Comment by griffzhowl

A currency is a social construct but it doesn't just come down to people who trade in the currency in a decentralized sense: the US govt imposes taxes on economic activity, and demands those taxes be paid in dollars (as other states do in their respective currencies), and this is enforced by the coercive power of the state, which is ultimately based on its military strength, since that's the ultimate guarantor of the continued existence of all the other institutions of the state.

Of course, there's more to it in the complex system of the global economy, but the power of the state is still an important central factor in a currencies' strength - it's not just about collective perceptions of value.