> Proof of work is the only way to get acceptable security properties for a monetary system.
Every country's financial system: ahem.
The U.S. dollar doesn't require giant energy-hungry server farms to be secure.
Every country's financial system: ahem.
The U.S. dollar doesn't require giant energy-hungry server farms to be secure.
Doubtful
Conventional currencies (notably the US Dollar) are also backed by signifigant military (and thus electrical) power. I would posit that Fiat currencies are nessisary in some sense, but not that they are more efficient to maintain than cryptocurrencies. Cryptocurrencies tend to piggyback on the infrastructure and economy that are built on fiat (e.g. The internet).
Yes, the militatary spending is nessisary but not sufficient to sustain a currency.
The US economy is the world's largest economy in gross value, is the largest or one of the largest trade partners of much of the world, and has very limited policies on capital control or other monetary restrictions. This means that there is going to be more depth on trading pairs via USD and even small currencies than you would likely have with other countries, you would have very little counterparty risk holding USD, and much trade will end up being denominated in USD anyways. So you'd be a bloody fool not to hold USD.
Magically blinking away the US military would not change any of the above consideration one iota.
So let me flip the question around: why do you believe that the US military is essential to its role as a major reserve currency?
Let's flip the question around: what happens when oil producing countries try to sell in non-USD? US military has entered the chat
(And I include the last few because there's no evidence they even attempted to sell oil in non-US currencies.)
Are you sure about that? Iraq was selling oil for euros and was then invaded in 2003.
https://www.theguardian.com/business/2003/feb/16/iraq.theeur... (published about a month before the invasion)
> Almost all of Iraq's oil exports under the United Nations oil-for-food programme have been paid in euros since 2001. Around 26 billion euros (£17.4bn) has been paid for 3.3 billion barrels of oil into an escrow account in New York.
Because it's the final backstop that compels people to pay taxes, and taxes are essential to that role.
If you refuse to pay taxes, they send a policeman to arrest you. If you evade the policeman's arrest, they send more policemen. If you somehow evade all the policemen, they send the military.
If the US had no armed federal agents, then people wouldn't pay taxes and the government would shrivel up and die, because governments can't survive on zero revenue.
In this way, the US dollar's value is reliant on the threat of physical force - or in a broad sense, a military.
Do banks not have server farms?
Crypto mining also makes the blockchain secure. What this means is that a malicious individual cannot, say, transfer crypto from another person's wallet to his own, or alter the software algorithm that controls the creation of the cryptocurrency.
Proof of work cryptocurrencies require miners to expend an enormous quantity of energy in order to prevent problems that national currencies don't have in the first place. Cryptocurrencies have no advantage over national currencies except for anonymous online transactions.
And those closest to the money printer benefit. And hint, the average joe is furthest from the printer. The future of the average joe is stolen via currency debasement and inflation, but those closest to the printer get richer.
Forget fiat. When money was gold in a vault, that's proof of stake, not proof of work. For proof of work, you'd have to disintegrate the gold. I wouldn't put my trust in a dollar backed by the absence of gold.
edit: I think maybe bitcoin enthusiasts think that value is a sort of spirit, and that if you kill something valuable, then through a huge mass ritual you can direct that spirit into another vessel. Proof that you once had money, and further proof that no one else has that money, should be enough for people to treat you as if you currently have money.
> I think maybe bitcoin enthusiasts think that value is a sort of spirit...
Interestingly, that is actually kind of how it works. The money you use itself has no value, it's value is in the things you use it to trade. So if you start trading in other currencies, those currencies receive that value, which gets reflected in the purchasing power metric.