I suppose I am not explaining this adequately.
Question1) What is money? 4 word definition
The most vendable good.
Money is the most vendable good.
In order to reach that status of “most vendible good” you must have some type of prior value before it is even established as a medium of exchange. People have to have a reason to want to hold that good in their inventory. The good must have been widely accepted and marketable prior to it becoming a currency. That ensures wide acceptance. Another reason why it’s important that the good is already widely desireable as this acts as a quality check mechanism. Being widely accepted ensures that the features wanted in money already exist. Features such as:
- Does the good have value not as a medium of exchange? Why would I want to hold this good in my vaults?
- Is it liquid? Can I immediately barter with it?
- is it secure? Can I secure it or guarantee it’s security?
- Is it mobile?
- Is it divisible?
There has to be a reason for a vast majority of people to HOLD that good BEFORE it becomes a medium of exchange. That will ensure it’s already in wide circulation and is already widely accepted. In this way money is discovered on the market bottom up. Not top down! No one makes currency for currency then tries to push it’s function out onto the market. Instead the market finds currency by identifying the most vendible good.
As it stands, short of being a programming geek, normal people have absolutely on reason to adopt bitcoin. It is far too much of a hassle as compared to using USD. USD is far more convenient for anyone. So there has to be an underlying reason for people to want to hold bitcoins, but there is none(as is the case with any fiat). There is no intrinsic value in bitcoin that would drive normal folk to invest into it, not as a medium of exchange, but as a commodity. No one has any reason to hold it into their vaults. A bitcoin has no consumable or industrial function, you cannot make jewlrey with it, you cannot make circuit boards with it. Therefore there is no reason for people to widely adopt it over an already existing medium of exchange. And even if the medium of exchange broke down there is still no reason for bitcoin to be the rescue currency. People would certainly not risk placing their savings into such a system. Preferring more concrete goods which are more likely to guarantee the immediate ability to exchange.
Money is the most vendible good. This definition runs in-line with the regression theorum in that the most vendible good is discovered over time by individual adoptation. People increased their holding in gold and silver before it was a medium of exchange. Bitcoin offers no such reason to be held.
Thats the first point.
Question 2) How does a store clerk detirmine the price of goods in BTC?
Well it’s easy. The common denominator is still the dollar. They just price their goods in dollars and translate it over using a currency exchange ratio. But this doesn’t mean you’ve established a medium of exchange, as all goods are still getting priced by the dollar. What you’ve done instead is made a dollar proxy. You didn’t replace the dollar. All the economic calculation and accounting is still done in USD’s, not BTC’s.
BitCoin prices are detirmined and pegged to the dollar. When the first Bitcoin store went up how did they know how much their goods and services would be sold for in bitcoins? Well they looked to see what those items cost in dollars. It’s like using a check instead. Shoot you could argue that mastercard’s plastic transaction system is another bitcoin.
In all instances all goods and services sold in BTCs are actually priced in dollars and then converted over. Goods and services are not priced in BTC’s. There is no exchange ratio between goods and services and BTC’s. A store clerk knows that a graphics card costs 64BTC’s because he knows what the exchange ratio between dollars and those goods are and he simply follows a currency ratio. A store clerk and supplier purchased those goods via USDs then ran their markup and prices in dollars. After that they converted that price into BTC’s. I guarantee nearly all of those company’s do their accounting in dollars, not BTC’s.
To spell it out. In order for BTC’s to become currency it must eliminate the dollar.
BAD → Goods/Servics ↔ Dollars ↔ BTC’s
Good → Goods/Services ↔ BTC’s
This is an EXTREMELY fundamental point of the regression theorum. The moment an exchange ratio between goods and services is established between BTC’s and goods then and only then can you call BTC any sort of money. However for now it is simply a dollar proxy. One that is not likely to get wide acceptance. So you have to explain logically how BTC’s replace dollars. How do they get wide acceptance prior to becoming currency.
So we now tie ourselves back into point #1. In order to develop a history of exchange ratio’s betweena candidate currency good and all other goods you need the candidate to have already been widely accepted as a good that people demand. It has to already have a history of exchange. The history of exchange must be an exchange ratio between itself and other goods. It cannot have a exhcange ratio history as a proxy as all your doing is mimicing the exchange ratio of another currency that is already more widely adopted. Bitcoin offers no reason to be held as a good. If the dollar collapsed tommorrow people won’t be rushing to throw all of their cash holdings into bitcoins. Long before the collapse consumers will have instead started investing heavily in actual goods that people demand for satisfaction. Cigarette’s, alcohol, food, water, fuel, silver, gold, farming equipment, ect…
Bitcoin’s cannot be offered praxeologically, prior to becoming a currency, as a way of satisfying consumers. Except as it’s roll as a toy for programming geeks. People wouldn’t dare increase their holdings in a good that doesn’t immediately bring satisfaction to anyone.
So as you can see there is no reason for anyone to hold BTC’s as a good outside of money. But you cannot establish it as money untill it becomes widely accepted as a good prior to it’s funciton as a medium of exchange. Thats the paradox.
This is why I have said this over and over and over. Money is discovered from the bottom up praxeologically. The most vendible good is not imposed top down.
It’s amazing that you claimed to have read the regression theorum yet in all of our discussion over the past several pages you failed to address these two fundamental points. These two points ofcoarse being the central focus of the whole regression theorum.