The utility value of the dollar (the reason why you would use this as your fungible token) is that if you don't give people the thing the dollar was given for, the government comes and does something to fix it.
Not really. The government would step
in (or not) to enforce any trading contract, regardless of whether one of the items traded were dollars.
The real reason why you would use dollars is that they are the ONLY token Americans can use to pay their taxes, and the government will definitely come and do something to fix you if you don't pay your taxes.
As all US taxpayers therefore must, at some point, acquire some US Dollars; And as there are lots of US taxpayers with a variety of goods and services to trade, all traders can be confident that they will eventually be able to swap US dollars for something they value, that is held by a dollar-less US taxpayer.
Any currency (like bitcoin) that cannot be used to pay taxes to someone who can enforce tax payments, and that is not pegged to some useful commodity, is a very wobbly thing indeed, and is likely to be highly volatile, depending for its value on the greater fool principle alone.
