> With Bitcoin you only have trust in value of Bitcoin.
More specifically, you have trust in the continued trust that others have in it. It's a self-fulfilling prophesy: as long as people continue to trust it, it continues to be valuable, but as soon as people start to doubt that others will continue to trust it, it's instantly worthless. There's no real value backing it up. This makes it very vulnerable to hype and hysteria.
The USD, in effect, does not. It's a reason I'm somewhat bearish on it.
In the 70s we made a number of agreements with a variety of Mideastern nations. We gave them what seemed like the world and asked that simply require payments of oil to be transacted on the dollar, and that they invest their excess revenues into US securities. In fewer words, the petro dollar.
And those agreements, for the most part, persist to this very day. A US dollar guarantees you access to oil. And so long as oil is the most in demand commodity in the world, the US dollar will remain the most in demand currency in the world - guaranteeing access to the goods and services of any country.
This is why the US dollar is the world reserve currency, or the money most countries keep under their bed in case of a rainy day. However, if this changes (renewables, Saudi Arabia deciding to switch allegiance to Russia/China, etc) what happens? We've a lot of debt that's only increasing and it's unclear to me how tall the USD would stand without its crutch.
Every currency that's backed by an actual government. Whatever else happens, you can always pay your taxes with it. It is the currency of the economy the currency is native to. As long as that economy is running, you can use that currency to purchase goods in that economy, and the currency has value. People doubting whether enough people will start using it in the future is irrelevant, because enough people are already using it in the present. A country will have to work really hard to sabotage its currency, and that's extremely rare (though it has happened in Zimbabwe and Weimar Germany).
Bitcoin, by comparison, isn't used for everyday transactions by a lot of people (though there are some). There's no real economy it's native to (unless you count Silk-Road-style markets), and there's no guarantee that you'll be able to use it there in the future.
So you have to have trust that others will have continued trust in the currencies or values that your example currency is pegged to.
Ultimately it seems that any material you treat as a store of value, rather than as a commodity or material that is valuable to you for its own properties, includes this trust that others will value it. If others do not value it, it is not a store of value, its usefulness to you is reduced to its own intrinsic properties rather than the value others place on it.
More specifically, you have trust in the continued trust that others have in it. It's a self-fulfilling prophesy: as long as people continue to trust it, it continues to be valuable, but as soon as people start to doubt that others will continue to trust it, it's instantly worthless. There's no real value backing it up. This makes it very vulnerable to hype and hysteria.