How is a piece of paper any more valuable than a hash though? They're all just place holders.
Because I bought a pair of Sennheiser headphones from a local audio equipment selling website and this in bumfuck South Africa we're talking about. I doubt the merchant is even aware they accept Bitcoin as "legal tender" since it happened through PayFast and was completely transparent to them. The point is _I_ could use it as legal tender. So from my point of view it has incredibly amount of value.
Bitcoin is not legal tender anywhere in the world.
The long and stable history of the US government gives weight to these promises.
That these worthless hashes still have people paying $226 a pop for them is a sign of all those things stated here on HN of all that loose money sloshing around due to monetary easing. It reminds me of all those subprime loan billboards I saw in the ghetto in 2007, or the pets.com Super Bowl commercials, and other such bubbles. The kids who did Dogecoin created a $14 million market cap with some goofy 4chan pictures and memes. The $3 billion market cap for worthless Bitcoin hashes are equally ludicrous.
Why are Bitcoins collectively worth $3 billion? It is an unanswerable question. The same reason the subprime real estate market, or Pets.com-type dot bomb stocks, or Dutch tulip bulbs for that matter attained crazy prices. Bubbles happen. This is the first time I can recall that something completely worthless became worth $3 billion though ($13 billion before the scam started unwinding).
You can pay your taxes with it. It's really just that simple; that's what gives fiat its value. Your government accepts it, thus it's backed by the productive capacity of the country.
The answer to the question of why fiat money has lasted for 44 years is too much to go into in an HN comment. It can be answered in a questions like you did though.
Why, with 10000 years of civilization, if it is possible for a state to create non-precious currency of a lasting like gold out of nothing, why if this can be done, did states only start doing it in the past 44 years?
The US allowed dollar to gold conversion prior to 1971, if the dollar really is priced on its own accord, why does the US still maintain over 10,000 tons of gold in Fort Knox and other facilities?
In 1971, an ounce of gold was worth $40, today it is worth about $1290. Conversely, a dollar in 1971 would be worth about seventeen cents today. Why did gold retain its value but not the dollar?