All cash works this way. It’s only worth what you can get for it.
Not quite. Official money (e.g., dollars in the US or Euros in Germany) is good to discharge debts to the government. IOW, the German government guarantees that I can always use a €100 note to pay €100 worth of taxes. If we stipulate that Germany (a country that on the whole has been reasonably well-run for the better part of a century now) isn’t going away anytime soon, that is better than €100 worth of Bitcoin, which may or may not actually be “worth” €100 depending on whether I manage to find a bigger sucker than myself who is willing to give me €100 for it.
That just reinforces what I said…" It’s only worth what you can get for it."
A government is still just a single entity saying your cash is worth “this” much to pay taxes. No different than a baker saying your cash will always buy “this” much bread. It’s true until it isn’t. The baker may change his prices. The government just changes the taxes due. No difference.
Yeah, but it doesn’t reinforce the bit about it only being bigger suckers who take it. The German government is not being a sucker at all to accept taxes in Euros. It is in fact rather to its benefit.
But it’s reductive to just define what a fiat currency is and call them all equal. It needs the context @Anselm gave. Having a government of a large country back your currency means more than a bunch of speculators who aren’t necessarily interested in using it to buy things.
In practice, Bitcoin has been an awful currency for buying stuff and the only thing it’s been good for is gambling that the value will go up.
USD has a track record and interest that the value very likely won’t change significantly in the near future. Bitcoin does not.
Yes, there are (currently) stable government currencies. There are and have always been plenty of unstable ones as well.
Bitcoin is currently an unstable currency certainly but it is not so unlike those others. Government currencies rise and fall due to complex links between economies, including speculation on imports/exports, commodities, and direct government manipulation to suit political needs. Bitcoin’s distributed nature makes it almost impossible to directly control, but it also (currently) lacks a large enough real-world anchor to stabilize it. Greater usage could have a stabilizing influence on it. I’m not going to say it will stabilize. Who knows what’ll happen. Then again who knows how the stock market, or value of precious metals will change and what those effects would have on world currencies either. It’s all a crap-shoot. Certainly the world got a view this past year of how disconnected the stock market is from the real world.
The “distributed nature of Bitcoin” is mostly a myth these days, even though it’s a horn that Bitcoin proponents like to toot. Bitcoin mining power is now virtually centralised (in the sense that a very few entities together control more than 50% of it).
The value of Bitcoin is in fact being pushed all over the place by speculators, using techniques that would be quite illegal on the stock exchange – generally because people used them in the past until regulators put a stop to that. Securities regulators are now increasingly looking at crypto exchanges and it is likely that there, the days of the wild West are numbered, too.
Bitcoin isn’t really a “currency” because virtually nobody uses it to buy or sell stuff. This is for good reasons: its volatility makes it unreliable, it doesn’t support anywhere near the transaction volume that would be needed for widespread use, and transactions are too slow and expensive for everyday usage. Most of these properties are built into the system and difficult to fix (notwithstanding various attempts to the contrary), so instead of a currency, Bitcoin became a highly speculative security.
There’s also the fact that many if not most people do prefer the regulated banking system with its customer protections and safety nets. For example, if somebody misuses your credit card number, you’re not liable, but if someone gains access to your Bitcoin wallet your money is irrevocably gone. If your bank goes bust there is a statutory protection scheme that will safeguard at least a sizeable part of your deposits; if your cryptocurrency exchange goes bust (or is hacked, or the owner misplaces their private keys, or …) then that is just too bad.
If the USD crashes the economy I’m living in crashes, too.
Isn’t the dream of crypto that countries accept it–perhaps becoming the new petrodollar or reserve currency? If so, everything you describe will happen in crypto instead of another currency. Governments would have some limit to manipulating currencies (which can be argued is good or bad). They’d just store a large chunk, like gold in Ft Knox, and store and release it to manipulate the supply. That kind of thing is already happening except the goal is manipulation instead of stability.
I haven’t seen Bitcoin moving in that direction over the past 5 years. Exchanges have always been sketchy, storing it sucks, trading it sucks, and spending it sucks. I think a lot of the reasons are fundamental, not institutional or lack of tools around it. A few businesses started accepting it 5+ years ago and many have since backed out. I saw an article from 2019 where the state of Ohio planned to accept Bitcoin for income tax payment, but the domain referenced has been abandoned. What has been growing is the speculation and negative externalities of mining. I think any extra attention to Bitcoin reinforces these negative things, making any practical use as a currency harder.
Many of the things you say are accurate. There are some mischaracterizations though:
Whether or not most people prefer regulated banking systems has little to do with defining what a currency is, or is not. Likewise with credit card usage and/or protections. If someone gains access to your physical cash, it is gone in exactly the same way as someone stealing a bitcoin wallet. A cryptocurrency exchange going bust has no effect on crypto holder if they aren’t being stupid and handing keys over to the exchange. Of course the vast majority of people don’t understand how crypto currencies work and unsafe usage patterns abound. That is a real problem, and not necessarily a solvable one, as getting the majority of people to do anything correctly when it comes to technology sometimes seems impossible.
Perhaps our only hope is if quantum computing becomes real enough that someone can use it to break Bitcoin. (Probably a lot of other stuff that’s actually important as well.)
Bitcoin today would be vulnerabile to quantum computers if they existed with sufficient qubits. This can be mitigated with quantum resistant algorithms that are known and could be employed if needed. However, even with improved algorithms, crypto-holders would be vulnerable if they left their coins in very old addresses (from the early days of Bitcoin), or if they re-used bitcoin addresses (which should never be done, but people don’t listen).
the future is unknowable, how can facts even exist 
Wouldn’t that depend on some public point where it was obvious that Bitcoin had been broken, and universal acceptance of a fork to quantum resistant algorithms?
Someone could make quite a few billions in the cracks of that.
‘All cash’ doesn’t perpetually suck up enough energy to power a small 3rd world country, though.
Anyone’s personal investment and monetary motivations aside; it’s unsustainable and actively harmful to the environment which we inhabit.
I think we’re now up to the equivalent of Argentina. Not exactly a “small country”. If Bitcoin was a country, it would be among the top 30 energy users in the world.
It would require the bitcoin core team updating the algorithms and other clients following suit. This could be done anytime they feel quantum computers become a practical threat. A fork in the blockchain would occur if a significant proportion refused to change…of course those people would be at risk to lose their coins, so the motivation would be fairly high I would think.
Of course, secrecy surrounding quantum computing improvements could mean the change comes too late…but then we’re all screwed everywhere else too.
Its current form is unsustainable and I fully agree with you. It can theoretically be fixed though. Will it be? Your guess is as good as mine.
I dislike all cryptocurrency, both Proof Of Work and Proof Of Stake. And NFTs can take a long walk off of a short pier as well. There are so many better things that the computational power for cryptocurrency could be used for. For example: People who love gaming on PC could finally get access to graphics cards once again. It could be used for Folding At Home. It could be used for any number of things that aren’t essentially mining for some fake shit that’s just used by the rich to make themselves richer.
Regulate cryptocurrency and blockchain bullshit off the face of the earth. I don’t care if the tech bros wail and gnash their teeth claiming that blockchain can still be useful for something that we just haven’t found yet; they had their time to figure something out, but all they did was suck up money from venture capital asshats by putting “on the blockchain” at the end of their pitches.
