What does cryptocurrency mean for governments?
Government's tax citizens and businesses in their currency. Earnings (even earnings in cryptocurrencies) are taxable income.
"Perhaps just an ambiguity rather than a contradiction - You said, ""at the end of the day, fiat currencies are based on trust and accountability of the government"".  You then later said ""I'm not conflating trust of the issuer with trust of the ""bank"". I don't trust either.""   The problem there is that, on the Bitcoin side of the fence, there's no one there *to* trust.  **You** can be the bank.  You can also be the issuer, with enough computing horsepower.  Do you, then, not trust *yourself*?   Or, did I take that entirely wrong and you meant that directed toward the fiat side of things, and don't trust that Trump won't get us into a currency war with China (or his successor finally authorize that trillion dollar platinum coin to circumvent the debt ceiling - I don't mean that to be at all partisan)?" Thank you. Added to my list. This is very very helpful. I knew about the blockchain and the currency. Unfortunately, I'm not a pedant about differentiating between them with capitalising the first letter. I do not, however, understand Ethereum very well at all. So will read up. "Edit: I discovered Bitcoin a few months after I posted this answer. I would strongly recommend anyone interested in this question to review it, particularly the myths page that dispels much of the FUD. Original answer: Although it is not online, as a concept the Totnes Pound may be of interest to you. I live quite close to this village (in the UK) and the system it promotes does work well.  According to the   Transition Town Totnes website this   means that it is ""a community in a   process of imagining and creating a   future that addresses the twin   challenges of diminishing oil and gas   supplies and climate change , and   creates the kind of community that we   would all want to be part of."" If you are looking for a starting place to introduce a new type of currency, perhaps in response to over-dependence on oil and global trade, then reading about the Transition Towns initiative could provide you with the answers you're looking for." Dream on. You are parroting government apologists. The only real complaint against gold is that it forces governments to limit their expenditures to what they can collect in revenue. All the critics of gold are in favor of big government and deficit spending.  Gold is money. It is the only real money. And within five years there will be a de facto gold standard in international commerce. It's quite the contrary. If there are mass failures of banks, then the money supply will collapse and there will be vicious deflation, increasing the value of money held as cash. It's only if governments print money to bail the banks out that there's a (small) risk of hyperinflation and the effective collapse of the currency. "Lol you finance guys are so hilarious. You don't understand cryptocurrencies or ""decentralized ledger technology"" at all. The ONLY way it works is if people have some **incentive** to actually secure and verify the Merkle Chain.... If I'm not getting something out of it **Why the fuck would I run a program to do that? Just to watch the computer get hot?** The block reward (aka the amount of bitcoins) I get are the underpinning incentive to do so! Get it? No bitcoins = nobody wants to secure your ledger! Therefore these ""permissioned ledgers"" are not going to be as secure or as trustworthy. There will likely be some cool shit that comes out of permissioned ledgers and intrablockchain stuff, but you are completely missing the ball if you think the actual bitcoins are dumb...... I know its complicated, it takes a while to **actually** understand, but it's partially engineering and you actually have to understand it all before you get to call it stupidity. The ""non-speculative value"" or utility of bitcoin as a currency seems to work just fine for online drug markets and has done quite a bit of business. It's got fantastic utility for buying retail shit online without having to give up personal information as well. It's got great utility for remittance. It's got divisibility. It is indeed a bonafide currency....    **TLDR; So how do you think that the recordkeeping gets done? Do you think people will do this for free? What function do you think the ""cryptocurrencies"" themselves currently serve? How do you think permissioned ledgers will be secure (i.e. tamperproof) if not done by public record? Don't you think that if they simply wanted to prevent tamperproof records they only need to use an airgapped computer and pen and paper?***" I legitimately can't tell if this post is satirical.   Ethereum is a very unique technology because it allows for Turing complete computation on its crypto network. Basically allowing for much higher security for data transmission and processing on the web. The reason that the currency is valuable is that in order to encrypt this information and transmit it, you have to pay the network in ethereum. It's had the support of Accenture and is in use by the Luxembourg stock exchange.  