The same critique can be made for gold coins today, in the absence of a gold standard anywhere in the world. Most people don’t want to own a gold coin, yet most people could recognize that it was valuable if they saw one and knew with certainty that it was really gold. The authenticity of any given bitcoin can be verified to a greater degree of confidence by my android cell phone in a couple thousand clock cycles. Honestly, I can’t do that with gold or silver, and yet they are money, are they not?
Gold and other precious metals are only money insofar as people (like us) consider those things to be money. They arent money if you apply the same standards as people seem to want to apply to bitcoin, such as near-universal acceptance. This may change soon, as some states are moving to make gold and silver legal tender.
difficulty verifying the authenticity of gold is a product of an entrenched non-gold economy. One major reason gold is so good as money is that it is hard to fake. Most metals are silver/grey in color. Gold also responds to acid tests, and has a high specific gravity, making it hard to counterfeit even if you can get the appearance right.
Excel isn’t a supporter as far as I’m aware, unless you’re referring to someone else?
Here we go with that commonly accepted bit again. Look, either “money” is a subjective or objective word. If it is a subjective word (as is entailed by the use of “commonly” and “generally”) then I could call it money and mean something different than what you mean when you use the word and we could both be right.
If it’s an objective word, then your definition must do away with the subjective terms in the definition before we can use it in any logical manner.
But to get back to the point about Bitcoin being unable to become “commonly” accepted, I think in context with what Bitcoin has achieved it is perfectly within the realm of possibility that Bitcoin could become the most used medium of exchange in the world. I suspect that this will happen, the only wild card is public perception. The biggest question in my mind isn’t “Will Bitcoins become a common medium of exchange” it’s “will the phobia surrounding bitcoins diminish or increase”.
I’m not referring to anyone in particular, just the fact that myths about bitcoin get posted here and remain unchallenged even by the bitcoin cheerleaders. I’ve even seen a few of the cheerleaders get details wrong when they describe things.
Well, in the interest of me and the people that might read hereafter (but mostly me) I’d like to see what wasn’t addressed. 
At the end of the day I think we’ve established that the biggest libertarian detractors have put forward the following argument:
1.) Bitcoin is not money. (It’s not used alot).
a.) In spite of the fact that it is used “alot” by some standards.
2.) It will never be used alot because people don’t use it alot, and because people don’t like it.
a.) In spite of the fact that the first part is circular reasoning.
b.) In spite of the fact that lower transaction costs will force businesses to use them to stay competitive, regardless of public perception.
3.) People don’t like it because they can’t feel it or find other uses for it and because they percieve it as being repudiated easily.
a.) In spite of the fact that money need not be felt or have other uses to function as intended.
b.) In spite of the fact that Bitcoins have the least rational incentives for repudation out of all competing currencies.
5.) More people will not like it in the future because people tend to prefer mediums of exchange that they can touch and find other uses for.
a.) In spite of the fact that Bitcoin has better attributes as a medium of exchange than any competing commodity or fiat currency.
well-formed argument and rebuttal.
its not that people dont like it, its that it doesnt have industrial value, as they perceive it. This puts a bottleneck on early adopters, because they have to have a suitable mentality for owning cryptographic patterns. This isnt significant to anyone but Misesians, as first world peoples have had two generations of fiat money, and are used to thinking of it like poker chips.
this is a reasonable argument. People like tangible money, for obvious reasons. What if an emp wipes out all computers with memories of bitcoin lol. Theres a lot of risk in adopting a digital crypto money, most people are not computer people and they are not cryptographers. Theres a lot of unknowns, and it is entirely reasonable to take a wait-and-see attitude.
