Does it bother you that there's no actual value creation at the bottom of it?
I used to work for financial traders, and while I was there I'd justify it to myself in the usual terms: the traditional commodities markets increase liquidity and keep prices low for people doing actually socially valuable things, like growing wheat or turning it into food.
But honestly, even then that could have been accomplished with 1/10th of the effort and smarts that was put into trading, and it was mostly driven by greedy people and/or fools, so when I got out of that industry I was glad to be shut of it. Crypto strikes me as yet worse, in that there's no underlying value, just a circus of greed.
I thought that too, but we're seeing increasing spillover. Molly White points out that the crypto "industry" spent $200m to influence US elections. That we know of.
The crypto industry is extremely untrustworthy, but for me, I don't think "there's no actual value creation at the bottom of it" is more true of e.g. Bitcoin than USD.
Assume USD is somehow attached to food, shelter, and other necessities (for the record, I agree that it is, but only indirectly). Those necessities are the things we need, but we don't need money to create them. We just need energy and physical resources (which, technically, also just require energy). All money is an accounting system built on top of the physical processes that we use to grow, gather, hunt, cultivate, shape, and build matter.
So there's nothing weird, to me, about money being built almost directly on top of energy usage. I think it makes sense.
Most money is built on top of gold or other precious-but-unnecessary materials, which I can't say seems more attached to real value than energy. But even if we assume 1 unit of money is 1 day's worth of food, who's to say that unit of food is actually a necessity for the holder? That food is a specialized form of energy; energy which has been used and which can't be unused. The food itself is an accounting of entropy. But it (mostly) can't be converted into shelter or other necessities, only traded or stored. So, again, I don't see "this money is an accounting of energy used" as outlandish, but reasonable.
Let me conclude, however, by roundly rebuking crypto grifters and the majority of the industry. They're generally not operating on the arguments I've made above anyway.
All currencies are built on trust. The reason the wildcat banking era failed was lack of trust. The reason various national currencies failed was never about resources, but lack of trust in the government behind the currency. The USD has been a very strong currency because it's backed by a stable government with a strong economy and has a stoutly independent central bank, which has built up enormous trust as a custodian of the currency.
I grant that the rhetoric of Bitcoin is about energy usage, but it doesn't work that way in practice. The most obvious use is the rise of Ethereum and its shift to proof of stake rather than proof of work. But there's plenty of other evidence. David Rosenthal has some good evidence there, like:
Well, yeah. I avoided the subject of trust because it wasn't the subject of the comment I was responding to. It's a different component of money.
Money depends entirely on trust which is a form of belief. But it only matters because it accounts for energy. Because there is nothing to trust in if money can't be exchanged for energy. We trust that our paychecks will buy food because our society is usually fairly robust in that respect. We trust that the US government will go to war to prevent the USD from being deprecated, which lets us continue to use USD.
There's no trust that Bitcoin can always be exchanged for any arbitrary good or service - whereas USD can be turned into anything you want. Bitcoin will always account for some energy usage, but so will starting forest fires. The difference is that nobody is ever going to trade me anything of value for starting a forest fire. That's the trust element. But starting a forest fire leaves just as real an impact on the universe as mining crypto, as mining gold, as building bombs to threaten grifters with.
Again, for most of agricultural history, energy was not used to grow food. The key commodity was land. The concept of energy you're referring to didn't come along until the 1800s, a couple thousand years after people invented the coin, and didn't have any real economic meaning until the industrial revolution.
I get where you're trying to go, but I just don't think it makes sense. If you're serious in trying to find some sort of fundamental thing behind money, you might read Buchan's "Frozen Desire".
I'll look into it, but, it's not true that energy was not used to grow food. Farming is labor, it takes human effort; food has to be eaten to grow more food.
You really seem to be having a hard time grasping what I'm saying. I guess I'll take one more swing at it just in case. Energy was not a commodity until the industrial revolution. If you want to say that you have your own personal conception of currency and a physics-ish notion of energy enters into that, go nuts. But as far as the actual history or common theoretical notions of money goes, it doesn't make much sense, because the concept of energy didn't exist and wasn't material to the creation of money.
I used to work for financial traders, and while I was there I'd justify it to myself in the usual terms: the traditional commodities markets increase liquidity and keep prices low for people doing actually socially valuable things, like growing wheat or turning it into food.
But honestly, even then that could have been accomplished with 1/10th of the effort and smarts that was put into trading, and it was mostly driven by greedy people and/or fools, so when I got out of that industry I was glad to be shut of it. Crypto strikes me as yet worse, in that there's no underlying value, just a circus of greed.