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Comment by sytelus | Hacker News Reader

At present no major currency is backed by anything material but trust. USD, for example, is only viable because, at the deepest level, trust in it is enforced by US army. There are three major class of people who need digital currency: (1) who are super rich and won't care about putting their 1% of wealth for "diversify and forget", (2) who need to transfer money eyes off from governments, (3) people who need alternative to be manipulated away from US fed. As long as there exist a group of people needing digital currency there is an intrinsic value assigned to that currency.

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Yeah but like, the US is a lot more likely to be around in 20 years, so this argument doesn't really make any sense.

Honestly I'm sick of hearing it; yes we know, all money is made up, that's not an interesting point anymore. Society is okay with that, but it doesn't mean you can just make up another currency, that's not how it works.

That's exactly how it works. When you issue IOU, you issue your own currency. When a company issues stock, they are in fact issuing their own currency. All contracts are in fact a currency that can be sold, bought, invested and transacted. World debt is far far larger than actually currency in circulation. How does that happen? Because we make up "currency" all the time.

No, contracts are not currencies. The whole point of distinguishing between currencies and other securities/debt is that a currency has the property of being a widely used medium of exchange.

The contract I have with my plumber to plumb my toilet is not something you can use to buy lunch.

No, that's not the same thing at all. For every other example of currency besides the government's currency, there's a tangible thing backing that unit.

Crypto still doesn't have that, and that matters. To what degree is up for debate, but it does matter. Only governments apparently can get away with the unbacked currency, because they otherwise back it with enforced societal rules (a.k.a. laws).

> No, that's not the same thing at all.

Per Mark Blyth

Money, to be useful is what Economists call three things; ♦ A Unit of Account ♦ A Unit of Exchange ♦ A Store of Value: A hedge against uncertainty Crypto is not money, so what is it? Is what the Chinese Central Bank characterized three years ago as Digital Gambling Asset

Since when does HN allow emoji!?

What other currencies are there in todays world other than fiat (government's currency back by nothing)? I was trying to think of something other than crypto and really came up blank.

Sure some corporations have things like CompanyX dollars that they could give out to employees who then redeem them for something. But in these situations those dollars are back by nothing.

Other things we're fed up of: people making up their own weird and arbitrary definitions of "currency".

Exactly how it works… but you left out the US Army part this time? You kind of need that to give it value. Nothing else will. USD.

But what if you declare it? Like bankruptcy, but in reverse?

> USD, for example, is only viable because, at the deepest level, trust in it is enforced by US army.

That's a very deep level. At the practical level, USD is viable because court judgements in the US can be settled in dollars (e.g. if somebody is held responsible for killing your goats, you can't demand to be paid back in goats), and US taxes are owed in dollars.

At the deepest level, taxes and courts are maintained by the US government, which I suppose you can say is protected by the US military?

Saying that the high dollar is protected by the US military makes more sense. But the dollar itself is protected by the magnitude and reach of the entire US government, which is only partially maintained and extended by killing people.

> trust in it is enforced by the US army

That's not exactly "absolutely nothing", to use the parent's phrase.

> At present no major currency is backed by anything material but trust.

While this is true in theory I trust the Swiss National Bank (in my case) significantly more than all those two bit shysters running crypto exchanges, while being extremely economical with the truth in all their communications.

At it's deepest level the $ is viable because of the consent of the people of the USA. The US Army isn't either capable of enforcing law in the USA or exercising influence out of the USA without that consent.

Chinese yuan is economically backed by state owned companies that routinely sell essential goods and services at below market prices when they otherwise would rise too fast.

If the crypto-bros had a militia as powerful as the US army then perhaps crypto would be worth something.

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