Is BitCoin the currency of the future?

[ClaytonB]

@Ron: Your typical grocery-store coupon is certainly not a currency, even for a “limited market.” A coupon is an entirely different sort of thing than money. However, a particularly valuable or sought-after coupon could conceivably become money. For example, bank draughts (checks) from a reputable businessman did sometimes circulate as money in the American West. Everyone knows that George Jones is always good for the money so a check for $100 on George Jones’ account is as good as $100 cash in hand and can be used as if it were a $100 bill. This shows that artificial instruments with a cash value can take on real cash value in hand-to-hand transactions if they are sufficiently reliable. In heavily inflationary environments, tokens can be used in exchange, as in the case of Zimbabwe where cell phone minute cards began to be used as money even though use of anything other than Zimbabwean dollars is prohibited. A phone card is not quite a coupon but it’s a lot like a coupon so you see where I’m going with this.

Clayton -

[Amanojack]

It’s not that I disagree, but I still think this kind of objection doesn’t really address the - admittedly far-fetched-seeming - idea that large numbers of people might adopt BTCs. If huge numbers of people got into used Chia pets for some reason, the conversation would be different. I think what is happening is the pro-BTC people are getting upset that most of the anti-BTC people are focusing on things besides the freak possibility of mass adoption. It seems that they are wanting to retreat into that possibility (mass adoption for some unforeseen reason), and if you are anti-BTC it seems to make sense to take that concession.

In other words, the whole argument for BTC seems to hinge on the possible existence of some kind of fluky or hard-to-grasp way that mass adoption could happen, so it seems inefficient to introduce anything else into the discussion. I think it will be treated as distraction, and BTCers will ultimately keep bringing up the possibility of mass adoption (with or without any actual scenarios) as a last refuge. To center the discussion on the possibility for mass adoption would allow things to reach some kind of resolution, I think, because either it will become obvious that no BTCers have any really plausible scenarios to propose, or someone will come up with something that sounds plausible and could actually be addressed.

To put it in a negative way, you could characterize BTCers as clinging to a fantasy that just in some vague way or another people will start wanting these BitCoins and the whole thing will somehow bootstrap upward. The challenge for them seems to be to give a really clear and believable scenario that leads to mass adoption, to show that they are not just stuck on some idle fantasy.

[Amanojack]

@Clayton

@AJ: It’s a mistake to think of money as having something to do with a “threshold”. A monetary good was already valuable in direct exchange before it came into use in indirect exchange and it would already have been among the most marketable goods. The use of money in indirect exchange is a merely pragmatic matter and nothing more than self-interest need be assumed. There is no cooperation or “threshold of adoption” required.

But this really just amounts to saying, “Well the threshold is really really high.” Saro apparently already values BitCoins in direct exchange, so if you happen to be his neighbor and he has something you want to buy, it already is valuable in direct exchange (for you). I’m saying it’s a matter of number of people, and really you are effectively saying it has to be an impossibly huge number of people, which is fine, but I think if you frame it that way it will address the pro-BTCers more to their satisfaction.

[Edit: Instead of “threshold of adoption,” it would be clearer if I had said “threshold of people who value BitCoins” (enough to trade them for potatoes like Saro apparently would)]

[Saro]

To the extent that Bitcoins can be exchanged for real goods and services, I suspect this is a by-product of the exchangeability of Bitcoins for real money

There isn’t a single store around me that accepts Euros, but I wouldn’t turn them down if someone offered them to me (because I know I can convert them to USD). Does that mean the Euro is not a currency?

[Micah71381]

@filc

And that has been the issue from the getgo. You are correct but no one will bother to explain why enough people would be like him. What economic incentive do people have to begin migrating to BTC’s? How many times have I raised the question?

And how many ways have I provided an answer in different ways:

https://forum.freecapitalists.org/t/is-bitcoin-the-currency-of-the-future/7363/329

The short answer is that adoption grows slowly with time. Adoption of any currency/money is not instant and, as shown in the two tables, the only requirement is that there is not a gap in collection size requirements, something that cannot be known without polling the entire population.

