Quote from: hashman on July 08, 2013, 07:37:22 AM

Quote from: johnyj on July 04, 2013, 11:05:04 PM

Quote from: Nemo1024 on July 04, 2013, 10:17:51 PM

How is this different from the 52 states (plus the rest of the world) borrowing dollars from the Federal Reserve, dollars, which too get printed out of thin air?

It's same everywhere, but before 1971 fiat money were backed by gold, so they were not printed out of nothing

If you can devise a system in which paper is provably backed by gold without counterparty risk, I'll give you a bitcoin Cheesy

I think it was 40% backed by gold under a gold standard, so it did have a risk of bank run, but that is very low risk, from a FRB point of view (The commercial banks usually have a 10% FRB without a bank run)

Anyway, even in gold FRB, each dollar is backed by some gold, that practice has proved to be working most of the time. But in today's system, it is backed by nothing, 0% FRB, how could this keep the value of new money? Purely by people's consensus and they have no alternative medium of trading (I want to get rid of these useless paper but what other money can I use to do my trading with?)

The ultimate thing that back the gold's value is still its high degree of payment acceptance: Gold is accepted everywhere on the planet, especially the governors in other nations. Even one nation went down, you could still move to other part of the planet with your gold and live a good life there. So it is actually backed by a gold culture formed in thousands of years

Similarly, if a bitcoin culture established widely around the globe, then it will reach the same status as gold, as the gold for internet