Hacker News Reader

Comment by snrplfth | Hacker News Reader

But the value of Bitcoin is that it is durable, portable, divisible and uniform - and basically in limited and predictable supply (unlike the Weimar Reichsmark or the Hungarian pengo.) That's what makes it useful. Why does a currency need to have other "functions"? Its usability as currency is its underlying usefulness.

Lots of perfectly reasonable and useful modern 'paper' currencies are not backed by any commodity nor have been since their most recent introduction. Money is useful as money, that's generally good enough.

View on HN

Most reasonable paper currencies are backed by the fact that millions of people need to pay their taxes in that currency. That's generally what gives fiat money value.

I wouldn't quite agree that tax requisition is "the thing" that gives a paper currency value, though of course it is one. (I mean, lots of people/companies hold USD, EUR, CHF, JPY, etc., without ever needing to pay taxes in those currencies.) But my main point is that it's not commodity backing that matters, and that currencies don't need to have "intrinsic value" in some other use than as currencies.

In any case, I find it kind of amusing how much incensed criticism Bitcoin gets simply for being a currency that exists. It's like, imagine people wrote thousands of angry, scathing articles and comments all over the internet about the Azerbaijani manat or something.

> I mean, lots of people/companies hold USD, EUR, CHF, JPY, etc., without ever needing to pay taxes in those currencies.

I don't think vkou was claiming that you yourself need to pay taxes in the currency yourself. Just that the fact that there's workers out there in another country who needs to pay their taxes in their local currency and will therefore need to charge for their work in that currency or trade for it. Either option will lead to some predictable demand that you can depend on whether you pay taxes in the country in question or not.

All cryptocurrencies are durable, portable, divisible, and uniform. Nearly all of them will be worthless, and many that were already created and possess those four characteristics are already worthless. Bitcoin may escape that fate (I own a a fair amount, so I hope so), but it won't be because of those four traits.

Sure, most cryptocurrencies will probably fail over the long run. But the comment I was responding to was asserting that Bitcoin would fail because it lacks "underlying usefulness" or "commodity backing". I disagreed with that concept of money - but I didn't say that possessing the aforementioned properties of money would ensure that Bitcoin, or any currency, would not fail.

Reply on news.ycombinator.com