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Comment by bsaul | Hacker News Reader

I guess bitcoin is a great tool for studying human psychology related to speculation. As it is the most virtual asset one could imagine, backed by absolutely nothing real, there is nothing you can base your analysis on other than « what people think other people will do ».

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> bitcoin is a great tool for studying human psychology related to speculation

It’s distilled animal spirits. No pretense of utility, no room for analysis. A number you can buy and watch go up and down.

I feel like Semper Augustus bulbs and the first bubbles of joint-stock companies give us the flavour of bitcoin and ICOs respectively.

Not only that, but there is a robust set of public data unlike any before.

Fiat currencies are a bit similar in that regard (except taxes).

Except they're the official money of a country. that is something the general people often don't understand with fiat currency. The fact that they are the official currency for a country, used to pay the salaries of state employees, and to pay taxes, as well as the central bank policy. All of this gives it an official utility, and thus an official value.

It's also has legal requirements to accept it for settlement of debt, and in practice is issued almost exclusively as repayable debt...

It's way more than that. Currencies vary based on the entire productive capacity of a country. When people decide that Japanese cars are reliable, that Costa Rica's beaches are lovely, or that the Russian private banking system can't be trusted, that dramatically affects the price of currencies. Currencies are a proxy for a country's whole economy not just the public sector.

You could imagine the private sector running on a different economy than the country’s one. It happens when the government has gone bankrupt ( because of war or unsustainable debt, for example). But even in that case, the money still has some value, and can’t completely disappear, even if state employees run to the bank to exchange their salary against us dollar. Their value are correlated to the trust and ability to function of a state.

Some of the cryptocurrencies attempt to have baked in functionality that allows it to have utility past speculation.

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