@El_Heffe said:
The whole concept of "digital currency" is flawed because it's based on the idea that the current monetary system is evil and doomed to collapse any day now.
Bollocks. That may be true of bitcoins, but proper digital currency concepts are based on the idea that pretty much everything else we used to use paper for is now done electronically, so why not cash? In purely practical terms, it's probably worth looking at replacements for paper currency based purely on the cost of use, which is non-negligible.
@dhromed said:
What I meant was, a random really hard to make note with "$10" on it is not automatically worth anything i.e. cannot be used to buy an item. Bitcoins are, apparently, hard to make, but are worth $0.
Yeah, that's what I was trying to say when I mentioned Monopoly money.
@dhromed said:
@El_Heffe said:
Whether or not it is backed by something (gold or whatever) is irrelevant.Money's value is backed by the government and all its assets. Having mutual agreement that a note has value is required, but it's pretty fragile for large groups of people. If the government collapses, your money will go down with it.
Money is backed by society and all its assets - nothing to do with mutual agreement. I would dispute that a governmental collapse would cause the money to become worthless - although it would probably be accompanied by societal collapse, which of course would affect the money situation.
I like Terry Pratchett's simplified explanation quite a lot:
On a desert island a bag of vegetables is worth more than gold, in the city gold is more valuable than the bag of vegetables.This is a sort of equation, yes? Where's the value?
He stared.
It's in the city itself. The city says: in exchange for that gold, you will have all these things. The city is the magician, the alchemist in reverse. It turns worthless gold into… everything. How much is Ankh-Morpork worth? Add it all up! The buildings, the streets, the people, the skills, the art in the galleries, the guilds, the laws, the libraries… Billions? No. No money would be enough.
The city was one big gold bar. What did you need to back the currency? You just needed the city. The city says a dollar is worth a dollar.
I would suggest that society can't exist (as we know it, anyway) without money, and that's what really makes money worth something.