You could pay your taxes. And all the others who need to pay their taxes, would need to trade valuable things to you for the dollars they need to pay their taxes. Also, almost all world trade is ultimately settled in dollars. And so, if you want to buy oil/food/fertilizer/machine tools/etc. on the world market, you need those dollar bills again.

The concentration of money in one hand means it is worthless for any other hand.

You can't pay taxes with worthless money.

It’s not worthless. The United States, which happens to be the largest economy in the world, requires taxes to be paid in dollars, regardless of how you’ve settled your transaction. If you and I trade a car for 40,000 chocolate bars, the IRS demands we figure out the dollar cost and pay them their due.

If I owned all the dollars, the US would simply decide to start demanding taxes in something else because it could not use those dollars for anything. If it refused to switch to another currency, it would not be able to pay the people who would force me to pay taxes, so there would be no reason for me to pay taxes.

The United States can print more dollars. Hell, they can declare all your dollars not real and throw you in jail. Every dollar is owned by the US Government. You’re just borrowing them.

The US Debt is denominated in dollars. The USA has promised to pay its entire $24+ Trillion debt, in dollars.

But that would not make any sense if one person held all the dollars. The creditors would have no use for dollars, and the US would need to switch to another currency in order to be able to pay its employees. They could print however many dollars they wanted, and could pay back the debt that way, but that would not solve the problem of the dollar no longer being useful as a currency. The government's employees would have no reason to accept the dollar because nobody else would accept it. The dollar is primarily valuable because it's used as a currency. If it stopped being used as a currency, its value would be zero. This is no different from Bitcoin.

If you had all the dollars and people still had to pay their taxes in dollars. You would be able to get a LOT of stuff for those dollars because everyone would need them.

The actual concern with this argument is that "You can only pay your taxes in US dollars" is a backing that is contingent on the policy of the US Government. The strength of that backing depends on your view about the likelihood that such a policy will stay in place. (Edit: granted, if all USD were owned by a single entity, the likelihood that such a policy would be revoked is much, much higher.)

It does depend on the policy, yes, but note that government backed (local) monopolies exist in other areas too. Like for example with hospitals, or with phone network operators.

I'm not sure how this comment relates to the topic as we aren't discussing any sort of monopoly.

If you have all the dollars then you have a monopoly on them. If the government forces people to pay their taxes in dollars you have a government supported monopoly. It stands and falls with the government's support for it, the connected regulations, etc.

> (Edit: granted, if all USD were owned by a single entity, the likelihood that such a policy would be revoked is much, much higher.)

If all of USD were owned by a single entity, the US Government just prints more. They will always have that power. That may cause inflation effects that they would be concerned about in the long term, but they have an immediate reaction lever to increase the monetary supply in such a (weird) hypothetical. (Though the correspondence between monetary supply and long-term inflation has always been much more theoretical "cause-and-effect" rather than showing practical, real world correlation much less "cause-and-effect". Especially this side of the Gold Standard the practical relationship between monetary supply and inflation is incredibly complex, and while you will find many people still presume an inflationary relationship the practical effects have been much weirder. [There are times in recent US history where USD monetary supply was at all time highs and inflation at all time lows.])

(Unless you hypothesizing an even weirder hypothetical where the monetary supply is increased by the US Government just handing the dollars to the single USD dollar holder and hoping that provides incentive to "trickle down" dollars back to everyone, but there's very little anyone can do with the onion of dumb in that weird hypothetical.)

In other words, a government mandate is necessary to arrogate value to paper.

Bitcoin is legal currency for taxes in El Salvador. And someone there will always be someone in el salvador needing to pay taxes.

Yes, but Warren Buffer doesn't live in El Salvador, so the only thing he could do with BTC is sell it to someone for USD so the point still stands

So Bitcoin should be priced according to the size of the El Salvadorian economy. Not all of the economy, but the economy conducted in bitcoin. Bitcoin can't take credit for people using alternative currencies to pay their taxes in El Salvador, or using it to buy groceries, pay rent, etc.

> And someone there will always be someone in el salvador needing to pay taxes.

1) You don't need bitcoin to pay taxes in El Salvador. You need dollars to pay taxes in the US.

2) Why would people in El Salvador give you their USD for bitcoin when you can pay taxes there in USD?

But it’s not the only one, unlike the USD

So do you believe USD would be worth zero if the US accepted foreign currencies for tax payment? Or abolished taxes?

It is now possible to pay for stuff and pay taxes in BTC in multiple jurisdictions.

It is only possible to pay taxes with BTC in a few failed states like El Salvador. So that's hardly a positive. And I expect that little experiment will probably be terminated soon after Bukele leaves office.

Zermatt in Switzerland is a failed state how?

Sure, but the argument wasn't that BTC was merely overpriced, but that it was mathematically worth zero.

