It’s not a minotriy view, and please display links proving such an outlandish notion.
So you think appeal to authority is going to disprove my argument? summarize it, then show the flaw.
My argument does not require that services have no value. You dont understand my argument if you write such an odd thing.
And bitcoin doesnt provide a service, btw. A barber cuts your hair, something you want. Western Union transports money for you. Dollars. Bitcoin doesnt do anything but change hands.
Anyway guys, tired of repeating myself, those who get it know what I have to say, those who havent by now never will.
I shall return only to gloat when bitcoin drops under $2 a coin. May be a while, since now it’s at $4.
On the contrary, that is exactly what it does. You deny that the service Bitcoin provides has value, reasoning that it cannot be consumed. By the same logic, all other services have also no value, because they cannot be consumed. This is absurd.
Bitcoin provides a replacement for significant parts of the the banking system and payment processing. This is where its value comes from. If it did not have a value, why do payment processors, remittance services and bank accounts exist?
But I explained it already. Are you incompetent or intentionally misleading? Oh wait, I don’t actually care.
You do not understand your own argument.
Again, refuted by empirical evidence as well as theoretical foundation of Bitcoin, plus countless anecdotes.
In other words, there is a significant overlap between what Western Union does and what Bitcoin does, it merely uses different units of account. But the unit of account is irrelevant to the service, similarly as it does not matter whether your hairdresser uses the metric or imperial system. WU actually allows to use more than one unit: you can pay euros and the recipient can receive yuan, for example. In combination with the exchanges, Bitcoin can do it too, and cheaper. Once you drop the necessity of fiat, it’s even more cheaper.
Even better, WU could simply replace their backbone network with Bitcoin, without having to tell anyone, and reduce their own costs.
Maybe you should start arguing rather than attempting to make up fairy tales.
How about you return when it reaches zero? That would give a reasonable chance for you to remain away forever.
I was reading about Nick Szabo’s/et. al. ideas on bitgold and Reusable Proof-of-Work (RPOW) more than a year before “satoshi nakamoto” began working on Bitcoin, a bit of pre-history most Bitcoin-fanatics are unaware of. But I was reading about bitgold back in 2008 which was just 4 years ago. We have a global fiat monetary experiment (Bretton Woods II) on the brink of collapse. That fiat monetary experiment has the backing of all the world’s major governments and is ten times as old as Bitcoin and was founded (however precariously) on the preceding established monetary order. Yet its “survival” means nothing. It appears to be on its last leg despite its many advantages over Bitcoin.
That Selgin link says nothing of the kind. I leave it to the interested reader to see for himself. But here’s a clue. If Selgin is agreeing with you and Mike, why does Mike feel a need to rebutt him at that very link?
As for Kinsella and Bagus, they are wrong, as I will show in an upcoming blog. Note that they do not disagree with Mises, just have their own interpretation of what they think he said.
Note that Kinsella didn’t understand Selgin’s paper, either.
This is not so. Walmart.com will present the user a site that is tailored to his locale, with localized pricing and the local currency. Paypal does the same thing. Even Ebay does it, unless I specificly choose to see foreign auctions, which I can then bid on in their currency even though I don’t have their currency. Walmart could add bitcoin to their site in less than a day.
If they are risk adverse, maybe so. In such a case, then Bitcoin is simply a dollar substitute to them, just like Paypal, Visa or Mastercard. The effect upon the bitcoin market would largely be a net zero. However, if Walmart chose to keep a portion of those bitcoin sales in order to build up a bitcoin fund, the overall demand for bitcoins would rise slowly, although still likely imperceptablely. If Walmart chose to start selling bitcoins in the stores at the ‘money services’ counter, they could close the loop just fine without either exchange fees nor credit card transaction fees. Said another way, Walmart could accept bitcoin on their website and sell them in the stores, and keep the vast majority of the transaction fees that they pay to others for their online sales. Everyone else could do this to, and once they start to do this, the ‘market adoption’ of bitcoin would be irreversible. At present, Bitcoin is still an experiment, and still very risky. Smiling Dave might prove to be correct about Bitcoin in the long run, even though he will be forever incorrect on the reasons as to why.
There is no way to ‘brand’ bitcoins into a pool. You are conflating terms here. A bitcoin pool is a group of people who own their computers that cooperate in ‘mining’ and share the proceeds, acting as one entity with greater hashing power. There are other currencies derived from bitcoin’s codebase, but among them only “namecoin” isn’t trying to compete with bitcoin directly in it’s own niche over some perceived flaw or arbitrary design decision. Most of them simply have died.
That would contribute to the stability of bitcoin, at the potential expense of Walmart. I can’t see walmart or anyone else making such long term pricing promises. They don’t make such long term pricing promises with US dollars as it is. An advertised price is only valid till the sale is over, which is usually less than a month from publication date.
Peter, what role does the cost of mining bitcoins play in terms of the theory of bitcoins to you?
