How does that compare to the market depth of actual currencies or commodities? BTC, being objectively worthless, must be much more sensitive to people wanting to sell I'd expect.
There's also other debt that the US government provides in USD - which provides value as well, in the form of bonds.
BTC has no such driver of wealth. Except perhaps money laundering/transfers without AML provisions.
You don’t need anything else.
For years the haters on here would screech “but it’s volatile” - not really anymore. I wonder what they’ll decide to hate it for now, rather than changing priors.
That's demonstrably false, because countries like Zimbabwe and Venezuela experienced hyperinflation (the complete devaluation of a currency) in spite of the fact that their governments were still forcing people to pay taxes with those currencies. So clearly that alone is not enough to provide intrinsic worth to a currency.
[0] in practice there's a difference between the idea of a distributed digital currency and the ponzi schemes they give rise to I'm real life. Bitcoin is some greater fool thing, it's not a medium of exchange.
Without institutional backing, crypto is just a number in a database that people agree is worth something—for now.
If that collective belief evaporates, there’s no court, no army, no tax base, and no GDP to catch it. Contrast this with fiat currency, which—while not backed by gold—is backed by coercive power and taxation.
Let’s start from something even more fundamental. How do you bootstrap trust? Suppose two pseudonymous entities online want to exchange money for services. Such a system will likely need a reputation system to establish the trustworthiness of entities. That system needs to be tolerant to Sybil attacks (i.e., forging multiple identities), while also ensuring the service provider isn’t exploited by a buyer who refuses to pay after receiving the work.
But this exposes a deeper issue: trust cannot be bootstrapped from scratch. It needs either:
A shared history (which pseudonyms lack),
An external authority (which decentralization avoids), or
A system of credible, enforceable consequences (which requires identity or stake).
There’s a future cost to cheating (reputation loss that matters),
There’s a benefit to cooperation over time (e.g. recurring jobs),
Or there's a credible mechanism to enforce fairness (e.g. escrow and arbitration).
More fundamentally, trust-based systems are built on recursive assumptions:
You trust X because X has a good rep.
X has a good rep because others say so.
You trust those others because…?
And so, the real limitation isn’t crypto per se—it’s that trustless systems don’t exist. At best, we shift trust: from institutions to code, from names to keys, from legal consequences to probabilistic deterrents. But the requirement for trust itself never goes away.
In a pseudonymous setting, the cost of betrayal is minimal. A buyer can stiff a seller and vanish. A seller can deliver garbage or nothing. Reputation can be reset at will unless there’s an expensive cost to identity creation or a strongly linked personal history—which violates pseudonymity.
Thus, bootstrapping trust in such environments is not just technically hard—it is philosophically incoherent without compromising at least one of the pillars: privacy, decentralization, or enforceability.
It follows that if you can’t bootstrap trust, you can’t bootstrap anything that depends on it—including money. Money, at its core, is a social contract, a belief system upheld by collective trust. We accept currency in exchange for goods or services because we trust that others will accept it from us in turn. That belief is reinforced by institutional structures: central banks, governments, legal systems, and ultimately, enforcement mechanisms.
But the moment that trust breaks down, the system unravels. If people no longer trust that their money will hold value tomorrow, they will try to offload it as fast as possible, converting it into hard goods, foreign currency, or anything perceived as more stable. This behavior accelerates inflation—sometimes catastrophically.
We’ve seen this repeatedly in history:
In Weimar Germany, the collapse of political and institutional trust after WWI led to hyperinflation, with prices doubling every few days.
In Zimbabwe, trust in government policy collapsed alongside the economy, and the currency became worthless.
In Venezuela, rampant inflation was fueled not just by bad economic policy but by the public’s loss of faith in any institutional ability to right the course.
Now contrast that with crypto. Cryptocurrencies claim to solve this by removing central authorities and placing trust in mathematics and distributed consensus. But this is not true trustlessness—it's merely replacing institutional trust with collective belief in code and game theory. And the cracks are showing: when confidence drops, as in market crashes or protocol failures, value disappears just as quickly—if not faster—than in fiat regimes.
So the uncomfortable truth is this:
Money only works if you believe it will still work tomorrow.
And that brings us back to the core issue: you cannot build a functioning economy without some root of trust. Whether that root is institutional, social, or cryptographic, it must be anchored, persistent, and costly to betray. If it’s not, the system becomes inherently fragile.
The reason I used pseudonymous here is exactly because we assumed govs are bad. If govs are good, then crypto degenerates to just a slower system for transactions.
In my view, money is a technology. People use a technology if they find it to be useful. I know this sounds circular, but bear with me. A "major" currency is designed to be useful as a medium of exchange, temporary store of value, and tool of government economic policy. For it to serve these purposes, a government has to moderate its own behavior to some extent.
Thus my view is that the value of a major currency is based, not on the expectation of paying taxes in the future, but on more general expectations of the future behavior of the government.
With that said, paying taxes is good use for money that's a short term store of value, because you rarely need to hold onto your tax money for more than a year before paying it.
There must be further reasons, then, that the price of Bitcoin is so high. And they're purely sentiment, I'd argue. If that changes, there's little to prevent the price from going down very far very fast. Unlike fiat.
A fiat currency that is issued by the government has no intrinsic value either, but there's one crucial difference compared to a cryptocurrency: in the case of a government-issued fiat currency the central bank will intervene the market, by making use of its prerogative to conduct monetary policy, to ensure price of the currency doesn't drop to zero.
I am getting tired of repeating the exact same thing on HN, but TL;DR:
. there is no such thing as intrinsic value, it is a fundamentally flawed concept.
. the only reliable tenet in economics (as in: having always be observed to work) is the law of supply and demand, which "value" derives from: if demand>supply, value appears. End of story.
. why there is demand in the first place is a many-colored and complex affair, which economist recurrently (and predictably) fail to analyze and forecast.Even so, sometimes they fall to basically zero. What chance does crypto have when sentiment turns against it?
Yeah. When crypto goes down, it'll be epic.
> If govs are good, then crypto degenerates to just a slower system for transactions.
That's how I see crypto: an inefficient and ill-regulated substitute for money, though suitable for crime. If governments turn bad, stable money is just one tiny part of the problem.
The thing about gold is that its price appears to to be negatively correlated with the economic cycle. Because of this some people argue that it makes sense to include it in a portfolio of stocks and bonds, so that the volatility of the portfolio is reduced, although personally I would advise against it.