Hey now, Colorado has started accepting Crypto payments recently. Per the CO Dept of Revenue - "Starting September 1, 2022, the Colorado Department of Revenue (DOR) will now accept Cryptocurrency as an additional form of payment for all state taxpayers. This includes individual income tax, business income tax, sales and use tax, withholding tax, severance tax and excise fuel tax."

The state is not actually accepting cryptocurrency tax payments. Tax liabilities are still denominated in dollars. All that they have done is partner with a third party payment processor which will sell you dollars for cryptocurrency at the current market price (minus fees), and then forward those dollars to the tax authorities.

Dollar bills are backed by the full faith and credit by the US Government. As long as the US Government decides those have value (IE: forces you to pay taxes denominated in bills), then anyone interacting with the government will value those bills.

As a centralized currency, the power flows from the Government. If the US Government loses power, of course dollar bills lose value. But generally speaking, the trust in the dollar is one-and-the-same as trust in the US Government.

How come people's only definition of value of currency is that it can pay taxes?

Everything else's value is determined by the market and not the government, so how does Bitcoin have trouble finding value if the market thinks it has its utility, which is a storage of value without any third party intervention which is its unique capability that people can't seem to figure out after 10+ years of its existence.

Seashells and Rai stones have been used as stores of value without any third party intervention.

The only thing a currency needs is widespread community coordination. US Government forces this through taxes and bonds/lending, so our system is largely built on top of the dollar and a centralized bank.

Other systems can be made however you wish. But solving the coordination problem is the fundamental issue.

It's a myth that taxes are what give currency value. Plenty of currencies needed to pay taxes throughout history have hyperinflated into nothing.

Its a myth that printing money causes currency to lose value. There are an infinite Dogecoins and yet the value goes up sometimes.

Doge inflation is only on the ballpark of 0.3% per year and will continue to decrease asymptotically toward 0%. It is a very sound policy imo

By what measure?

DOGE is -53% over the last year, which means its _actually inflated_ by 212% vs the Dollar (or really like 233% in real terms, after accounting for the 9%+ inflation of USD).

DOGE inflating by 233% in a single year is horrific policy.

The parent comment was obviously regarding total/circulating number of dogecoins. It erroneously made a hyperbolic claim there are infinite dogecoins. It is a common misconception even among cryptocurrency fans that the number of dogecoins increases at a high rate, because it doesn't have a hard max total supply number like bitcoin's 21 million. In a cryptocurrency context, inflation most often refers to the rate of newly printed units because the price volatility is just from market movements and has often little to do with the monetary policy

There are only a finite number ever. The amount of Doge is limited by time. Unlike fiat, it is disinflationary (yearly supply rate goes down toward 0).

There were only a finite number of German Marks in 1923, last time I checked. A very large number, but finite nonetheless.

I'm not sure why you're trying to change the subject to money printing. But thanks for proving my point. You're right that dogecoins have value (for better or worse) and that value definitely doesn't come from any government.

Dogecoin has hyperinflated 210% this past year, while BTC has hyperinflated 340% this past year.

As far as things with inflation, we should be discussing why Cryptocoins are so terrible at it.

You've changed the subject again--I didn't mention inflation. Are you a bot or are you just parroting random talking points without reading?

Since you brought it up, YoY returns are not really relevant for a long-term investor. If you're speculating/gambling on short-term volatility, then USD/VTSAX/BTC have done poorly--but I'm not much of a speculator. I'm very happy with my 10-year returns.

As long as you keep wildly changing the subject (this applies to your next reply as well), I'll assume you have no counterpoints and agree with everything I say. I'm glad we can agree!

> hyperinflated into nothing

You literally said this. Honestly, I'm not sure what subject you want to discuss anymore. But you were the one to first bring up inflation.

If you got something to say about my root post, feel free. But you're changing the subject more than I am: https://news.ycombinator.com/item?id=33789831

You would have an immediate market for them since dollars are the only legal way to pay your taxes. Since everyone must do this, it creates a kind of Schelling point such that everyone defaults to using dollars for everything else also.

If you produce something of value in return for Bitcoin, you must still acquire dollars to pay your taxes. If you refuse, men with guns will escort you to jail. That is what ultimately backs Buffet’s preferred currency.

The US government accepts these for debts and issues debts denominated in these.

Then you would hold a weird power over the worlds largest economy? It’s the official medium of exchange. The government could print more money, but you would be able to flood the market at any time, essentially being a second federal reserve. Everyone would depend on you for loans to be able to pay their taxes. Likely the US government would need to deprecate the dollar and move to a new currency, which would have incredible economic shocks. Doesn’t sound at all like owning all the bitcoin.

I get your point, but they are really not the same.

If I owned all the dollar bills the Fed would add twenty zeros to them by printing a boatload of money, making mine worth a lot less and the new dollars useful.

You buy twitter and burn it down

Exactly. The same argument can be applied to dollars, to all dollars, not the bills only.