As I’ve read this, several times people have attempted to make a point that there is no “intrinsic” value to bitcoins, or similarly, how would somoene know how to value the first one, the implication being that there is no objective way to argue that they aren’t worth “zero”. I’ve read a bunch of your stuff and still haven’t seen what I think is a direct response by you to this question: how would one of the first adopters put a specific value on a bitcoin.
It strikes me that the cost of mining them has a role to play here. Quite simply, if it cost my X dollars to mine a bitcoin, that I’m not going to do so unless I get at least a dollar in exchange. The cost that I put in to mining one sets a specific, concrete, non-zero lower bound on how much I would be willing to trade one for.
And to be clear, I’m not invoking a labor-value concept here: value is always subjective and a function of what people are willing to pay. But since the cost of mining a bitcoin is relatively constant (some amount of computing power and electricity), it follows that for someone else that wants a bitcoin, if they can buy it for something close enough to what it would cost them to mine it to cover the convenience factor of buying rather than mining, they would. So this again sets a reasonable price on bitcoins.
In fact, IIUC, as the value of bitcoins has dropped, it has ceased being cost-effective to mine them which, among other things, helps point out the importance of the cost of mining them in the bitcoin economy.
As for “intrinsic” value, I think there was value in an earlier poster who referred to gold’s original “intrisinsic value” as purely aesthetic. For many, many years, that was gold’s value: purely aesthetic. I suspect (but have not looked up) that it is still far more in demand for its aesthetic uses than its industrial uses (that is, absent its use as a money/store of value, most of its price would be driven by its aesthetic uses, not its industrial uses). I see no reason to not thik that some people could assign an “aesthetic” value to being one of the first to “own a bitcoin” or whatever. The MRT doesn’t require all that much for the origin of money: it just needs to have some value to get the ball rolling, and then the value of that item as money can take over. Putting these together would work towards giving that initial value: some people wanted bitcoins for aesthetic reasons (no different in their pure subjectivity than gold), and the cost of mining set the early price.
OK guys, the proof that Mises Regression Theorem is not a mere “insight”, or a historical bedtime story, but a true logically perfect theorem with predictive power, that will show once for all that bitcoin is naught but a place for idiots to get together and lose their money, is hot off the presses right here:
Also in that article: Justification of the concept of “intrinsic value” [hint: Mises used it without blushing], and a rebuttal of Pete’s proof that bitcoin is money becuse he used it at the bitcoin convention with to buy a beer.
I would say this is a controversial question. Empirical data suggests that the market price of Bitcoin and mining difficulty correlate. At the bottom, a lot of miners were unprofitable. However, because several times more Bitcoins are traded on the exchanges daily that are mined, I think that the difficulty adjusts to market price rather than vice versa.
I spoke to one of the professional miners (he has many rigs in a data centre), he sells immediately, and stops mining when it’s not profitable (i.e. when electricity costs exceed the price of Bitcoin). I on the other hand don’t mind mining below profitability for a while because I don’t sell immediately. Of course, it’s not an efficient use of resources but it’s not that much money (1.7kW) so I don’t mind. I also have the option of lowering the costs by mining only in the night as opposed to 24/7 because I have dual electricity prices.
If my conclusion (that mining does not influence the market price, but the other way around), this could be interesting from economic point of view.
There’s no way I’m increasing your (SD) blog’s readership numbers by clicking through, not when you’ve been nothing but snide and condescending. You want me to read something, post it here.
I already addressed your argument regarding MRT, many times. The main error in your position is that you exclude the possibility that money originates from a service. Now, whether Mises/Rothbard made the same error as you is of secondary importance, since many other Austrians disagree with the origin as commodity as well, albeit for other reasons than me.
Furthermore:
It is symptomatic for irrelevant trolls that they cannot even correctly represent their opponents’ position. You got my name wrong, and also my argument is not that this proves that Bitcoin is money, but that it’s a medium of exchange. Since I already explained this several times, either you’re incompetent or deliberately misleading. I don’t care which one, but I’ll probably go back to seeing you as an ignorant fool.
Got that? WIDELY ACCEPTED. Not you and a couple of drinking buddies. And yes, a medium of exchange has to be WIDELY ACCEPTED, not just a money.
From thefreedictionary.com: medium of exchange - anything that is generally accepted as a standard of value and a measure of wealth in a particular country or region
Write it down, Pete. Generally accepted. Not you and and Moondog and Mike. You three guys, or even a room full of guys like you, don’t constitute generally accepted.
But I’m glad you are retreating, step by step. You aren’t claiming bitcoin is money anymore, thank God. Now you think it’s a medium of exchange. Still a mistake, but you’re learning.
