Bitcoin Is an Escapist Safe Haven

How can the Zcash company deanonymize users? I haven't studied their system, but that sounds completely against the design goals. (Not to mention to mention the personality of those Zcash core developers I've worked with in the past at leastauthority.com. But security engineering is about not having to rely on their probity.) I don't understand what you're saying about liability and authorities either.

In online discussions of cryptocurrencies it's clear that many people's financial positions bias their conversational positions. I'm long on all four of these currencies.

Bitcoin is really not an asset by any stretch.

"They don't have value because someone just came along and claimed they do" - that's exactly why they have value - because a bunch of people arbitrarily believe they have value.

There are zero currencies which survive on this basis.

All major currencies exist because they are the medium of exchange in some economy - and/or they are backed by something tangible: in the US it's government debt, in Europe by other assets.

In China it's a little more fantastic, but the currency has about as much trust as one can have in their government - meaning, it's sketchy, but it's not going to 0 overnight.

Bitcoin could be worth 0 tommorow if people lose interest, vendors stop caring - which could happen - after all, what is the underlying impetus to keep pricing momentum? Is there demand on Bitcoin for people to pay taxes? Nope. To buy other products and services? Nope. As a 'store of value'. Nope.

Really - the only value might be to 'hide from paying taxes' or to 'hide from authorities' - which admittedly has value to some people, but I'm not sure if it's enough to keep it afloat.

"What asset backs dollars?"

USD are mostly backed by T-Bills, i.e. government bonds, i.e. the faith you have in the US government (i.e. people of the US) to pay you back. Oddly - they are priced in dollars creating a really odd circular dependency. If the US government paid off all of it's debt today, most currency would be sucked out of the market! :)

Since 2008 - some of USD is backed by crappy real-estate.

Euros are backed by 'strong assets' for the most part: real estate, high grade bonds (I think) etc..

The reason the Euro is a very strong currency is because none of the European countries trust each other to not print money willy nilly. So if a bank wants Euros, they have to put up good collateral. This is how Germans know their Euros are not going to devalued by Italians at the printing press.

RMB is backed by nothing really, just faith in the Chinese government, which is why people don't want to hold them. If China wants to become a real player they have to have transparency, which means they cant print money willy nilly, which means they lose some crazy monetary control they have today. But they think they need that super money power to 'centrally manage' the economy. You can't have both. They either need to have a currency with more integrity - which other nations will 'buy into' - or - they can keep their currency kind of a fiction, but which allows them to turn their economy on a dime if they need to. (Question is, will they turn it in the right direction?).

If Bitcoin were used broadly in some areas - say across a bunch of S. American countries that don't trust their governments, and it was widely used by the citizens, then it might actually have more integrity than say the RMB. Bitcoins cannot be arbitrarily devalued, whereas RMBs are quite often.

The big risk with Bitcoin is that people stop needing/wanting them and they become worthless. Remember that humans are susceptible to up and down 'manias'. All it takes is one rumour and selloff to wipe out Bitcoin for good. If there is a really bad report about US economy, the dollar might go down - but there is 'underlying support' for the USD - people still need them to do commerce, pay taxes. With bitcoins ... a single downturn would wipe them all out for good. They'd have no reason to come back.

That's interesting. A quick search didn't turn up any math in the first few hits, but https://mises.org/library/cryptocurrencies-and-wider-regress... discusses this application to bitcoin somewhat skeptically.

Without more detail, https://wiki.mises.org/wiki/Regression_theorem seems to be saying that non-money uses of a currency set a floor on its value. If there are no such uses, the floor is zero. If there used to be such use-value, the past floor can bootstrap an equilibrium with a nonzero value in the present. Is there more to this theorem?

Trading volume is not the important metric here. Trading volume is free to produce, order book depth/liquidity is not. The real value of an exchange is measured by how many it has of 1) dollars bidding on bitcoins and 2) bitcoins offered for dollars.

This provides a cushion effect on the price of bitcoin, since large orders won't eat through as much of the order book and bring the price up/down.

Trading volume is just people (allegedly) making trades. Liquidity can be easily tested by executing large orders, and seeing whether they will allow you to withdraw the proceeds.