Quote from: Rassah on November 30, 2012, 04:21:01 PM

Quote from: 2_Thumbs_Up on November 30, 2012, 03:46:42 PM

The different between IRS and any other merchant is the use of force. While you have the choice of paying any other merchant in their prefered currency, you are forced to pay IRS in their choice of currency.

You actually don't have the choice of paying any other merchant in YOUR preferred currency. You have to pay it in THEIR preferred currency, or not get the service at all. Same as with IRS.

Read my post again, because that is EXACTLY what I said. And it's not the same, because in the case of IRS it's not about using their currency or not getting the service, it's about using their service or go to jail. At the end of the year you need dollars, or you will go to jail. That creates demand. The "not going to jail"-property of dollars is valuable.

Quote from: Rassah on November 30, 2012, 04:21:01 PM

Quote from: 2_Thumbs_Up on November 30, 2012, 03:46:42 PM

I could argue that the main difference between government and merchants is who has the bigger guns. While a merchant can't stick you in jail, if they don't like your currency, they can kick you out of a hotel or your apartment, refuse to sell you food, and refuse to sell you lifesaving medicine, which could all result in punishments similar to what a government can dole out.

But unlike government they don't have any incentive to refuse payment in other currencies as long as the payment minus the transaction costs exceed the value of what they're selling, because they don't have a monopoly to protect.

Quote from: Rassah on November 30, 2012, 04:21:01 PM

So, bigger guns, bigger say in what everyone needs to pay. And, similarly, if your merchant only accepts euros while you only have dollars, you can always just exchange your dollars for euros, just as you can always just exchange your bitcoin for dollars when paying the IRS. Again, really nothing special here except for the personal preference of the biggest merchant on the block.

Yes, you could do all your daily businesses in gold, and only buy dollars at tax day. But then you will suffer some transaction costs. The fact that you absolutely need dollars at tax day creates artificial costs for all alternative currencies. That's the reason there is still some demand even for hyperinflationary currencies. If you don't contribute to the demand at all you will face the risk of jail time.