I think they might know a bit more than the unnamed author of this article who doesn't think being able to inject code into a block chain is unique. Currently many countries (and non-government bodies) hold dollars to facilitate trade. If the dollar is no longer used in their trade, then they no longer have a reason to hold those dollars. If every other country starts to dump their dollar holdings into the world currency markets, the number of dollars floating around in those market would shoot up. The massive supply increase of dollars (we're assuming these other countries are holding massive amounts of dollars) would lead to a large drop in value of the dollar - lots more dollars chasing the same amount of goods. Every purchase will become much more expensive for anyone still buying with dollars, including the American government trying to buy expensive military equipment - unless the US government also switches to using something else to purchase military supplies. Cryptocurrency is undoubtedly at the peak of Gartner hype cycle, but it very well could revolutionise the way we use currency for our daily needs in the future.  Stay with me on this… At present, cryptocurrency appears no more than a speculation that is sugar-coated by individuals who have vested interest in it. However, if we overlook this excitement, the actual use of cryptocurrency is mind-boggling.   Suppose you had a mid-life crisis and went on a journey to the middle of the Earth to find where humans supposedly originated from, and you met and connected with a local coffee farmer named Razaq in a very remote part of Ethiopia. He invited you for an evening coffee and you obliged, and six months later you yearned for this same coffee whilst you were having another wave of existential thoughts in your penthouse that overlooked the urban jungle.  Suddenly, you remembered that Razaq had a cheap but functional smartphone with a Bitcoin wallet, and afterwards you communicated with him on WhatsApp and decided to enter in a transaction with him. Razaq is delighted with this technology, but mainly because he does not have to travel 100 km to-and-fro the nearest city where his bank is located, and he is also happy that he can send a sack of coffee beans to his friend who lives in a faraway land, and all he needs to do is hand over the coffee sack to delivery truck en route the shipping port. Ultimately, saving Razaq lot of his precious time and resources.  Now use this one example and multiply it by hundreds of millions of people around the world who have a very remote access to a ‘bank’, but have an access to a basic smartphone – imagine the possibility of connecting people like Razaq to the ‘internet’ world and having a seamless cross-border trade finance transaction using currency that is not controlled by any government.  Like many others, I am keen to see the developments of cryptocurrency in the coming years, but for now I remain sceptical. That said, I am more interest in the countless opportunities that will be unlocked by the very technology that is fundamental to all the cryptocurrencies; the Blockchain.  Crytocurrency is one branch of Blockchain technology which has proved useful. There are million other possibilities which I'm sure will benefit many industries in the coming decade, and I, for one, am very excited. The government is this countries largest monopoly and rent seeker, whose interests run divergent to our own, and which must be managed closely by the governed lest it becomes an arbitrary regime beholdent to no other authority but its own.  If you've watched congress at all, you know how quickly these people can write away the rights and privileges of their constituents.  http://work.chron.com/average-salary-government-employees-7863.html Legal tender laws and capital gains tax mean that other commodities are at an unfair legal disadvantage to local fiat currency.  In other words, governments are using taxes and regulations to manipulate the market and create artificial demand for the currency their central bank has a monopoly on the creation of. Does it matter? IF a hostile State wanted to use this data it will certainly be available to buy. Imagine the chaos that a coordinated attack could cause if this data started to be used specifically to cause disruption.  The US government should be reacting AS IF this was a State sponsored attack. Legislation should be *flying* through Congress to mitigate this risk. They can only do that because Coinbase interfaces with fiat currency. As more transactions and holding become denominated in crypto, it will be more difficult for them to tax (if you are using an unlinkable crypto). If I pay someone with Monero or most coins, then the government won't know who was involved in the transaction. Fist money does not have legal tender.  And technically there are thousands of people willing to fight for bitcoin, who can be seen as an army so in that logic bitcoin has some intrinsic value.  But both don't have intrinsic value. Most sources on the internet I can find agree with that. Wikipedia, investopedia and many others.  Not that money needs intrinsic value. If the market value is 1000 times above the intrinsic value then the intrinsic value is not even relevant. But 1000 * 0 = 0 and the intrinsic value of the dollar itself (not coins) will always be 0. Same for the EUR and then YUAN. Well, if the bond notes are the only currency around, then the electric company will have to choose from at least one of the money supplies to accept as payment; bonds will be the cash.  Whichever firm they choose will just see their money demand go up.    Second, It will most likely be implied that those people choosing to go into a certain money supply will want to look for a produced good or service in the economy from that firm before taking on it's notes.  If the supply has too much inflation for everyone, than they can all move to another one that ensures their capital value.    The idea of these systems is also to facilitate productive decision making, which is one of the things are education system should do more of these days.  This will be more possible when Government is more limited to and more focused on the role of researcher and developer.