@filc

Look why does this discussion need to proceed beyond the Regression theorum? Either you read it and dispute it or agree to it but everyone else is just skirting around the actual issue.

BitCoins meet the requirements of the regression theorem. I have separated out the core requirements of the regression theorem that have been argued in these two posts (please reply to them if you disagree with the conclusions):

https://forum.freecapitalists.org/t/what-is-industrial-demand-in-misess-regression-theorem/18606

https://forum.freecapitalists.org/t/does-misess-regression-theorem-require-a-minimum-population-size/18580

If there is some other premise of the regression theorem that BitCoins do not meet the requirement of please let me know so I can consider it. It is my understanding that the two points addressed in those topics are the ones that you feel apply to BitCoins not meeting the requirements of the regression theorem.

[filc]

@Micah71381

If there is some other premise of the regression theorem that BitCoins do not meet the requirement of please let me know

@Clayton

Bitcoin has no value in direct exchange so it could never come to have value in indirect exchange.

[filc]

But again we’ve been through this already several times.

[Micah71381]

@filc

@Micah71381

If there is some other premise of the regression theorem that BitCoins do not meet the requirement of please let me know

@Clayton

Bitcoin has no value in direct exchange so it could never come to have value in indirect exchange.

This statement is incorrect, particularly the bolded part. BitCoins have value to some people and the reason for that is inconsequential. Whether they value it as a collectable, for alltruistic reasons, philisophical reasons, religious reasons or predicted future value reasons is of no consequence as shown here:

https://forum.freecapitalists.org/t/what-is-industrial-demand-in-misess-regression-theorem/18606

BitCoins do not have to have value in direct exchange to you, they only have to have value in direct exchange to one person as shown here:

https://forum.freecapitalists.org/t/does-misess-regression-theorem-require-a-minimum-population-size/18580

I do not value gold in direct exchange. It has 0 direct value to me. That does not mean I am unwilling or unable to use it as a medium of exchange.

[filc]

@Micah71381

BitCoins have value to some people

For the purposes of indirect exchange. I know of no BTC supported here who doesnt collect BTC’s without the intent of trading them in exchange.

Im not sure how you missed this.

@Micah

I do not value gold in direct exchange. It has 0 direct value to me. That does not mean I am unwilling or unable to use it as a medium of exchange.

You continue and persistently missed the entire point of the regression theorum. That is because you don’t know it. Youve only googled and displayed a butchard understanding of it.

[Micah71381]

@filc

@Micah71381

BitCoins have value to some people

For the purposes of indirect exchange. I know of no BTC supported here who doesnt collect BTC’s without the intent of trading them in exchange.

Im not sure how you missed this.

The first person to accept BitCoins (user-0) as a means of payment for goods/services could not accept them in indirect exchange because they previously had no value and therefore must have accepted them in direct exchange. Just because that person is not on these forums does not mean that person does not exist. In fact, because BitCoins are currently used as a medium of exchange in a limited market (the hobbiest market as you have described it) we can logically conclude that user-0 must exist and user-0 must have accepted them in direct exchange.

This is what the regression theorem is all about, the abilitity to trace any medium of exchange back to it’s origins as an item of direct value. The regression theorem does not violate praexeology as you appear to be doing and require that the value be understandable or meaningful to you. It only claims that the object had value to someone at some point in history. The regression theorem does not even require that the item still has value in direct exchange presently.

@filc

@Micah

I do not value gold in direct exchange. It has 0 direct value to me. That does not mean I am unwilling or unable to use it as a medium of exchange.

You continue and persistently missed the entire point of the regression theorum. That is because you don’t know it. Youve only googled and displayed a butchard understanding of it.

If you believe my understanding of the regression theorem is incorrect I would encourage you to point out the specific flaws in my understanding. It is my opinion that you are the one who doesn’t understand the regression theorem yet I am not making such accusations at you but instead attempting to discuss the particular points that we seem to disagree on. I have created two separate forum topics in an attempt to address specific issues that you have brought up related to the regression theorem and I would encourage you to post in those threads if you believe the conclusions come to by the thread participants are incorrect.

