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Comment by wissler | Hacker News Reader

What will Bitcoin clones do to the value of Bitcoin? In principle you could have an unlimited number of them, it's not as if Bitcoin is the only possible instantiation of a cryptocurrency.

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Exactly, Bitcoin will ultimately fail as money as it has no intrinsic value or real scarcity. As to those who might argue that fiat money has no intrinsic value either I beg to differ. The "intrinsic value" of, e.g., the USD is that there exists an organization (US government) with gargantuan physical force that stands to lose a lot if the value of USD goes to zero too fast and so holders of USDs can rely on that organization to deploy that force against rapid devaluation of their currency. There is no such comparable organization in the case of Bitcoin. In the absence of that, only real intrinsic value (the kind of gold or silver has) may prop up a currency and Bitcoin has none of that either. Tulip mania was very rational compared to Bitcoin.

How does the US govt. deploy force against decentralized crypto? It can go after the exchanges and clamp down on bank-to-Bitcoin services but it can do nothing against the network itself. Should the USG clamp down on Bitcoin too hard, Bitcoin will thrive in those places that are harder for the regulatory agencies to reach.

ATM, 1 bitcoin is worth ~350 times more than one Federal Reserve Note, making Bitcoin the most valuable currency in the world. I expect demand for Bitcoin will only rise elsewhere in the world even if the USG tries to make it difficult for its own citizens to use.

The USG could easily make transfer of USD into Bitcoin impossible, so can EU for EUR.

Until we are in the matrix you need the physical world. And there governments are dominant.

Then the yuan exchanges will pick up the slack. I'd dump my dollars for yuan and btc, as would other people. The USG would be slitting its own throat if it made btc > $ exchanges outright illegal.

Because the wildly libertarian China that has state firewall and can cut off the access to the block chain completely will just fall in love with something that could for any reason diminish its ability to have iron grip control over its economy and currency.

If Bitcoin is going to be not fringe it will need wide state support of at least 51% of the world GDP. There is not a single economic bloc that could endorse the loss of the ability to manipulate its own currency.

It is an awesome real time payment system, but crappy as a currency.

China likes Bitcoin because the USG doesn't. As long as that dynamic holds, Bitcoin is safe in China.

Unlike the US, a hundred million+ internet users in China are already accustomed to digital money through the use of the now defunct Q coin.

It makes no difference to me if Bitcoin stays fringe or goes mainstream. It's value will continue to increase as long as it finds uses all over the globe, with or without the blessing of the USG.

I argued that the US govt. can deploy its force to protect the dollar (as has done in the past even to the point of going to war) and the assurance of such a powerful guardian undergirds the trust in US dollar. Other have already answered as to how it can deploy force against Bitcoin (although not part of my argument). Governments can also act in concert. Invoking images of pedophiles or drug dealers using BTC would be more than enough to secure public support for such measures as blocking BTC port numbers, Deep Packet Inspection for BTC protocol content and ensuring that no legitimate retailer wants to be seen associating its name with the "pedophiles currency".

People always propose ridiculously convoluted solutions to simple problems.

Step 1: make Bitcoin exchanges illegal to operate. There is no Step 2.

All the supposed uncensorability of BitCoin doesn't matter once you do that, because no one conducting legal business activities is going to bother with it after that. Al Capone was arrested for tax fraud.

> Step 1: make Bitcoin exchanges illegal to operate. There is no Step 2.

Step 2 is moving my Bitcoin business to a country that's not afraid of Bitcoin.

Thus losing all your customers in a large, well-established 1st world market.

Again: if you can't buy BitCoin in your native currency legally, no one would bother trying to do it except if they had a compelling reason.

> if you can't buy BitCoin in your native currency legally

My native currency is now Bitcoin. ;)

> "ATM, 1 bitcoin is worth ~350 times more than one Federal Reserve Note, making Bitcoin the most valuable currency in the world.

The value of the M1 money supply (all the cash) of USD is $2.5 trillion. The value of the BTC money supply in USD is $[handful] billion. Calling BTC more valuable because it happens to be denominated in a large chunk is missing the point.

And as more dollars come into existence, they'll continue to be worth less in comparison to Bitcoin's fixed supply.

Also, the accumulated transactional value of Bitcoin is increasing. All of the fees and other costs associated with moving money are being lost by banks and other agencies.

The intrinsic value of USD is the fact the the government demands them from the populace and is the only source of them.

That's only a sliver of its intrinsic value. It also has value because the rest of the world (rather, their governments) recognize it, accept it, and buy/sell it. The U.S. government is one of the pillars lending strength to the dollars credibility, but you have to keep in mind that it's not the only pillar.

The force of the US military is not what props up the value of the USD, look at all the other currencies around the world with almost no offensive military. How do you explain the value of CHF or JPY? The value of a currency is based on the network effect of everyone who uses it and how much they trust it not to devalue (ie trusting they won't print too much too fast).

We trust the USD because everyone we have ever met in the US has trusted it for their entire life, and their parents, and grandparents, ... . And the network effect is so large that people growing up in countries with weak currencies trusted it more than their home currency, it was stable and everywhere.

All other fiat currencies are similarly backed by a government that enjoys monopoly of legal force over some geographical area. That's why when governments die (lost war, revolution) the value of their fiat goes to zero and only "money" with intrinsic value is accepted (gold, silver, gems, works of art, cigarettes). In 6000 years of recorded history money always either had intrinsic value or was backed by a strong guy.

Why is a single entity needed to back a currency. Isn't bitcoin just crowd-funded vs. the the US is the dollar's vc backer? For it to truly crash, everyone who uses it for different reasons would have to decide it is worth less.

Bitcoin is a protocol for money. Protocols, once they have acceptance have a pretty great shelf life. See http, tcp/ip. So long as they get the job done, there's a disincentive to replace them once established.

"to deploy that force against rapid devaluation of their currency"

This statemetn is rubbish. If the USD were to rapidly devaluate, military force would be USELESS to protect its value. It is the Fed, through its policy, that can help influence deflation. But even then, its influence is limited.

Probably nothing, unless they have features that are sufficiently more desirable to the market than what Bitcoin offers?

A zeroed blockchain that wipes current accumulated bitcoins is something that the latecomers to the party could desire the moment the currency becomes mainstream.

Whatever they will do, it seems likely they have already done: there have been many dozens of altcoins, but most have come and gone without a trace and wound up being simple pump-and-dump schemes.

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