[api]

Devils advocate / steel man reply: isn't that what all currencies are?

Why does the Federal Reserve US dollar have value? Because people trust other smart people who say they've done the work and trust other smart people who work for the Federal Reserve.

Money is a thing people agree upon as a medium of exchange. It is not value itself. Value is the people, places, and things that make up the actual economy. Bitcoin has no value but neither does the USD. Can't eat them. Can't build a house with them.

My problem with Bitcoin is that I don't think a hyper-deflationary currency is a good idea. Bitcoin is even more deflationary than gold due to breakage (loss of keys) and a hard mining limit.

[FollowingTheDao]

> a hard mining limit.

This is what I keep telling people. No government will use BTC because of this.There is a reason the US went off the gold standard, so they can print create money without causing inflation tied to money supply. Inflation now is not tied to money supply, but to money spending. (ie. if people did not spend money buying things there would be no increase in prices.) In the past, if you printed more money inflation would be immediate since it, in effect, immediately devalues the price of gold.

[munksbeer]

Fiat currencies have value because governments enforce using them to pay taxes, and to buy goods and services.

[IanCal]

USD has value because there are things people need to pay for that can only be paid for with USD.

[halfcat]

USD has value because it’s backed by a sufficiently large group with guns.

BTC has value because it’s backed by a sufficiently large group with encryption.

Mechanisms which are difficult to bypass have value. You can’t eat an RSA private key but private keys have immense value.