bitcoin?

[halfcat]

At this point, market cap, i.e. the cost to execute an attack against it.

[dools]

> In your view, how would bitcoin go to zero without a compromise in encryption?

Everyone realises that it’s worthless and new buyers stop turning up to buy it for more money than the last round of fools