Paper currency is backed by the presumed continued existence and effective taxing and police power of the issuing state. It might seem theoretical, but if you benefit from the existence of the state, generate value, and don't pay your share to the state in the currency that they demand it in, then your punishment is anything but.

Right, but the total USD value is much greater than the tax obligations of its citizens.

Are you sure? The quickest sources I could find claim it's the other way by a significant margin.

> There was approximately $1.56 trillion in circulation as of July 12, 2017, of which $1.52 trillion was in Federal Reserve notes.

https://www.federalreserve.gov/faqs/currency_12773.htm

> In FY 2017, total US government revenue, federal, state, and local, is “guesstimated” to be $6.56 trillion

http://www.usgovernmentrevenue.com/total

The total USD value is much larger than bank notes. Money in bank accounts and equivalent services is in this context indistinguishable from notes.

The reserve requirements on balances on more than $115.1 million are 10%. That means with $1.56 trillion outstanding you're looking at a ballpark amount outstanding of $15 trillion in bank deposits. That's still not "much greater" than the $6 trillion annual tax revenue.

https://www.federalreserve.gov/monetarypolicy/reservereq.htm

From your link: "Depository institutions must hold reserves in the form of vault cash or deposits with Federal Reserve Banks."

Current balance of federal bank deposits is ~$2.3T:

https://www.federalreserve.gov/releases/h41/current/

Interesting. I'm not sure how to read that balance sheet. For the sake of argument let's say that there's $2.3T is federal bank deposits and $1.5T cash in circulation. If it's all used as reserve balances then that's a total of $38T in bank deposits outstanding. $6T taxing power a year is still not small compared to this!

Your traditional bank account balance is stored as 1's and 0's in a database somewhere. What is the intrinsic value of those bits?

Now think of how much energy is "wasted" keeping all those accounts updated, the lights on at all the branch offices, etc.

The way they store the information is irrelevant. They also have regulation and mandatory checks and balances on their ability to repay current account holders.

> Now think of how much energy is "wasted" keeping all those accounts updated, the lights on at all the branch offices, etc.

You should do some research before making such uninformed assertion (also banks do more services than just transaction ledgering)

The intrinsic value of bitcoin is that I can transfer money to anyone in the world, very quickly, for a couple cents of transaction fees, in a way that can't be censored.