[nodoll]

> where __value__ comes from and how/where it is stored

Value comes from people and the work they do. A currency, or a system of money, or let us speak plainly, a system of economy tracks the value provided by a person to the community. If you have 100$ with you, that means that you have done 100$s worth of work for the community. Same with bitcoin, if you have 100 bitcoins with you, that is a proof that you have done that much work for the community. And you are entitled to the same amount of work from the community. You redeem it by paying with this currency, the other people of the community for their services.

So in otherwords, paper currency is just a distributed ledger. Instead of a ledger with some values written in a piece of paper against your name, you just hold the corresponding amount of paper currency to prove the work that you have done. When you consider all the currency held by a the people in a community, it is really a ledger that is distributed over the people in that community.

A bitcoin economy can work exactly like this. Fundamentally because in reality, in a real economy, you are not storing the value, you are tracking it.

This makes sense, because an economy really is a system that enables people helping each other, ensuring that no one takes more than they provide, or have to provide more than they take.

[rickydroll]

$100 worth of work is not the same as solving $100 of proof of work puzzles. $100 worth of work produces some value to the local community in that you deliver goods or services that somebody else wants. A proof-of-work puzzle takes a resource (electricity/compute cycles), and destroys it. IMO, Proof of work puzzles are only useful as rate limiters. POW doesn't create value like chemical processes producing pharmaceuticals, or smelting iron ore producing steel.

[nodoll]

When I said "Work" I didn't mean POW puzzle solving.

But solving PoW puzzle to mine bitcoin is also useful work in the sense that it adds one coin to the economy, which is why miners are rewarded for it.