Dave, you are a grade A jerk. From what I recall, none of us have claimed that bitcoin is a “money” in the economic sense, although some of us may have used in in the common vernacular sense. Also, whether or not your views on the interpretations or accuracies of the MRT are correct or not is irrelevent, since Bitcoin does not violate regression any more than the current fiat US federal reserve note does. Bitcoin has a history as a currency, prior to that, a longer history as a general idea. Bitcoin has no intrinsic value, but neither does any other currency issued by any government on Earth. Gold might be better for in person transactions and as a store of value, but that’s inmaterial if I can’t fax it over to my power company. I have purchased many things with bitcoin alone, both real and virtual in nature. The fact that it may be used only as a currency substitute, just like Paypal, Visa and Travelers’ Checks, by those who accept bitcoin as payments online is entirely irrelevent from the perspectives of the customer.
This is as true of fiat paper money as it is of Bitcoin. In other words, you’re wrong, if Bitcoin were to become the most widely used medium of exchange (money), it would not have “violated” the regression theorem.
I listened to the first two minutes, and in terms of fiat money (money by DECREE) Hoppe is right.
In reference to “fiat” money as Hoppe defines it, he is clearly wrong.
WRONG WRONG WRONG WRONG WRONG
We know Hoppe is wrong because BITCOIN DID EXACTLY THE THING HE SAID WAS IMPOSSIBLE. The market established prices for Bitcoin all on its own without any threats, violence, impositions, etc.. etc.. etc..
Bitcoin is not representative of a physical commodity and it has no prior use, nor does it introduce any economic inefficiencies. In fact, I would argue that gold introduces economic inefficiencies! Gold takes massive resources to produce, store, ship, and protect. Bitcoin hardly takes any. When gold is used as a money, it introduces massive waste and inefficiences because now that gold is not availible for productive use in physical processes, such as jewerly or plating.
I’m pretty sure I can think of a use-value that bitcoin has for some: the satisfaction brought about by the employment of a money that they believe to be innovative, revolutionary, efficient, and non-fiat.
It shows. You really don’t get Austrian monetary theory because, like most critics, you haven’t actually taken the time to hear it all the way out. It’s not something you pick up in 2 minutes or even in an afternoon. Human Action is, I think, 400 pages or so of extremely concise explication of Austrian theory. This doesn’t mean you have to be super pointy-headed to get it, it’s just that there is a large body of specialized concepts and terminology that have very definite and exact meanings and which feed into the exposition Hoppe gives in that 45 min lecture. Understanding the many theorems and concepts he alludes to is pivotal to understanding that he’s not just venting an opinion, he’s making an argument that basically boils down to this: “Unless you reject the idea that humans are motivated by self-interest, you cannot deny the following facts about money…”
If he’s “WRONG WRONG WRONG WRONG WRONG” then either he’s made a mistake in his reasoning (please point it out for our benefit) or humans are not motivated by self-interest. Take your pick.
A couple things. Bitcoin is not a fiat money, it’s an unbacked currency (or “currency” since the picture painted by Bitcoin apologists is undeservedly grandiose). So, you’re the one who needs to straighten out your definitions, not Hoppe. Second, saying “the market established prices for Bitcoin” is a contradiction of the idea that Bitcoin is actually unbacked. It’s backed by something otherwise people wouldn’t be exchanging anything for it. I have speculated elsewhere on these boards that it might be backed by the black-market goods and services which it can be exchanged for (to the extent that its value exceeds that given to it by hostile speculators and starry-eyed enthusiasts).
If this is true, then its value is dependent on the size of the black market. Should the government liberalize drug laws or prostitution laws or other laws which are creating the black-market demand in the first place, Bitcoin would drop significantly in value. Note that this is quite different than the behavior of the price of gold which has risen meteorically since 1971 despite the confident predictions prior to 1971 that the price of gold would plummet once its “link to the dollar” was severed.
This is why you’re mistaken to compare Bitcoins to gold. They’re doing very, very different things.
To quote Warren Buffett:
“[Gold] gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”
The same could be said to one degree or another of wheat, beef, oil, copper or any other commodity. All of these commodities are basically useless in their raw state and are valued for their eventual use as a consumer good (gold being unique in that it is valued for its eventual use as a monetary good). The fact that the production of these goods is costly is simply a by-product of the limits our technological know-how.
Nonsense, there are economic substitutes (silver, platinum, etc.) for gold’s industrial uses and its costliness in jewelry is the primary reason that it became money in the first place, so this is a feature not a bug. As for the costliness of mining and transporting gold, this is why banknotes were invented in the first place. Rather than wasting resources on silly unbacked digital currency like Bitcoin, if we had a more mature, adult attitude about gold in the culture, we could see entrepreneurs applying those very same cryptographic protocols to implementing gold-backed digital banknotes which could be used with all the advantages that Bitcoins have, with the crucial difference that you can cash your digital tokens out in gold bars if you choose.
I hope I get to see this happen in my lifetime… it will truly be the 8th wonder of the world and I believe it will unleash economic forces whose power will create wonders on a grander scale than the future envisioned by the Venus Project. Gold really is that big a deal.