Akas answer -- "Where does the money come from?"
(in reply to the #bitcoinpizza conversation)
once upon a time,
there opened a bank. They set up a slipshod shed in the wood and gave out chips made out of cardboard and promised that anyone depositing their own, widely accepted, currency - little, shiny rocks - would get more of those cardboard coins over time. And because the value of the cardboard chips would go up, the investors would get more shiny rocks back later too. And true to their word, the new bank had cut a lot of coins out of cardboard already!
Word of these miraculous deeds spread quickly, and the people came to claim their share - two coins for free! - and settled to see whether this new village, nay, town already, would thrive and bloom as everyone around them seemed to think. Some even brought their own shiny-rock-money and changed it into cardboard coins!
and they went to work:
everyone yelled and gesticulated and danced and jumped up and down as loud as possible to receive a little attention from those who had many cardboard coins already. Who, in turn, demanded they get naked, stand on their head, selfie with a bread on their heads or do push-ups.
A pretty maiden stepped forward, for instance, grimacing as if from a sudden seizure - and started to paint her face. To the great applause of the crowd, she received a few rocks, which she bartered into another currency (beautiful ropes with complicated knots) so she could invest in more face paint. Another one, who looked like someone who has been a trucker all his life, announced he was a trucker all his life and also received a few rocks so he could keep truckin' (after changing them into a currency consisting of pieces of paper printed with fine ornaments). Another woman soon returned from a beautiful travel she could afford by changing shiny rock currency (earned telling everyone how awesome cardboard coins are) into widely accepted painted sea shells.
So even more people saw that the cardboard money is legit, joined and started using cardboard coins as curreny, either by working for it (like the man who painted his face also) or bringing their shiny rocks (or watching tutorials on how to exchange their widely accepted carved sticks into shiny rocks first).
When the original investors saw that the scheme worked and indeed the value of the cardboard chips went through the roof, they sold all their seashells, knots, paper and carved sticks and brought more shiny rocks to buy more cardboard coin.
there was a good reason to do so,
because every now and then, they got another coin for each cardboard coin they already had, and when that had happened often enough, it became invalid and they had to pay 10:1 for the new edition. Although nobody really understood the math, there was wide agreement it was a good thing that the cardboard coins had such great value and would rise in value, and so they continued to strip naked, stand on their heads, drive trucks and paint their faces, knowing well that soon, more would come and join the trade with cardboard coins and give up their deprecated monetary systems and all would be well.
somehow, they knew, this party would never end,
and the value of the cardboard coins continue to rise forever, and people keep joining, and everyone have enough cardboard coins to buy whatever he wishes simply by dancing his name.
Soon, they forgot about the shiny rocks in the vaults of the new bank, and they bought their bread and paid their rent and received their wages in paperboard coins. Where does the money come from? The bank issues it.
the question is hence:
where does it get its value from? By being accepted as payment, it is "worth" something else; it is a contract that says you get a part of the slice. It is an almost childishly magical game of trust and belief. Each cardboard coin is the claim on a promise made by the bank: prove yourself worthy, and you'll get more of this good stuff, eventually we'll bring peace and harmony to the world because everybody has enough of the good stuff.
And they steemed happily ever after...