The point is that a $101 certificate for the smoke from $100 in burnt five dollar bills isn't worth $101. Or $100. Or $5. Or $0.01.
You can declare by fiat that as a proof of effort, the smoke certificate is worth something. You can try to convince people that certificates representing smoke function as a medium of exchange. But as a medium of exchange, it must reside on a continuum with all the other media of exchange, ranked by the certitude that it will in the long run be convertible to other media. And in that ranking, "smoke from burnt dollar bills" fares poorly.
I still do not understand. Bitcoin's value is not based on making smokes.
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The point is that a $101 certificate for the smoke from $100 in burnt five dollar bills isn't worth $101. Or $100. Or $5. Or $0.01. You can declare by fiat that as a proof of effort, the smoke certificate is worth something. You can try to convince people that certificates representing smoke function as a medium of exchange. But as a medium of exchange, it must reside on a continuum with all the other media of exchange, ranked by the certitude that it will in the long run be convertible to other media. And in that ranking, "smoke from burnt dollar bills" fares poorly.
I still do not understand. Bitcoin's value is not based on making smokes.