- bitcoin is not a money substitute, nor is it govt fiat money. Your statement that “once money exists it si not necessary that money has commodity use anymore” is mistaken. You think that Mises et al meant that once any money at all, say gold coins, exist, then the door is open for bitcoins and other useless garbage to be money. That is not what they meant at all. They meant that once a particular thing is used as money [because it is a commodity or reedemable on demand for a commodity] for a while, then that particular thing that used to be a commodity does not have to remain a commodity. For example, if paper money is redeemable for gold on demand fro a while, thus becoming acceptad as money, it can remain so even after its connection to gold is broken. That is what they are talking about. Not about a country having a money and somebody wanting to foist useless bitcoins on them from scratch.
You see the flaw in your argument. Bitcoin never was a money, nor a commodity, so there is nothing to talk about.
- The concept of intrinsic value contradicts the subjective value principle of Austrian economics.
So you say. But Ludwig von Mises, who knew a little about Austrian Economics, disagrees. Here’s what he has to say in the theory of money and credit. I inserted one little phrase in brackets of my own, which I think everyone will spot right away, but all the rest is Mises, word for word:
The Necessity for a Value Independent of the Monetary Function
before an Object can serve as Money
If the objective exchange-value of money must always be linked
with a pre-existing market exchange-ratio between money and
other economic goods (since otherwise individuals would not be in a
position to estimate the value of the money), it follows that an object
cannot be used as money unless, at the moment when its use as
money begins, it already possesses an objective exchange-value
based on some other use. This provides both a refutation of those
theories which derive the origin of money from a general agreement
to impute fictitious value to things INTRINSICALLY VALUELESS [like those stupid bitcoins] and a confirmation of Menger’s hypothesis concerning the origin of the use of money.
This link with a pre-existing exchange-value is necessary not only
for commodity money, but equally for credit money and fiat money.’
No fiat money could ever come into existence if it did not satisfy this
condition...
You see, “intrinsic value” and "OBJECTIVE exchange value" are two ways of saying the same thing [as is evident from the Mises quote, which contrasts things with objective exchange value with "intrinsically valueless" things], and neither contradict the Austrian principle that all value is subjective.
For some people, that might be a real head scratcher. Either value is subjective or objective, right? It can’t be both, right? How could the mighty von Mises have missed the boat so badly, writing all over the place that all value is subjective, and right here, when talking about things like bitcoin, he suddenly says money has to have objective [not subjective] value? How could he belittle something as “intrinsically valueless”, when all value is subjective? Didn’t von Mises know anything?
For those of you who want to know the answer, you will have to hit the books. Read the article “Bitcoin Takes a Beating” on my website. When you have digested carefully what Mises said there, and really undestand it, you will finally get a] why bitcoin is not now and never will be money and b] why Mises is not contradicting himself.
I have led the horse to water. Now he has to drink.
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Money sustitues are not an “analogy” to bitcoin. It is like saying a virtual wife is an analogy to a flesh and blod wife. Money susbtitutes have to be redeemable for something. Bitcoin is redeemable for nothing. The Mises quote above, especially the last paragraph, will show those thirsty for enlightenment why fiat money, even in the decrepit state it is in today, is way way different than bitcoin. Study well, ye seekers of truth.
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I am glad we agree that bitcoin is not a money now. If you insist on saying that two idiots using beany babies to trade with make beany babies a medium of exchange, which seems to be one use of the phrase [though I have quoted in the forum mainstream articles that say otherwise], that’s fine with me. We can agree that some fools are currently buying things with bitcoin. We can agree that that doesn’t make it a money, contrary to what Mike Suede asserts. I’m glad we both disagree with him.
But we seem to disagree on the signifance of the fact that two retards use rocks or used sandwhich bags to trade with. To me, such a fact is of no economic significance. Certainly anyone paying $33.00 for that used sanwhich bag is a sucker. Same with bitcoin.
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Yes, gold right now is not a money. So what? As for gold never being money because of high transaction costs, I disagree. The technology of the debit card makes it as viable as anything else. But even if bitcoin has ZERO transaction cost, and everything else had a 100% transaction cost, bitcoin would still be just the virtual wife who never nags or spends money. She is still missing the very essence of what a wife is about. Mises explained what the essence of money has, and why bitcoin just doesn’t cut it.
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If you understand what I wrote, you will grasp that I didn’t ignore or misrepresent anything.
Good luck to you.
P.S. AJ, are you really going to buy those worthless bitcoins? I have a bridge in Brooklyn for you at a great price, a real steal.