American money, fei, and bitcoin are all forms of currency that rely on the people who use them to realize their value. If the value is not realized, then there is no value associated with the currency.
The fei was a lime stone donut rock that was found outside the island of Yap. Since the people of Yap had to cross the sea to recover the limestone, the limestone became valuable. These limestones were then called fei and traded for goods and services on the island of Yap. This transfer of currency was done without physically moving the limestone from buyer to seller, becoming a system of credit. The bitcoin essentially does the same thing. Users receive and trade bitcoins for whatever they may need, but users never physically hold their bitcoins. The users just build a credit of bitcoins, just like the people of Yap built credit with fei.
Bitcoin is strikingly similar to paypal. They’re both online currency transfer systems. As long as one person has another’s account info, the first person can send the second X amount of money. The main differences are that paypal uses a number of globally recognized currencies, and bitcoin uses their own currency. This allows bitcoins’ prices to fluctuate constantly without many people knowing how or why. Bitcoin also doesn’t record transactions meaning a person can exchange USD for bitcoins, send them to another person’s account, and be re-exchanged for USD (or other currencys) in a totally anonymous process.
When a person is paid “under the table” for a service the person doing the service is paid in cash. This cash is untaxable and virtually untraceable. This is the same thing that bitcoin does. Bitcoin a virtual untaxable currency that leaves no traceable trail. While this similarity between actual cash and Bitcoin does exist, the two also differ in the amount of control on each currency. An American dollar has legal tender because a central government says so, but Bitcoin has no kind of central government controlling it. With this lack of control, Bitcoin seems to be impossible to sustain to outside people.
Bitcoin seems strange and foreign to many of the people that research the topic but it is actually very similar to many currencies of today and the past. Currency retains value as long as a person believes someone else will accept it as payment. Bitcoin is seen as an acceptable form of currency for some people and that is why it survives and retains value.