Quote from: Impaler on December 07, 2013, 06:34:39 PM

Quote from: Ibian on December 07, 2013, 02:10:45 PM

Been over this countless times just in the short while I have been on the board. Bitcoin is backed by the strength and security of the network as well as the safety compared to fiat. Ultimately it all comes down to trust, even with government "backed" (in that it is not actually backed by anything physical) paper money.

You confuse BACKING with SECURITY, Backing a Currency means giving it value, government legal tender laws and the ability to pay your taxes in a currency BACK the currency, or in the past pegging the currency unit to quantity of precious metal. Security is preventing a currency from being stolen or counterfeited and governments also generally provide Security both by making paper bills hard to counterfeit and punishing thieves.

The BTC computer network provides SECURITY only, it keeps BTC from being counterfeited, and it kind-of prevents bogus transactions by cryptographic signatures, while turning a blind eye to scams, hacked wallets and black-markets. But all of these things are just guaranteeing your continued ownership of BTCs not that the coins will be WORTH anything. BTC is secured but not backed.

What happens when the government is the thief?

Cyprus was just a test case. All members of the EU are essentially governed by a central authority - somewhere north of 50% of all laws are made by them, and the rest fall within the borders of those 50%+. Any of the member countries could wake up on monday to find their bank accounts have shrunk by whatever arbitrary percentage.