Don't buy Bitcoins (video)

Miscellaneous General
121

Appeal to ridicule noted, as is your failure to explain why you believe it’s impossible to transition from A to B. Remember, you’re the one claiming it’s impossible, the burden is on you.

The oranges: yes i saw it already. The analogy can be improved: Everyone is allergic to the oranges, but these ‘oranges’ can be traded ‘pseudonymously’ without a person leaving their house, they can be traded internationally without incurring additional fees, they take next to no physical space to store, etc. Despite being inedible, these oranges have characteristics that make them so good for trading with, that people continue using them anyway.

Now why can’t there be a path from A to B in your view?

122

Good job trying to shift the burden of proof. .
Just interested though - how many bitcoins do you currently have bitbutter? Got much mining going on?

123

Conza–please read the conversation more closely, Neilsio and Clayton seem to be claiming that it’s impossible for BItcoin to move from use by a small minority to become the dominant medium of exchange. That’s a positive claim. One that I’m not seeing any support for so far.

I have more than zero Bitcoins. I’d prefer not to disclose further information about my finances on a public forum. I’m sure you understand.

@Clayton

The government can ensure it remains in black/grey-market status without breaking a sweat.

Legalistically, sure, a gov could pass a law. But can a government prevent a potentially competing currency like Bitcoin from becoming dominant? How do those chances change if there’s a collapse of fiat money? I don’t see how anyone could claim to know the answers to these things.

124

Thank you bitbutter in helping to unravel the core of the issue. Praxeology is about deduction, rather than induction. About definite logical connections rather than probabilistic estimates. Although the most eloquent Bitcoin opponents in the beginning claimed that their arguments are based on praxeology, they in the end admitted that they are not.

More than a year ago, I asked on the Mises Blog comments about the relationship between Bitcoins and the regression theorem. However, I could not comprehend why the regression theorem is supposed to be based on deduction. My complaints were dismissed so I just thought I do not understand it correctly, so I kept thinking. But the recent media publicity brought up more debate, yet still no proper address of my complaint. Eventually, it turns out I was right all along: the regression theorem is not a praxelogical argument. It’s mixing together several things: the network effect, historical facts, and, admittedly, some praxeological roots.

I also find it amazing how the historical development of Bitcoin (i.e. that it is not widespread sufficiently for the network effect to kick in after 2.5 years of being launched as an open source project) is used by Austrians as “evidence”. As if the gold standard emerged fully matured overnight and magically the whole world scrapped whatever they had before switched to it. We’ve had 40 years of SWIFT, 3 years of SEPA and what are the results? Bank transfers are still crap. Western Union and paypal being able to make profit is evidence enough of the crapiness of the projects. And there’s big companies and governments behind them, I might add.

Now I can finally rest, the curiousity of my falsificationist mind satisfied.

125

Eventually, it turns out I was right all along: the regression theorem is not a praxelogical argument. It’s mixing together several things: the network effect, historical facts, and, admittedly, some praxeological roots.

You have seriously missed the boat. And it’s all here, staring you in the face.

Let me quote a bit of I Ching:

For youthful folly it is the most hopeless thing to entangle itself in empty imaginings. The more obstinately it clings to such unreal fantasies, the more certainly will humiliation overtake it.
Often the teacher, when confronted with such entangled folly, has no other course but to leave the fool to himself for a time, not sparing him the humiliation that results. This is frequently the only means of rescue.
When ignorance is fed by stubbornness the fool arrives to a dead end, losing touch with reality.

126

That’s quite an assumption. It’s also easy enough to show that Bitcoin is in some governments’ own interests. At the moment, I would have to say that it’s in the interests of Iceland for monetary reasons, as well as because their geography is ideal with regard to distributed citizen mining. Bitcoin might also be in the interests of many other small governments, if Bitcoin is dramaticly counter to the interets of the United States. Although it’s unlikely that any government in this group is going to come out an openly support Bitcoin, or pass laws that legitimize it, many are unlikely to enforce the laws that the US imposes upon them via political pressure. Just considering the huge monetary advantage that the US wields by the fact that the US FRN is the only international reserve currency, just about every other government can be said to have some degree of interest in the success of Bitcoin.

127

Humans care about goods, not about currency for the sake of currency. Just because a tiny group of people cares about currency for the sake of currency doesn’t mean that makes it a reliable medium of exchange for people outside that group.

