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Comment by betterunix2 | Hacker News Reader

It's funny, many years ago when Bitcoin was relatively new I and a number of others pointed out that there is no particular reason why it should have any value, since there is zero barrier to creating your own cryptocurrency and therefore supply was effectively unlimited (and thus prices should decline long-term). Various unsatisfactory answers were given at the time, and since then the USD price of Bitcoin actually increased very significantly. Yet every time I see something like this, I immediately think back to that argument -- these alternative "tokens" or "coins" or whatever people call them are simple to create and seem to require minimal promotion to start attracting buyers. I wonder if we will eventually see this space become so crowded that those early objections wind up playing out...

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Then why other currencies don't dilute the US dollar? Or monopoly's (the game) money?, or just paper, or shells, or grains of sand?

The value of a currency comes from it being backed by a government, and that government accepting taxes in that currency.

This puts a hard limit on the number of currencies, and how much they'll dillute the dollar (or any other country's currency). Since you'll normally only see a single currency per government.

Cryptocurrencies on the other hand, aren't tied to any country.

There's no hard limit on the amount of them. So every time a new one shows up, they'll they'll take a piece of the cake from the already existing ones, since the space is limited by the number of people willing to invest in them and how much these people have to invest.

USD is backed by nothing. Nothing.

https://www.treasury.gov/resource-center/faqs/Currency/Pages...

> Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything

There are no limits to currencies. No limits to how much money governments will print. No limits to how much the banks will inflate the money supply through loans.

They're backed by the fact that the IRS wants dollars from me to pay my taxes. I don't think the post you're responding to meant that they're redeemable for anything directly.

But it is backed by reputation, threat of litigation and physical violence (police/military) if you try to interfere with it, where as crypto doesn't yet have this.

Disclaimer: A significant part of my investment portfolio is in Defi.

Actually it is backed by US law and the strength of the US government in terms of enforcing those laws. In particular, the dollar is backed by US tax and debt laws; US taxes must be paid in dollars, debts in the US can be cleared with dollars, and US courts deal only in dollars when working out damages or in bankruptcy proceedings. As long as people doing business in the US follow those laws, which ultimately requires them to respect the government's ability to enforce the law, demand for dollars will exist and thus the dollar has value.

So it is not really about reputation or violence being used against those who would "interfere" with the dollar (whatever that means). I would argue that the value of the Yen is more influenced by reputation than that of the dollar, since people tend to treat Yen as a "safe haven" during economic crises (but ultimately the Yen's value primarily follows from the Japanese government's ability to enforce its laws).

> But it is backed by reputation, threat of litigation and physical violence (police/military) if you try to interfere with it, where as crypto doesn't yet have this.

Also by the fact that the companies of the S&P 500, who are generally based in the US, account for a large portion of global transactions, which they tend to do with USD. If anyone wants to participate in the global economy, the USD often provides the least amount of friction in transactions.

The other most popular/useful/"valuable" currencies, per forex trading volume, are: EUR, JPY, GBP, AUD, CHF, CAD.

* https://en.wikipedia.org/wiki/Foreign_exchange_market#Tradin...

* https://fxssi.com/the-most-traded-currency-pairs

As an American, I have to pay taxes and abide by US laws and the rulings of US courts, and all the above work exclusively with USD. So I cannot switch away from the dollar completely; whatever business I conduct in some other currency, I would still have to convert back to dollars at least some of the time. So you cannot crowd out the dollar with alternatives, because hundreds of millions of Americans are required to use the dollar regardless of the availability or popularity of the alternatives.

Keep in mind that even though you can create new cryptocurrencies/tokens you cannot disguise them as being "bitcoin", in fact, it is easier to draw a piece of paper and disguise it as a US dollar bill

Every kind of currency was born out of an idea and expectations, whether it is the idea of a standardize currency controlled by our own new free nation, or the joke that created dogecoin.

You seem to have a good graps of what US dollar's main idea is. But do you understand what is the main idea behind bitcoin or ethereum?

In the end, they are all just memes. Bitcoin's ideas that I like the most are:

- Immutability (strong and fast finality)

- Backwards compatibility (I can run old software and it will still work)

- Strong security

- Easier to verify (personal nodes require less resources than other cryptocurrencies)

I do not like at all the climate change impact of bitcoin, but as long as it remains a small global percentage I think it's worth it

Same reason Bitcoin isn’t a threat to the US government. You can’t store shells in a bank, you can’t pay your taxes in sand, etc.

I do think in our lifetimes we will see the US dollar cease or transform (such as the transition from gold backed to nothing backed). Maybe it’ll be Bitcoin backed hahaha

Shells do have actual value. In Hawaii all the good ones have been taken from near the shore by now. It's typical to find some pristine ones only a few inches in diameter being sold for thousands.

Anything can have value.

Agree completely.

Bitcoin has the brand, Ethereum has the community to make it the real long term solution.

Everything else is noise IMO.