Almost entirely false. Money qua money has no counterparty risk. This is because it has industrial uses. Aborigines used bags of pemmican as money. Transactions that use tokens (redeemable money, fiat money, poker chips, etc.) are a form of credit. When you take a check, you are trusting the bank to redeem it. Bitcoin is not a token, apodictically it must be useful somehow or it is not valuable. Being a member of a finite set does not suffice. Fortunately bitcoin does have arcane uses that lend it some “industrial” value.
that doesnt make sense either. People who dont use bitcoin arent going to change their minds simply because you tell them that their reasons “arent rational.”
it has better and worse attributes than other exchange media, for instance specie is totally anonymous and has much more accessible industrial value (barter with a jeweler, trade the jewelry for stuff). People hold cash for periods of time, that means it must be a store of value, and bitcoin is dangerously volatile. This volatility also precludes its use as a unit of account for the time being. This means bitcoin is good for buying and selling things to other bitcoin users, but bad for keeping large amounts of worth. Bitcoin also has counterparty risk, although this is offset by the number, systematic redundancy, and persistency of the counterparties (I include the computer network itself as a counterparty in assessment of any digital system).
I have a better reply to this: every money was not used a lot before it became money. Some people seem to think that money pops up instantly fully matured with everyone accepting it immediately. This is contrary to the evolutionary catallactic process described by Menger, Mises, Rothbard, De Soto and so on.
To be accurate, Bitcoin is not money. At least not in the Austrian sense. Neither is the US FRN or the Euro. Both are deliberately designed/altered & offically supported mediums of exchange that are wholly detached from a commodity support/backing. At least the US FRN once had such a backing, while the Euro never did. This is not to say that “well, what we have now is worse”; but that is a real market driver for the adoption of Bitcoin as a medium of exchange. However, Bitcoin’s (deliberately deflationary) design model is also likely to make it a reasonable store of value, if Bitcoin should ever become a true & widely accepted medium of exchange. While this is not likely to occur while the US FRN & Euro systems remain stable and trusted, I’m operating on the assumption that stability is unlikely in the long term. While most people here might favor a gold standard of some sort, I find such a future to be politically unlikely. There is simply too many powerful forces that have a vested interest in not returning to any kind of sound money system for that to occur openly or naturally. Bitcoin avoids the main methods of government/political resistance altogether.
I really don’t know if that’s true or not. I hope so. I was going to argue against it and say, “Omg no the world hates bitcoin 'cause it’s not physical”, but now that I’m thinking about it most 1st world people are perfectly happy with their fiat currency. So you might be right.
lol! We’d have more than our currency to worry about if that happened!
You’re right of course, but that’s an argument out of ignorance, and remember, the entire libertarian argument here tries to say that Bitcoin will be less adopted and less valued in the future. If it was because of ignorance, it’s unlikely that people will become more ignorant of Bitcoin as time goes on.
None of the detractors here say that Bitcoins will be less valuable in the future because less people will understand it in the future.
I’m not sure that all money has no counterparty risk, particularly fiat money, but even if I grant that, there would be virtually no risk if Bitcoin had even a tiny fraction of the market share that dollars or Gold has today. Even .1% would do wonders.
The playing field isn’t exactly even.
That’s not what I said, I said that incentives for repudation would be irrational. There’s no rational event with slightly more than a remote possibility that could take place that would cause complete repudiation of Bitcoins. Some things I’d consider irrational: A rumor that an exploit in Bitcoin had been found or a huge speculative bubble bursting (We survived one, so we know even that likely wont cause complete repudiation).
First of all, if I say that Bitcoin has better attributes for use as a medium of exchange, it doesn’t make sense to say “Well gold can be used in jewelry”. We get back to the butter knives vs swiss army knives debate again. Swiss army knives are great for other things, fine, but butter knives are better for buttering bread. Just like gold is great for other things, but Bitcoin is better for being a medium of exchange.
Secondly, if you want to trade with a commodity money you can do two things:
1.) You can give it to them face to face.
2.) You can mail it/electronically transfer (Sort of.).
If you’re transferring Bitcoins from one smart phone to another, it is absolutely as anonymous as giving someone some money in a pawn shop.
