But what gives bitcoin VALUE? You can’t beat it into rings or jewelry like silver, gold or copper; it has no decorative or industrial use like diamonds; you can’t eat or wear it, or even hit an attacker over the head with it.
What’s to keep me from starting my own coinage, buying all the stuff I’ll ever want and slipping away into the night?
You could start your own coinage. How do you get folks to trust it enough to see it as a store of value? One of the nice things about Bitcoin is that anybody can “mine” the coins. It doesn’t matter if Bitcoin’s founder spends all he or she has and never mines another coin. When Bitcoin started, folks could mine a coin in a reasonable time period using their home computer. It takes much more processing power to mine a coin today. And that’s by design. Some folks think the last Bitcoins won’t be mined until 2030 or so, because of the amount of processing power needed. There are hundreds of Bitcoin miners, but only a handful of companies with warehouse-sized processing farms are mining the vast majority of new Bitcoins today.
The new coin that I’m keenest on has taken a different approach to trust. Instead of decentralized mining from the start, the company doesn’t plan to make the algorithm public until 80% of the maximum 2.1 billion coins are mined. The trust factor involves the company’s huge goals for the usability of their coin — the profit they will make from, say, displacing Amazon in online marketplace and Paypal in online payments dwarfs the billions involved in the coins’ face value. Most of the world’s population doesn’t have a bank account. Cryptocurrency has vast potential in helping billions of unbanked folks day in and day out. I think cryptocurrency will have as big an impact on the world as the invention of the printing press, the TV, the computer, and the cell phone combined.
Have you ever tried to do any of that with a US dollar bill lately?
As far as I can see, the only thing that gives a dollar value is the "full faith and credit" of the US government. With Barack at the helm they have zeroed out...