It is all human psychology plays, even Bitcoin, but where Bitcoin is different, and the answer the the parents question is:

Yes, there is zero barrier to creating a new cryptocurrency. Thus, we must look at the effort, or energy that is going into a /cryptoasset/ to determine its subjective value. This token was created in a smart contract and will live forever in the Nodes run by a large cryptocurrency exchange. It cost $16.77 in BNB at the date it was published, now $10.74.

Bitcoin will continue to spend what is now Billions of dollars on energy to secure the blockchain for /at least/ the next 100 years. The only thing securing this token is the goodwill of the nodes that run BSC and the RPC operators that interact with the wallets.

Ethereum is expensive and you shouldn't use it, but that aside, looks like mining the blocks is going down an insane path, with multiple AV vendors shipping ethereum miners in their clients. What a strange time. I do however like the idea of 100s of millions of home PCs mining and distributing the mining revenue, rather than consolidation in large corporate mining operations. Concentration of specialist miners would however be more efficient.

Other EVM chains, all Proof of Stake, with various levels of security exist. The tokens that live on these are just as much at risk of the same kinds of things that could impact BSC.

> Bitcoin will continue to spend what is now Billions of dollars on energy to secure the blockchain for /at least/ the next 100 years.

Do you really believe that this will still be the case after the pain and suffering caused by climate change becomes too ever-present to ignore, and global sentiment turns against fossil fuels?

There will come a point in the future when there is energy abundance under a zero-carbon regime, but that probably won’t happen before global polities begin to demand that fossil fuels be banned—which bans may very well be enforced though dramatic means.

Can Bitcoin survive in an environment in which fossil fuels are banned, and in which people also demand that energy remain affordable to them, even in that context?

In an environment where governments must subsidize energy in order to meet both of these objectives, will they be willing to tolerate—and can they even afford—the continued operation of Bitcoin mining within their territories?

I think most people would prefer if all fossil fuel fuel sources could be replaced by sustainable non-polluting alternatives. How energy is produced and the sustainability of supply is of great importance to the miners.

> Can Bitcoin survive in an environment in which fossil fuels are banned, and in > which people also demand that energy remain affordable to them, even in that context?

Absolutely. As long as we can power a networked computer, there will be Bitcoin. I don't think the relationship to fossil fuels is any more than a second order component, and most people would rather see disappear now we have cleaner way to generate electricity.

I think a fair way to clean the energy supply is to get suppliers of non-clean energy sources pay a penalty for the production of that energy. This would apply to electricity and oil/gas like petroleum producers. That penalty rate can be adjusted based on environmental measurements like air quality figures in local areas of consumption. The penalty should be paid into a capital pool that loans money for clean infrastructure projects at a preferential rate. We then accelerate the decommissioning and aid in migration to clean energy infrastructure.

Bitcoin is PART of a sustainable energy future. It drives economic incentives and behavior, and can be harnessed to achieve a cleaner energy. Bitcoin can and does subsidize clean energy, independent of States.

> Bitcoin...can be harnessed to achieve a cleaner energy. Bitcoin can and does subsidize clean energy, independent of States.

Yeah, I would need to thoroughly understand the mechanism that would be at work here, if I were to believe this at all.

Based on my own understanding of these things, your assertion seems incredible to me.

This seems more like a disagree completely.

I agree completely with the "coin a day will remove the scarcity that creates value in cryptocurrency" but as the OP says, Bitcoin has gone up despite that. It's only because Bitcoin has the brand. There could be 1,000 competitors but the money will go where the brand name is because that's where everybody else is putting their money.

The only coin with any chance of unseating Bitcoin is Ethereum once the Eth2 conversion is done (increasing the speed and reducing the cost) simply because there's been so much community buy in and ecosystem around it that it will become the defacto network for everything.

Monero has the privacy.

A lot of your questions would be answered by reading about proof of work, the bootstrapping problem and economy in general.

There are a lot of shitcoins that are worthless because not enough people agreed they are valuable.

Do dollar bills have any intrinsic value ?

I don't think you understood the questions.

"Proof of work" answers none of them.

New cryptocurrencies appear all the time. This dillutes the cryptocurrency space. There's only so much capital to invest in any of them.

And the dollar has value, because they're backed up by a government. Not because the bills themselves have an intrinsic value.

> New cryptocurrencies appear all the time. This dillutes the cryptocurrency space. There's only so much capital to invest in any of them.

And that's exactly why a lot of these new cryptocurrencies are worthless. The space is saturated and a lot of these new coins don't offer anything new. People don't agree on its value. I mentioned this.

> And the dollar has value, because they're backed up by a government. Not because the bills themselves have an intrinsic value.

Well crypto is backed by a huge network of miners, hence I mentioned proof of work.

Yes, USD is the only accepted way of paying taxes in the USA. If you wanna live and consume in the USA, you need to pay tax. If you need to pay tax you need dollars. This is generally how a country ensures demand for their currency.

That's not intrinsic value

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