Obviously Bitcoins beats commodity money hands down when it comes to electronic transfers so I’m not going to argue that point. As for mailing money, I could print a private key, put it into an envelope and send it in the exact same manner, but I could also send it electronically much faster, cheaper, and have alot of tricks at my disposal to keep it from being traced back to me.
@Peter Surda
That’s absolutely true, and then they’d say, “Well Bitcoins can’t evolve into money because they had no prior function in society.” and then one of us would have to go through and debunk that all over again. Kind of like what MoonShadow says, Bitcoin isn’t money in the Austrian sense.
Even if everyone in the world were using Bitcoins every day it would still not fall into the Austrian definition of money. Which is kind of messed up if you ask me. Reminds me of Noam Chomsky’s Libertarian Socialism. How can you slaughter a word that badly?
I’d also like to add that if some emp, or deep impact, or whatever disaster were to befall the United States on this scale; the US FRN is at greater risk of destruction due to the facts that 1) roughly 98% of all FRN in circulation are actually digital, not paper and 2) the computers that hold those records, while they are sufficiently backed up, are not massively redundent like Bitcoin.
Furthermore, I have specie and I have bitcoin. I can say with certainty that in any economic condition short of something out of MadMax or Jerico, Bitcoin has huge advantages over silver as a medium of exchange. Not the least of which is that, under certain conditions, it’s actually impossible to prove that I have the bitcoins at all. Silver simply requires a patdown and it’s found a new owner. Silver remains in my possesion for two reasons, first they are pretty coins and I like to have them, just like my daughter likes her American Girl dolls; and second, silver has anti-microbial properties that make certain that even if I do find myself in Jerico with the only copy of the blockchain left on Earth, the silver has value to me in my first aid kit.
Moreso even, because the pawn shop security cameras take your picture. On the Internet, no one knows you’re a dog.
The Austrian definition of money is very narrow, but the Austrian perspective doesn’t exclude mediums-of-exchange that do not fit that narrow definition. Austrian economic theory can include other forms of value that most economic analysis doesn’t even recognise as legitimate value. There are several examples of this, for which I don’t have the time to dive into. However, it’s important to note that Bitcoin does qualifty as a currency under an Austrian perspective, which places it on the same theoretical plane as US FRN’s Euros Pounds & Ithica Hours. The relative merits of these currencies being a rather subjective conversation, Austrian economic theory would not pretend to be able to know the ‘proper’ relative value of such currencies. Only a free & unhindered exchange market can tell us this.
people can still have physical dollars. Furthermore, bank deposits are held with a bank, meaning there is someone you can sue. If people wake up to a failing bitcoin network they cant sue anyone.
thats true but under certain economic conditions it can be proved that you own bitcoins, and the transaction history can be pulled. bitcoin has enormous disadvantages over specie as well.
only under “certain physical conditions” at which point bullionists can also say “we have bigger things to worry about lol”
I guess I should say its less anonymous than giving someone money elsewhere than a pawn shop
fiat “money” has counterparty risk, but the only reason people use it is because that same counterparty enforces the mandate to use it. So its like reverse counterparty risk, its counterparty mandated. When I said “money qua money” I meant sound money. Money’s lack of counterparty risk is the reason money requires industrial use. You could put gold nuggets in the freezer and use them to cool your beverages even if every other person on earth was dead (assuming you had electricity and refrigerant to operate the fridge). What can you do with bitcoin besides transfer balances and information?
It does make sense, because industrial value is a large part of what makes something a good medium of exchange. Its like we are comparing knives, and you only want to cut one thing, butter (you only want to trade under the easiest conditions). Whereas I say this knife might be a little clumsier for cutting butter in your kitchen, but its much better for cutting all sorts of thngs under all sorts of conditions (media of exchange with strangers who have no use for intangible money). Offering bitcoin to someone who doesnt appreciate its characteristics is like offering them an expired coupon. They dont want it, and you cant call their reasons irrational because value is subjective. They dont want it because they want to cut things besides butter.
