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Comment by pmiller2 | Hacker News Reader

And I would argue that cryptocurrencies do none of those things. What value is being stored? Owning some BTC just implies that someone at some point burnt some electricity and computing power to solve a rather insignificant crypto problem.

This is precisely what I don't get about cryptocurrencies. There is no intrinsic value, and they're not even backed by the full faith and credit of, well, anyone. I don't see why it's "worth" anything.

And, we don't need a digital currency. We already have a bunch of them (the US dollar among them). Most money in the world doesn't exist as physical coins, notes, gold/silver, etc. It's all bits in a computer, but those bits are backed by a sovereign entity. That's why we are able to use them as currency.

If anyone can explain the fundamentals of why BTC or any other cryptocurrency should have any value whatsoever, I would really appreciate that.

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Exchange bitcoin with real money and ask yourself the same questions.

> And, we don't need a digital currency. We already have a bunch of them [...]

That's a bit enraging to me. I feel it's in the same class of arguments with things like earth is flat -- we don't want a round one, blacks are not humans -- they should be happy we grant them slavery. The status quo is our normality.

> backed by a sovereign entity

Which one? I had savings to buy several apartments but in a few years those savings were worth a lunch. That was a long time ago. But as of now my income depends on US, EU, Syria, Turkey etc crisis and hell knows what other stuff I don't even hear about on the news.

As a guy lacking both bitcoins and real money they both weight as a surprisingly similar amount of crap.

>It's all bits in a computer, but those bits are backed by a sovereign entity. That's why we are able to use them as currency.

I've always felt this argument is disingenuous. People traded goods and services prior to government-backed currency. Being backed by a government sure does simplify things and make more people value it but it isn't necessary. Government-backed money can turn into Monopoly money as well.

Lest you forget 1920's Germany [0].

[0] http://i.imgur.com/nk0CnNr.png

I think their intrinsic value is backed by their usefulness as a medium of exchange for the use cases described in the parent comment. Solving the crypto problem seems more like something that makes them useful for exchanging.

Solving the crypto problem is just part of the mechanism that ensures there's a limited supply of them. We could do the same thing by randomly assigning floating point numbers between 0 and 2.1x10^10 - 1 (corresponding to the 21M BTC that are ever allowed to exist).

The part that makes BTC relatively safe to transact with is the blockchain itself.

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