Well clearly we aren’t getting anywhere and it’s probably time to stop arguing.
If you’re just going to define something being used currently as money as not money, then there’s no way to have a productive discussion. It’s like you’re saying a motorcycle can’t be a vehicle because it doesn’t have four wheels, it’s just flying in the face or actual experience right now.
We should always put aside what we want to be true for what we know to be true. Honestly, the fact that bitcoin is being used as money right now doesn’t give you any pause when you write things like this?
BITCOIN IS VALUABLE APART FROM ITS USE AS MONEY. You may lack the technical knoledge to recognaise it, but it is still a fact, it has different uses than that of money. For example, smart property.
How could be a demonitazion scenario for bitcoin and why that’s imposible for gold?
unbacked != fiat
Backed = redemable for a commodity
Fiat = because the state says so, by decree, enforced by laws
THE bitcoin. THE, THE, THE bitcoin. Bitcoin is simply X. It’s a thing that people have decided to treat as money except that it doesn’t really exist. When YOU think of bitcoin you’re thinking of everything BUT THE bitcoin. You’re talking about the economic actions surrounding it. And it doesnt matter that it’s limited. 1 x 0 is 0. 999999999999 x 0 is 0.Bitcoin is a projection, a projection that could be put upon any other nothing, any other nothingness, any other zero. The reason its been named bicoin and described as cryptocurrency is because the descriptors and name are meant to direct people’s behaviors, that is it tells them under what category it exists but it’s just an abstract category and not an actual thing within that category. It’s is not money. It is the suggestion of money and the prompting of economic action that implies it’s money but it’s really just a little girl’s imaginary dog.
It’s a pretty good point. Currencies have usually been backed by two things:
Commodity value
Government coercion.
We can now add a third to the list:
Cyptographic limitation.
Likely each currency type has its own features and unique problems.
Commodity money: In the past this type has been liable to flooding the market with that commodity. For instance, silver in Europe nosedived in value when masses of silver poured into Spain as a result of its new world dealings. However, such instances are rare and not likely to be easily or commonly repeated again. Unless someone discovers a cheap way to transmute elements, which is not entirely outside the scope of possibility, or if we discover gigantic asteroids full of precious metals in space, also quite possible.
Furthermore, since commodities cannot be traded directly, usually, people resort to paper certificates which often results in an inflation problem.
Government coercion: the problem here is when the gov loses control of the printing presses to sovle some political crisis causing either rampant inflation or failing to pay its own debts and thus a default and devaluation. Various countries world over have experienced either in recent memory.
As for bitcoin, we’re not aware of any vulnerabilities similar in nature to the previous two. Instead this new class of currency has its own challenges. The easiest way for it to be destroyed would be if anyone gets control of 51% of the network processing transactions–however the larger and more accepted the currency becomes the harder this becomes, to the point that it would not be realistic at all if bitcoin were adopted by any large economy. In fact, at this point right now it’s already a remote possibility.
These are the facts as we know them. If your pet theory can’t incorporate bitcoin, then the theorists must be given time to catch up.
Riiiiight. This isn’t even cogent in the most limited sense. It’s like saying a digital copy of a CD is nothing, and I’m imagining the music as I play it.
Hi pairunoyd. You are making the same two basic mistakes that Clayton, Hashem, and Dave have all made (One or the other.).
1.) You assume your conclusion that Bitcoin has no value.
The value of a bitcoin is not zero, at the moment it is around $6 a bitcoin. Many people have “projected” this value onto the bitcoins; this is called “Subjective Value”, there’s nothing wrong with this. Through mutual voluntary transactions Bitcoins have attained the value of $6 a bitcoin, just like through mutual voluntary transactions gold has reached the value of around $1600/oz.
Anything that is scarce can have value in a free market. The invisible hand has produced the value of $6 per bitcoin. Make your peace with that.
2.) You arbitrarily define “money” in some way that exludes Bitcoin from the definition without defending why the said exclusionary qualifier is important.
Bitcoins are a medium of exchange that have attributes that meet or exceed any “money” currently in existence with one exception; They lack any industrial use.