People can have physical bitcoins, too. I just don’t consider them of any greater utility than sliver rounds
If you wake up into Waterworld, who are you going to sue about your CD at your non-existant bank? Where are you going to find a judge? If it ever gets to the point that a natural return to silver & gold occurs, we’ve returned to a local barter condition already. You’ll have been the lucky one just to have survived the Zombie Uprising ™
True. Under certain conditions. So what? Under no conditions can you hide the silver in your pocket during your shakedown at that “checkpoint”
What do you need it to do besides transfer balances & information? After all, even under a natural gold standard; banks, letters-of-credit & halwala transfer networks formed. The ability to transfer value across distances in a reliable and rapid manner is an industrial utility. One that gold & silver were particularly poor at, and required and encouraged the development of financial institutions to permit such distance transfers. Bitcoin does not require many of the modern functions of these institutions, and therefore does not require their overhead costs.
I need it to do something useful for the bearer of the note, if he, for whatever reason, decides not to exchange it for other goods.
you are equivocating on “industrial utility” perhaps without meaning to. Money as money has no counterparty risk. The banks And such you mentioned are means of exchanging value using credit, instead of money, and using hundreds of counterparties in order to spread out risk. Bitcoin does the same thing, as you mentioned above, that doesnt make it money. Money has no counterparty risk.
the tradeoff is the assumption of risk.
they are far less utility, since one must “destroy” the physical bitcoin in order to use the digital bitcoin, and outside of the digits, bitcoin loses big in every category vs. Au and Ag
yes, it would have to take a zombie apocalyse or another worldwide flood to be bad enough conditions for the massive difference in counterparty risk between bitcoin balances and bank balances to be hidden. Why cant you zealots be honest enough to admit the very real disadvantages of bitcoin, along with the advantages? No one who wears a suit to work is going to take you seriously until you do.
so, the future is uncertain. You hand-wave away the conditions that are unfavorable to bitcoin, instead of acknowledging the possibilities. This makes you a zealot.
youre also woefully undereducated on physical security. And, just for good measure WE WOULD HAVE BIGGER THINGS TO WORRY ABOUT THAN MONEY THEN
While it’s true that Bitcoin substitutes for credit functions over natural money, Bitcoin doesn’t have any counter-party risk either. A US FRN has counterparty risk, but that counterparty is the US government, for it is the US government that recognizes it as a note with “the full faith and credit of the United States”. Without the US government as your FRN’s counterparty/backing institution, those pretty pictures would have no more value than a Confederate Dollar. Probably less, because a Confederate Dolllar probably has collectors’ value these days. My point is that it doesn’t have to fit into the Austrian definition of money in order to be an effective monetary system, and it’s already a fairly complete one even before additional services such as escrow are added by others. It has value because it’s useful (as a monetary & distance value transfer system) and because they are of limited quantity. The many qualties of an ideal money were deliberately designed into it, so it’s about as close to a money as has yet been designed by mankind.
What risk would that be?
yes, it does. People could choose not to accept it because they cant use it for anything and you are stuck with nothing. Its a service, not a good, which implicitly states counterparty risk, as it entails people doing something for you.in this case the risk is spread out over the entire peer system. This mitigates it, it doesnt eliminate it.
right, and without a significant portion of the network meaning meaningfully connected to an individual, the bitcoin is worth less than a confederate. Meaningfully connected doesnt just entail connectivity, but profitabke connectivity. If they dont have goods and services to trade, the fact that they can trade balances doesnt help them. Ergo, no industrial use. Most people arent spies or international arms dealers.
no, it just has to be money in order to be money, and not a form of credit. Business has functioned on credit for hundreds and thousands of years.
but it still cant beat money that God designed as a risk-free medium of exchange, store of value, or unit of account. Its a shame that they didnt design a broader industrial use to the bitcoin network, as that would answer the principle objection from the austrians. Oh well, thats why I await cryptocurrency 2.0
Catastrophic loss of confidence due to the fact that no one wants any of your bitcoins anymore.