How a Bitcoin is not a Dollar

"The dollar represents a claim against the government."

What does this even mean? A claim means that I can turn in the piece of paper and get something back. I can turn in my coat check claim paper and get my coat back. Under a gold standard, I can turn in my paper bill and get gold back. But we are no longer under a gold standard. What is the thing I get back with regards to a dollar?

The actual thing bootstrapping the value of a dollar is that the dollar is legal tender for paying taxes and for "all debts public and private." The dollar isn't a claim against the government -- it's a token than can extinguish the government's claim over you.

"Not having intrinsic value" is a prerequisite for a viable currency. The Dollar doesn't have intrinsic value either.

> Every dollar starts its life when the US Government spends it or gives it away in a two-sided transaction.

This is a common but enduring myth.

The vast majority of dollars are created when banks give out loans.

> There is no guarantee that the government will honor the claims that the outstanding dollars represent

Indeed, they don't even have enough resources to do so. The only way any currency retains value is if a large enough mass of people believe it to have value.

Some of your other arguments are strawmen:

> The whole point of BitCoin is that there is no central issuer and that is what makes it so great.

That's part of what makes it great. For me the most important part of what makes it great is that you don't have the risk of the bank deciding they don't like what you're doing and shutting down your account. Because your money is represented by a "number you just made up" (i.e. a private key), there is nobody who can revoke your access to your money.

> Just like gold, BitCoin has intrinsic value in the effort it takes to mine.

> But to mine a BitCoin I must solve a very difficult math problem, so value of the solution to that problem is captured in the BitCoin created.

Mining needs to be difficult so that it can't be faked. That's it. Mining creates no value in and of itself, and nobody is claiming it does.

EDIT: This thread has been flagged. I vouched it because I don't think it's unsubstantive, I just think it's wrong.

> There is no (intentional) intrinsic value to the problem you are solving when you mine a new BitCoin. If you were looking for interesting and valuable solutions to compute, you would almost certainly not pick any of the ones have been found as a result of BitCoin mining.

I agree that Bitcoin doesn’t have an intrinsic value, but I think he is missing the argument people actually make. The value isn’t in the problem they solve, but the power spent to solve it. At least, that is what I have always heard.