The Somali shilling is not widely used as tissue paper, and is not widely used for fire starting. It is a paper currency entirely backed by the cost it takes to create, print, and transport. Clearly Humans care about currency for the sake of currency, otherwise the Somalis would have stopped using it 20 years ago.

1 million times 0 is still 0.

A possible use makes it non-zero. I have no use for gold as jewlery, gold fillings, or electrical conduction. Yet I own gold.

Possible use neither makes it a reliable medium of exchange. Clayton explained well what requirement a good has to be suitable as a medium of exchange and it’s the opposite of no use / possible use.

and yet this is exactly what you are claiming gives gold it’s value. A Possible use as jewlery or electrical conduction, even though most people no longer use it for that.

Let’s go back to water and robinson curuso for this. He has 10 gallons of water. He can use it for drinking, or bathing. He choses drinking because he get’s greater utility from that, but the fact that he doesn’t use it for bathing doesn’t mean that the water isn’t worth the amount of bathing he could use it for if he couldn’t drink the water for some reason.

Let’s go to bitcoin. I could use it to exchange for server subscription, or captcha. I’m sure you can figure out the rest of this paragraph.

So I think this is your main objection. RIGHT NOW, people are not using bitcoin for captcha, nor do they have the ability to because nobody has developed a method for doing that. Which leads us to future valuation. You seem to be claiming that potential future valuation can’t be a basis for current valuation. This in and of itself is a denial of the valuation of capital goods. Bitcoin is not substantially different from the valuation of capital goods because the consumption goods created by it may be substantially lower in value than the estimated value of the goods when the capital project was started. Similarily, bitcoins captcha potential value my not be reached by the time speculators have speculated it would. This is no different than the failure of valuation of the capital good. This however doesn’t deny that the capital good has some value, but just not as much as predicted. It may very well be that bitcoin is over valued, but it’s a non sequitur to say it has no value due to that.

I’m probably the most senior member here in favor of bitcoin (at least arguing that it’s not praxiologically certain to not be a money). I just want to clarify, I own precisely .04 bitcoins, which I got for free from bitcoin faucet, and bitcoin bonus.

128

I have made no such admission. I would elaborate but I just typed a fairly long response and my browser took a dump… feeling a bit discouraged.

Clayton -

129

The Somali shilling is perhaps the world’s greatest example of the regression theorem. It is valuable today because it was valuable yesterday and so on back to the days of the Barre regime. It is this memory that gives it value. And please note that its value is insanely small, it is only used in Somalia because people there are so incredibly poor.

Clayton -

130

This is a very good point. There is no necessity that a medium of exchange has a non-monetary value to everyone, it is sufficient that it has such a value for some.

131

While I agree with you Peter, I will be deeply saddened if that is the point most people take from that post. I believe this paragraph is the crux of the objection.

So I think this is your main objection. RIGHT NOW, people are not using bitcoin for captcha, nor do they have the ability to because nobody has developed a method for doing that. Which leads us to future valuation. You seem to be claiming that potential future valuation can’t be a basis for current valuation. This in and of itself is a denial of the valuation of capital goods. Bitcoin is not substantially different from the valuation of capital goods because the consumption goods created by it may be substantially lower in value than the estimated value of the goods when the capital project was started. Similarily, bitcoins captcha potential value my not be reached by the time speculators have speculated it would. This is no different than the failure of valuation of the capital good. This however doesn’t deny that the capital good has some value, but just not as much as predicted. It may very well be that bitcoin is over valued, but it’s a non sequitur to say it has no value due to that.

132

Why are people buying bitcoins? Is Mises rolling in his grave over this ‘mystery’? No.. It’s actually very simple:

Latest comment on my video:

“What does all this talk about apples and oranges has to do with Bitcoin currency? Then he talks about gold. Blah, blah, blah. Then he talks about dollars. He suggests that dollars are backed up by something. Dollars are backed up by absolutely nothing. His monologue is boring, long-winded, and tedious. I had to slap myself the entire time to keep myself awake while he spoke. It was just so boring. Who gives a rat’s ass about legal tender laws?—like any of us are going to obey legal tender laws.”

People buy it without regard for facts or logic. And then other people interpret those actions as evidence for their (lasting) value.

133

Nielsio,

people’s irrationality does not disprove economic laws. If you claim that people are acting in spite of your predictions, that only means that your predictions are flawed.

Furthermore, the commenter is correct. Your (not only you but other bitcoin detractors’ too) obsession with the obscure term “money” is the irrational aspect of the debate, not the actions of bitcoin enthusiasts. It’s like mumbling mantras. I have repeatedly, for over a year, asked for the praxeological connection between the term “money” and bitcoin, and have not received any meaningful reply.

