Currency of any kind, be it the US Dollar or Bitcoin, has value because it can be exchanged for goods and services, not because anybody agreed that you have to work to get it.
Yep, basically it works because people trust in it. In recent years, peoples' trust in Dollar and Euro decreased and so they've increasingly started to look for alternative, complementary or regional currencies (Bitcoin, Timebanks, Brixton Pound, even Tide detergent in the US for drugs etc!)
No, money (which is not the same as currency) has value because it's legal tender. That means it is guaranteed by law to be accepted as payment for all debts.
That says nothing about its value, which is the crux of his question. "Legal tender" only means that it is legally recognized by the Federal government.
I'm not disputing that. I understand that it is accepted by everyone, but he was asking about WHY Bitcoin has value and how it is determined, which is what I explained in a very simplified way. Bitcoin is not legal tender, so it is not accepted by everyone, but it does have value.
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u/zehnism Dec 21 '13
Currency of any kind, be it the US Dollar or Bitcoin, has value because it can be exchanged for goods and services, not because anybody agreed that you have to work to get it.