However, as pointed out many times before, the price floor of “industrial use” is not necessary for Bitcoins to function as medium of exchange (The Regression Theorem doesn’t apply). It would only act as psychological comfort from the unlikely event that all bitcoins are suddenly repudiated.
This disadvantage is insignificant in the face of all Bitcoins advantages.
You are making the same two basic mistakes that Hashem made…You assume your conclusion that Bitcoin has no value.
I would take offense at this misrepresentation, but you’re not misrepresenting me, you’re just making things up. That’s a plain red herring. I already acknowledged bitcoin may have value.
You assume your conclusion that Bitcoin has no value…You arbitrarily define “money” in some way that exludes Bitcoin from the definition without defending why the said exclusionary qualifier is important.
Again red herring. I already acknowledged bitcoin may be fiat money. Fiat money, as opposed to money proper in the Austrian sense. Fiat, because it isn’t valued as a market commodity prior toandapart from its use as money.
Well clearly we aren’t getting anywhere and it’s probably time to stop arguing. If you’re just going to define something being used currently as money asnot money
No that’s just your red herring. I find it silly that I have to remind you I already acknowledged bitcoin may be used as fiat money and it may have value. You, however, refuse to acknowledge that it isn’t money proper—that is, money in the austrian sense, which is valued as a market commodity prior to and apart from its use as money. Fish would make a better example of money, but bitcoin is perfectly fiat.
EDIT: Perhaps it would clear things up if I referred to “money proper” as money, and “fiat money” as fiat currency. Anyways, this is the biggest thorn in the side of fiat currencies: that they aren’t valued as market commodities prior to and apart from their use as currency.
OK pal, let’s try to transfer gold over the net. That’s where something like bitcoin comes in handy you can purchase goods with it over the net easily.
And of course bitcoins are a commodity, just as paper money or gold. The one unit of bitcoin is as good as the next one.
Commodity price is the market clearing price for the fiat currency stripped of its “official” currency status.
In the case of Bitcoins there is no “official” currency status, so there is no distinction.
If you arrive at your commodity value through voluntary transactions in the marketplace, then the commodity value is equivalent to the market price for Bitcoins.
In all cases C =/= E, but in this case they are equivalent, and so they’re comparable.
Also, you replied while I was editing… I stand by that wording, but I did see it was unecessarily confusing.
I don’t think you mean fiat, which means by decree. A necessary component of fiat money is government backing, of which Bitcoins have none. Bitcoins are still not money, for the same reasons you list, but certainly not fiat money.
Agghh, money is not a commodity is an agreement, anyway…
This conversation is getting worse, not better. If we don’t accept some common ground definitions this will lead nowhere…
Bitcoin is not fiat, because it’s not enforced by any state. It is unbacked, because there’s no promise for redemption in any physical commodity.
The sooner both sides accept those simple definitions, the sooner we can discuss more interesting things.
No one chanllenged my explanation of why bitcoin (without being a physical commodity) is money and doesn’t contradict the regression theorem. Bitcoin has uses different from being a medium of exchange (and therefore is valuable BEFORE becoming money).
No one is explaining us bitcoiners how its value will collapse to zero without monetary inflation and why that “crisis of confidence” is impossible for precious metals.
Can anyone prove me wrong? Is anyone willing to try it?
If not, I guess I’ll have to leave the discussion…
Whatever dude! It’s a cryptocurrency capable of becoming “money” (However you choose to define it.)
Unless your definition includes “Can’t be cryptocurrency!” (Or something similar.), in which case money will just be superceded by the better system.
Also, you’re right, it’s not fiat by any stretch of the imagination.
I personally don’t think the Regression Theorem applies at all, so there’s no need to point out “other uses” for Bitcoin. Isn’t being a currency enough?
You’re right of course, the same attributes that make it useful for currency also make it useful for, say, NameCoin, but I don’t think it’s necessary to refute the “Regression Theorem” argument (or why it fits.) as the Regression Theorem was postulated to figure out the value of fiat currency.
The mystery concerning fiat currency was why the currency was traded far above it’s normal market clearing price.
There’s no mystery to solve with Bitcoin. It’s traded on the open market and through voluntary exchanges it has gained value. It is traded at the market clearing price, there’s no discrepency.