One key difference between a government issued currency and a distributed cryptocurrency is that the former is based on a promise and the latter is based on trust.
A government issued currency is based on the promise [1] given by a state that this money must be accepted by everybody else. Everyone can enforce his rights by law.
A distributed cryptocurrency is based on trust given mutually by the users. The trust relays on the circumstance that no significant number of participants will abandon their precious investment may it be acquired through mining or purchasing of coins.
Exactly. If a substantial amount of people stop trusting the "promissory state money", then the inflation will be uncontrollable (or not controllable by the state) and the state won't be able to give anything in return of their promissory notes.
The trust system only works between participants. Trust can't be enforced.
The promise works with a third party. When two parties to lose confidence/trust into each other they can relay on a thrid party (the gov.) to enforce a prommise between two participants.
A government issued currency is based on the promise [1] given by a state that this money must be accepted by everybody else. Everyone can enforce his rights by law.
A distributed cryptocurrency is based on trust given mutually by the users. The trust relays on the circumstance that no significant number of participants will abandon their precious investment may it be acquired through mining or purchasing of coins.
[1] https://en.wikipedia.org/wiki/Promissory_note