[api]

I’ve seen an argument that military power and credible threat are the proof of work mechanism for fiat currencies. That is also useless, but it does throw off secondary useful effects like inventions.

Not totally convinced the analogy maps but interesting.

[throwanem]

Somebody spilled bong water on that before it got to you, I feel like. What backs the credible threat of military force is that the threat is credible, which is why the United States maintains a dozen carrier strike groups and does not want to have any kind of conversation at all about hypersonic weapons and especially hypersonic anti-shipping missiles.

[api]

That's why I said the analogy doesn't map perfectly.

Still I do think there's some validity to the comparison. Fiat currencies are not backed by "nothing." They are backed by a state. Some percentage of the cost of operating a state is therefore "work" done to back the currency's value.

The question is: if we had a cryptocurrency backed by digital PoW that scaled to the level of fiat currencies (millions of transactions per second) and had some of their other desirable characteristics, would the state be able to proportionally shrink? That's what I'm not convinced of, but it'd be an interest experiment if we could spin up another universe and try it.

[throwanem]

> Some percentage of the cost of operating a state is therefore "work" done to back the currency's value.

No, this is perfectly reasonable and catastrophically, dangerously inverted. We do not operate a state to generate money. We use money to fund the operation of the state. Otherwise we create a perverse incentive attracting what would be parasitism, had we not just incompetently surrendered effective beneficial ownership of the resource to the first sufficiently convincing comer.

Say, for example, the Afrikaner failson of a gemstone magnate, who is regrettably good at cosplaying a foolish person's idea of a wise person.

[andruby]

Hadn't thought of it in that way, but there's some merit to that if you include government, police & power in general. Law enforcement needed really high penalties on counterfeiting money and check fraude to make cash and checks work. And I guess some of that is still the case with credit card fraude.

[throwanem]

"Fraud," and there is no historicity to the idea that counterfeiting and adulteration only became a problem with the introduction of paper instruments. Indeed those replaced specie in considerable part to reduce opportunities for chicanery! Gold is gold, after all.

[genewitch]

Military is certainly proof of burn...