I think this is the best comment on this topic I've seen today.
Ultimately the problem with "virtual money" like Bitcoin is it isn't tied to anything with a limit. Sure -- the point you make about "belief" in value is part of it. But it's even fiat currency is based on a scarcity.
Long ago I thought about virtual money, but I immediately saw the problem of making on that was based on nothing -- it's absolutely vulnerable to any large player to manipulate. A huge sell-off or even an options market created to "protect" the value like a futures contract can send it plummeting -- and it plummets because of panic selling, and there's no way to pull the plug other than some people holding on no matter what. Eventually, it hit's a very low value and then those that manipulated it might buy in and create value again, by those careless enough to "believe" in a system. And they will -- people still buy stocks and play the market for instance.
A few bright people suggested instead of bonds and debt, the USA could just create "trillion dollar coins." And if they could protect and store them and control their creation -- that's perfectly valid to creating the scarcity and control to base new money on. Anyone buying dollars would have to "have faith" in the government to not produce too many Coins. And based on economic growth, new coins could be minted to allow for liquidity.
Most any other group trying to establish faith in their own coin is going to run into problems. So a virtual currency should be based on some kind of good or ownership in something that has scarcity, and can grow with an economy or the value of the coin. That could be anything -- but it should be SOMETHING tangible that does not spoil like wheat or even a refrigerator that breaks down with use. Stock in a company might work. Percentage of frequency bandwidth the government allocates and communications companies "lease" could be another.
And creating longer block-chains means that future coins are only going to suck up more computing power. This is as bad as using Gold as a standard, because then people spend a lot of money to dig up more gold which has little intrinsic value and it's hard to keep up with growth. Or one day quantum computing could suddenly make the group that harnesses able to mine bit coins at a rate a million times faster than everyone else -- and then you get a collapse in the virtual currency, until enough quantum computers are available and then you are back to the same old "mining problem."
Crypto currencies are not freeing anyone. They can be used for black markets but also, they will be able to be monitored easier than cash by those with the power to do so. They are unstable and arbitrary. So far, they've worked -- until someone big wants to squash them. The only reason they haven't is because those entities probably like the tracking and black markets now available to keep tabs on the more anti-establishment people and groups. If it was really a potential to undermine the status quo -- it would haven't been this easy to implement it and there'd be a dozen laws criminalizing it by now.