On the empirical level, I have repeatedly shown how government intervention created a market gap, which is not being filled by any of the other encumbents and how bitcoin is specifically designed to fill that gap. Again this has met with ignorance.

In summary, the debate is a waste of time, since there is no debate. On one side there are people obsessed with the past, on the other people obsessed with the future, and their arguments fail to meet.

134

2 pages later and still no reply. The Bitcoin theory of money seems to be, we put “coin” in the name; therefore, it is money.

135

@Caley

The answer’s been provided for you several times over already. I’ll try to put it a different way:

Imagine that bitcoin was widely in use, all over the world, for a long time already. Would it matter if it didn’t match any given definition of money? I don’t see that it would.

136

The answer has not been provided already. What you tell me to imagine is what is to be proven by comparing to other things that have not attained that status. Assuming what is to be proven is not the asnwer. Right now Bitcoin is basically the same as WoW gold. Wow gold supply is limited by the game mechanics. Wow gold is traded for dollars. The only difference so far between WoW gold and Bitcoins with respect to prospect of attaining the status of worldwide acceptance as payment is that Bitcoin’s PR group tells us that it will , whereas Blizzard has never made such a claim since 2004. What is going to make Bitcoins succeed in the next 7 years where WoW gold (and everything else) failed?

137

Nice to imagine but the reality is it will never become widely used all over the world for a long time because it is just another type of unsound ‘money’ dreaming of competing with our current unsound ‘money’..

While I aplaud the efforts of the bitcoin community to ‘fill the gap’ and educate others in the flaws of our current money system, in the end (when the current system fails), it will never compete with sound monies beacuse billions more people value specie more than bits.

138

Toilet paper has a very low value to weight/volume ratio.

Wow gold is inflationary, costs money at the very beginning before you can even accept any (you have to buy the Wow software), and has no ability to be traded outside of playing the videogame.

Each of those 4 problems are overcome by bitcoin.

I do not offer this as “proof” but as potential reasons why bitcoin would succeed where WoW gold has failed.

Edit: That costs money at the beginning before you can accept it litterally just changed today.

139

lewrockwell.com says bitcoin is a commodity, that Mises had it all wrong, not to follow his authority blindly:

…And who says that money MUST emerge from a commodity? (von Mises I know [Menger too], but what makes that pronouncement authoritative?)…

…I add this. It seems to me that a bitcoin is a newly-produced commodity or good. In the same way, those persons who discovered a rock and got gold out of it produced a new good or commodity by extracting the gold. Marketability is a quality of a good that is subjectively assessed by those in the market. It seems that bitcoins possess it. People can recognize it and transport it at almost zero cost…

140

As you seem to follow his take blindly.

Correction: Michael S. Rozeff says, not lewrockwell.com.

I’m sorry, did he provide an argument against Mises regression thereom? Did he address the arguments, besides pointing out “ohh you guys an appeal to authority maybe?”, no.

It’s not WHO, it’s WHAT… and that is reason.

It seems to me that Rozeff needs to go back to the basics.

Regression theorem. The theorem by which Mises applies the subjective theory of value to the objective-exchange value, or purchasing power of money. Objective-exchange values of all other goods and services are explained by the subjective theory of value, whereby the values are traced to the ultimate subjective use values of the marginal consumers who value such goods and services for their objective-use values which they expect to consume. This is not true for money because (1) money is not consumed in its use and (2) the subjective and objective use values of money coincide and are equal to its objective-exchange value, the estimated value of the goods and services for which it can be exchanged. Mises explains the origin of the objective-use value of money by tracing it back step by step from the point at which it is being valued to the point where the monetary good served only non-monetary uses, an essential point preceding the first use of anything as money. At this point, its objective-exchange value is explained by the general theory of subjective value and marginal utility.

HA. 408-11,426,610-11; M. 97-123; also PLG. 141-67. See also Murray N. Rothbard’s Man, Economy and State (Princeton, N. J.: Van Nostrand, 1962; Los Angeles: Nash Publishing, 1970).

Does bitcoin do this? No. Does it matter that it doesn’t? Yes. Ask yourself why… when you make the claim that it is FREE MARKET money, maybe you should consider the fact that we’re not in a FREE MARKET ENVIRONMENT… and whether bitcoin is not in fact a by-product / reaction to that of the state.

An answer I am yet to still recieve a response to.