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Comment by moocowduckquack | Hacker News Reader

You can't exchange your BTC back into electricity.

Huh? Why not? Surely you could just buy some solar panels with bitcoins, or convert them to another currency and then buy electricity from the grid.

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By that reasoning, I can convert my USD into donuts, and hence the USD is backed by donuts, hence the term "dollars to donuts".

Well, it is partly backed by donuts, along with any other commodities or instruments of value that it can be easily exchanged with.

Which really puts the lie to the idea of currency being "backed by" a scarce resource at all, which is the main premise of goldbugs. I'm totally okay saying that a currency is backed by the entire economy of goods being exchanged for it myself.

The meaning of a backed currency is that it's backed by the issuer with a specific commodity (or service). You can go to the issuer and exchange the money ("symbol of value") into the real thing ("value").

With BTC you can't go to some miner (=issuer) and exchange it back into the electricity that was used to produce it.

But I can't expect that I will be able to exchange the BTC for a fixed amount of electricity, which is the same as the fixed amount of electricity I originally exchanged for BTC. Hence BTC is not convertible, and not "backed"

I can buy gold with the US dollar, but it doesn't mean the US dollar is backed by gold.

That's a tortuously inefficient way to get electricity.

Surely it is just what bitcoin miners have been doing anyway, the difference remaining being their profit.

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