Wait a minute, we value all this cryptocurrency using normal money but isn't it supposed to replace the normal money ? Is this like how paper money was backed by gold ? But haven't we already gone past the point of crypto being backed by paper money ? I mean everybody talks about how when you look at crypto it isn't really worth anything but in those terms is my paper money reeeally worth anything ? It's worth changes all the time, one push of a button and all of sudden we're all trading bottle caps. I'm confused.
It is supposed to replace "normal" money but things haven't gone as planned. It's not like how paper money was backed by gold; the best analogy for the value of cryptocurrency is the infamous "bearer bond" beloved by screenwriters the world over. It's a thing that is worth what the person you hand it to thinks it's worth; a bearer bond that says you have one share out of a thousand in company XYZ is worth 1/1000th of XYZ. It is confusing. Your average business major banker/investor is completely and utterly flummoxed by cryptocurrency and will use any excuse they can to be dismissive of it so they don't have to pay attention.
Are cryptocurrencies really supposed to replace "normal" money? I mean, yes, that's the vision we're often offered, but how likely is that scenario, actually? I think it's likely that DLTs (distributed ledger technology, i.e. blockchains and similar technologies) will be used as e.g. a sort of "transport layer" for money (like what Ripple is aiming to do), but I really don't think your average Jane or Joe is going to have much to do with cryptocurrencies. I made the analogy to Linux in another comment: Linux is one of the underpinnings of the information age, but 90% of people never really run into it or use it "on purpose" (but e.g. their smart fridge might have a version Linux.)
The Federal Reserve has a blockchain working group. Most of the big names behind the Ethereum Enterprise Alliance are also backing Hyperledger. Your Linux analogy is apt: 90% of people never really use Linux "on purpose" but Unix of some flavor or another is iOS, Android, OS X and most of the server software out there. You're effectively arguing that people don't need a CS degree to utilize software and I would agree with that entirely. There's no reason Paypal or Venmo or Western Union need to use ACH. They could (and will) use a blockchain of some sort. It's pretty clear that Bitcoin won't be that blockchain but whatever blockchain it is, it has to be prevalent and agile enough that companies sign onto it.
And I think this is indicative of the future. Hyperledger especially is an interesting concept, as it's more of a toolkit for building decentralized systems with a strong emphasis on trust — specifically removing some of the need to trust your counterparty, and replacing it with trust in (or "generated" by, however you want to put it) the infrastructure itself. Most current DLT-based systems don't seem viable as tools for the payment services field, due to a variety of reasons — scalability, features, ease of use, and so on. Out of the current batch, I think Stellar / Ripple or an approach like them has a good chance of being a major player in the future. They have a limited and trusted set of nodes that validate transactions and create new ledgers/blocks (basically a Proof of Authority scheme where you can decide which validators you trust, but you can use a default trusted set), meaning the entire network doesn't have to participate in the consensus process. They also specifically target payment service providers and payment gateways by providing features like payment paths and freezing accounts. They also have an on-chain governance mechanism, which a lot of platforms lack. Not to mention that they're already being used by a number of different banks. It'll be interesting to see where we end up in 5 or 10 years.The Federal Reserve has a blockchain working group. Most of the big names behind the Ethereum Enterprise Alliance are also backing Hyperledger.
There's no reason Paypal or Venmo or Western Union need to use ACH. They could (and will) use a blockchain of some sort. It's pretty clear that Bitcoin won't be that blockchain but whatever blockchain it is, it has to be prevalent and agile enough that companies sign onto it.
Don't get lost in the bond analogy. In the case of a bearer bond, you buy it at one price and cash it in at another. It's a loan. in the case of the Louisiana bearer bond illustrated, it is redeemable for $5 cash on January 1, 1886. It probably cost $1 cash on January 1, 1866. At the time of its printing, that was a $70 bill. Cryptocurrency is "redeem for whatever someone will give it to you for. Say, for example, Louisiana ceased to exist betwen 1866 and 1886. That bond would be worth nothing. Say Louisiana seceded from the United States because they'd invented UFOs or some shit. That bond would be worth a shit-ton because Louisiana currency would be worth more than US currency. Right now, crypto is volatile because no one is sure if it's going to become confederate dollars or UFO currency.