Isn't this true for every currency that isn't literally a physically scarce and useful resource (gold, grain, uranium, gold-pressed latinum?)

http://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe

But that's true for almost any modern currency. If everyone believed that the US dollar is worthless it would become near worthless. There will always be some demand because US citizens have to pay their taxes in US dollars but that wouldn't be enough to keep the dollar at anywhere near it's current value.

The economic power and military are already calculated into that. It makes it very unlikely that people will think the US dollar will become worthless. But he wasn't talking about whether that belief is likely, but simply stating the true fact that IF everyone starts believing that, then demand crashes and supply skyrockets accordingly and it'll become worthless.

In other words, no different from any currency or any good on the market for that matter, including bitcoin.

For the record, people said the same thing about paper currency. And again when paper currency stopped being backed by gold.

And this periodically actually happens to real government-backed currencies in the world, especially during times of hyperinflation (e.g. Germany in the 1920s, Zimbabwe in 2008, etc)

Right, but that happens sometimes, and never with proper governance. (but what is "proper governance" you ask? It's a tautology that says that governments that never allow hyperinflation never suffer from hyperinflation)

ALL asset bubbles collapse. The magnitude of the collapse is determined by the non-monetary value of the asset. (e.g. tulip bulbs collapse harder than real-estate). Because the non-monetary value of Bitcoin is negative (you need to burn electricity to use Bitcoin), this implies the eventual collapse of Bitcoin will be absolute.

Dollars, Euros, Yen, aren't backed by anything other than the belief that it is money.

However, I do acknowledge that states invest a lot of resources into indoctrination, so the belief in fiat currency might be stronger than the belief in cryptocurrency.

However, I do acknowledge that states invest a lot of resources into indoctrination, so the belief in fiat currency might be stronger than the belief in cryptocurrency.

I'm not sure how you think this will help anyone take you seriously?

We aren't on the gold standard anymore, that's how all currency works now.

All it takes for Bitcoin to be worth something is the belief that Bitcoin is worth something.

We are arguing two sides of the same coin. [0]

The difference is how we define "worthless" and "worth something." Step back into reality for a second. Realize that most economic transactions take place between two entities. Generally two entities exist within the same social structure or community groups. e.g. I transact with my good friends (see your venmo newsfeed for example), accountants transact with local clients, etc. Payment networks and social networks are inextricably linked. Realizing this, "worthless" and "worth something" become only relative terms. Bitcoin does not need to be "worth something" to every person in existence in order to be viable. It simply needs to be "worth something" within confined payment networks, which tend to correlate with social networks. As long as a single comminity agrees to transact with Bitcoin, it becomes acceptable as a currency, within that community. Similarly, Bitcoin could be worthless to an entire community, and they could avoid it altogether.

The viability of the Bitcoin is moot, within a network of a community that sees it as worthless. But outside that community, other communities might see it as worth something. As long as transactions occur within clusters, it therefore holds true that Bitcoin is worth something, somewhere.

Do you see the difference in our arguments? We are both saying the viability of Bitcoin depends on either people seeing it as viable, or nobody seeing it as viable. But my argument is that as long as one community sees Bitcoin as viable, they can transact in it. Your argument is that Bitcoin is worthless to everybody, if everybody belives Bitcoin is worthless. This is true by default -- nobody was using Bitcoin before it existed. However you must consider that as long as some communities are using Bitcoin, it exists by definition, and therefore is also valuable, by definition.

> Therefore, if you hold any Bitcoin, you are incentivized to be a Bitcoin evangelist.

If you have a [myspace/friendster/facebook], you are incentivized to tell your friends to get a [myspace/friendster/facebook]. Community based programs, the ones that depend on "network effects," are obviously useless if you are the only one using them. I fail to see how this is a weak point for Bitcoin. It seems like a strength. As people buy Bitcoin, they invest in the ecosystem and join the community. As the community grows, it becomes the single community that supports Bitcoin, and the network is viable because of its momentum alone.

> It's just as decentralized as tulip bulbs (http://en.wikipedia.org/wiki/Tulip_mania)

This is a fair economic comparison, but completely ignores the fact that Bitcoin is a decentralized, digital currency, and Tulips are flowers. One is specifically designed for transacting in the age of the internet. The other grows in the ground and people went crazy over it 350 years ago. Therefore we must take the tulip mania comparison to Bitcoin only within the context of Bitoin's economic repercussions. The lesson is that humans are irrational creatures living in a world of scarcity. As a species we need methods of transacting with each other, and we use whatever happens to be en vogue at the time. Ultimately all currencies will be flawed, so long as they are created and used by humans, directly or indirectly.

[0] That seriously was not a pun. I didn't even notice it for a couple minutes.