Physical money has intrinsic value equal to the metal or paper it's made of. Of course that is not what makes physical money valuable and I am equally confused by that quote.

USD/EUR/JPY currency (either physical as bank notes and coins, or electronic) has intrinsic value because it is almost universally accepted, taxable, and backed by debt that (at least in theory) will have to be repaid at some point in time. Bitcoin proponents like to point out that bitcoins are decentralized as if that's only an advantage of the currency, but it's the fact that commonly accepted currencies are centralized, controlled and regulated that makes them trustworthy enough that people keep accepting them in exchange for goods or labor. It's called 'fiat money' for a reason. Bitcoin has none of this, and the 'value' it derives from the 'trust' people buying them is based on nothing but speculation and hype. Anyone who thinks otherwise is fooling themselves.

Disclaimer: I'm not 'anti-bitcoin', 'anti-cryptocurrency', 'pro-government' or a big fan of fiat money and how central banks are handling it. I'm just stating my observation how the bitcoin hype and echo-chamber has made people almost blind to see the risk it will some day go to zero (maybe soon)

All regular currencies are fungible and its super-questionable that BTC is divisible (the network can't handle more then what, a million transactions per second? What's the use of a currency that splits into microscopic sizes if you can't make lots of micropayments with it).

USD may be the most ubiquitous currency on the planet. However, go visit a country like Japan. Once you're out of reach of any currency exchange, you won't have much luck using your USD. Ironically, you'll have better luck using a Visa/Mastercard (which, btw, are not used anywhere other than perhaps ATMs). Those credit cards require a network to be used.

I've been to Internet cafes in Japan. But I never bought a single thing with USD. I don't see Bitcoin having any issues here. Internet is more widely available than places that take whatever your paper currency is.

You can easily take Bitcoin with you. You take your credit card with you. Both require electronic communication to work. There is no difference here.

The difference is, all national currencies have an offline only form which is good anywhere within that nation. Bitcoin does not.

Same disclaimer as above.

A distributed ledger with proof of ownership that makes it impossible to forge transactions

That my friends is a first in history, Greenspan and others have not realised yet the implications of this.

All that means is that I can prove beyond any doubt that I own something that's worth nothing... :-)

http://www.bloomberg.com/video/greenspan-on-bitcoin-i-guess-...

>> Of course that is not what makes physical money valuable and I am equally confused by that quote.

Not going to jail is pretty valuable, and that's what governments "give us" in exchange for paying taxes in their fiat currency of choice. It's quite simple.

The thing is, most of the money/credit that has ever been created (derivatives and such) makes the amount the physical money in circulation a joke in comparison. It's as if some bitcoin enthusiast decided to etch a bitcoin wallet onto gold (because that has "value" since jewellery and electronics have been deemed "valuable") and placed a fraction of a bitcoin on it compared to the total that have been mined so far.

It's also interesting that an ever so fluctuant of a social construct is used to justify existence of one thing over another thing. One would think existence alone would suffice, but I guess that is not what man seeks…

The intrinsic value of Bitcoin is the payment network. That may not be a physical good, but it is a powerful idea.

But there are plenty of other forms of money that have vanished, from stone wheels, to shells, to papers. And all of those would be considered hard money.

No, things have intrinsic value for an underlying reason. People don't just want random stuff out of the blue, there's always a reason. Look at it from first principles:

Gold: Rare, soft, lustrous metal that interacts with our genetic programming in some strange, emergent way that creates a strong desire for it most humans' psyche. No rational reason, a reason nonetheless - people covet it, and as a result of that demand plus sparse supply, it has become a status symbol throughout most of human history and across all cultures that had access to it (Western, Mid Eastern, Far Eastern, South American). Also, better conductor than copper for some industrial uses.

Money: Utility + Fiat. It's much easier to store your wealth in coins, bills, or bits in a bank computer than in cows, lumber, corn, or iron. Also much easier to transact exact amounts than in cows, lumber, corn, iron. And, doesn't die, rot, or go bad over time (inflation jokes notwithstanding). That convenience is desired, hence has value, which drives demand for it. There are also some things that only money can buy, or pay for - taxes, oil, etc. Everyone is required to have money for such things, hence demand for money is increased.

Bitcoin: Solved the problem of trust in unregulated, no-central-authority, P2P transactions, eliminating the middle man, enabling people to save money on direct transactions while sufficiently mitigating the fear of fraud that would otherwise sink the whole endeavor (and has in past attempts). That utility = value = demand.

Things that have value and demand, have it for a reason. It's not just b/c people randomly decide it does.

That Greenspan can't see this merely suggests he hasn't spent much time trying to grok bitcoin. Didn't read the source code, didn't install it and play with it to learn how it works, doesn't read any discussion of it at bitcointalk or the btc blogs or anything. He's applying old world thinking to a new world of cryptocurrency, and hasn't adjusted yet.

Not directly anyway.

I have to go somewhere and take cash out which then I can burn, assuming the bank has that kind of money available when I attempt it and assuming I will be allowed to take it out.

Furthermore in many places such activity would be illegal.

Anyone arguing about Bitcoin without admitting that there is demand and basing everything on outdated/flowed theories is bound to be wrong with their predictions.

I think Greenspan's point was that just like with stocks you have to be careful investing in things that have low intrinsic values, ie a company that is valued very high but doesn't make much money. This is why people view gold as a safer investment then dollars, it has a higher intrinsic value.

This makes them valuable, unless you expect the US government to fall shortly. Bitcoin does not have these features. It also does not have the normal features of a commodity (i.e. industrial uses).

This means it has zero intrinsic value - nothing stablizes or enforces its value in anyway.

How come some paper has more value than other paper. Intrinstically they are the same.

“[Congress|WallStreet] has to have intrinsic value. You have to really stretch your imagination to infer what the intrinsic value of [Congress|WallStreet] is. I haven’t been able to do it. Maybe somebody else can.”