I have heard dollars are popular with crime orgs all the world over, who are unlikely to use or be able to use the dollars in US courts. Dollars are valued by people (and they exchange goods/services for it), and Americans need them to pay their taxes.
> If someone takes your Bitcoin
This is one big if, and it will still be prosecutable by courts, as evidenced by all the current legal cases about crypto theft.
> Same thing with the Euro and all the other major currencies (and even a lot of the minor ones). They have the threat of legal recourse and military violence back them.
Military might matters only so far as it defends the country and makes it possible to produce stuff that other people want. A lot of countries with good military might (e.g., North Korea) don't have valuable currencies.
I think once you've laundered drug money into dollars, it's spendable just like dollars are spendable. But it also makes sense they want dollars because dollars can pretty much be spent on anything anywhere.
>> If someone takes your Bitcoin > This is one big if, and it will still be prosecutable by courts, as evidenced by all the current legal cases about crypto theft.
Well first you have to find the perpetrator -- then you have to find the money. Do enough transfers and mixing currencies together and it becomes near impossible to trace. This gets worse if it's state sponsored hacking (Russia or China, say)
> A lot of countries with good military might (e.g., North Korea) don't have valuable currencies.
That's because NK doesn't have a lot of trust. Saddam Hussein hoarded US dollars [1] even though he could have used Iraqi currency instead (since afterall he was the leader of Iraq and the currency had his face on it). That's because nobody really trusted Iraq's currency -- not even the leader himself.
[1] https://www.nytimes.com/2003/04/20/world/nation-war-baghdad-....
The speculative and tech aspects of it provide enough of a veneer to keep authorities from entirely cracking down (though banks really really don't like touching it!).
I dunno how long that can go on, it seems like eventually someone will start making stricter KYC rules and the whole thing will come tumbling down. The feds are currently sniffing around Tether, which might be the start. That or the bitcoin system invents another part of traditional finanical systems, the bank run (tether is already backed by loans and crypto neither of which will assuage depositors looking for dollars).
For USD it’s also the fact that oil is sold in USD, which is why a lot of foreign debt is also denominated in USD.
The reason the US dollar is valuable worldwide is because if you run into trouble, you can use the US courts to be made whole, and if that doesn't work, assuming the dollar amount is high enough, the US military or Secret Service will use violence to make you whole again.
Same thing with the Euro and all the other major currencies (and even a lot of the minor ones). They have the threat of legal recourse and military violence back them.
Bitcoin does not have that. If someone takes your Bitcoin, there is little recourse to be made whole again. Now maybe if the US government decided to buy up a significant amount of bitcoin, they would have an interest in using the courts and military to enforce it. But the US government doesn't like competition, so most likely they would be buying up bitcoin to get people to exchange bitcoin for dollars, making the dollar even stronger.