[filc]

omg. You are deeply confused. No I won’t teach you.

[Amanojack]

Usually if people are deeply confused on these forums their arguments get sliced and diced for sport. If anything, it seems like Micah is doing the slicing and dicing and asking for more rigor about specific aspects of the regression theorem, but the answers have not been fully satisfying on the rigor end of things, even lacking in terms of methodological individualism (Micah called it praxeology just now, but whatever). His claims touch directly on home turf for Misesians, so it ought to be easy to refute them soundly if they are that far off base.

[filc]

@AJ

it seems like Micah is doing the slicing and dicing and asking for more rigor about specific aspects of the regression theorem,

Is it my responsibility to teach a theory to someone who’s inclined to reject it? What little Micah knows was done by me wasting my time explaining to him the errors in his understanding of it. What little he does know is blotched at best. All he’s done here is ripped quotes without context out of various literature because he cannot be bothered to read it himself.

You think it’s responsible to critique such a theory without reading it first? And that it is somehow my responsibility to teach it to him?

Further more what slicing and dicing has he done? I have been repeating myself for 20 pages. So far as I can tell no slicing and dicing has been done at all, alot of teaching, a lot of mis-understanding.

I have stated several times that I won’t waste too much time teaching Micah. I have seen the quality of his posts elsewhere and I don’t think its fruitful for me to invest a major portion of my day teaching someone who has no interest in learning.

@AJ

t the answers have not been fully satisfying on the rigor end of things, even lacking in terms of methodological individualism

I haven’t a clue as to what your refering to. It is not the task of Misesian’s to defend the theory. It is the task of Micah and BTC Enteusiasts to research the theory and adequately explain why it’s broken. It his task to explain why the regression theorum is faulty. How can he do that if he is having to ask for clarification on the theory in the first place?

Furthermore why is the task of the Misesians to defend the theory? Does the existence of the BTC’s somehow threaten the theory? No not at all. It is the other way around, it is the theory which is threatening to BTC entheusiasts by explaining why it is not likely to ever be adopted as a widely accepted medium of exchange.

@Micah

(Micah called it praxeology just now, but whatever).

Micah just copied that word off the forums here and pasted it. Im not convinced he even knows what Austrian Economics is. So I haven’t a clue as to what you or he is refering to. The regression theorum is entirely compatable, and in fact built from, praxeology.

@AJ

His claims touch directly on home turf for Misesians, so it ought to be easy to refute them soundly if they are that far off base.

What claims are you referring to? The only claim I’ve seen is that BTC’s have a possobility of being succesfull just because one or two people are using them. That argument isn’t coherent. Just because one or two, or ten hobbyists use BTC’s doesn’t mean that it will magically become widely adopted. As Clayton said there is no use for direct exchange.

So I either don’t know what claims your referring to or don’t find them coherent as far as the theory is concerned.

Notice that we’ve talked now for 20ish pages. My postiion has remained the same. Micah on the other hand has had to change his arguments, verbage, and termonology. And he is the one doing the slicing and dicing eh?

AJ youv’e been on the forums long enough. Cut me some slack dude.

[Micah71381]

@filc

It is the task of Micah and BTC Enteusiasts to research the theory and adequately explain why it’s broken. It his task to explain why the regression theorum is faulty. How can he do that if he is having to ask for clarification on the theory in the first place?

I am not sure if you are not understanding me or if you simply are not reading my posts at this point but I am not claiming the regression theorem is broken. I am claiming that BitCoins meet the requirements set forth by the regression theorem.

@filc

What claims are you referring to? The only claim I’ve seen is that BTC’s have a possobility of being succesfull just because one or two people are using them. That argument isn’t coherent. Just because one or two, or ten hobbyists use BTC’s doesn’t mean that it will magically become widely adopted.

No one here, as far as I know, has stated that BitCoins will become widely adopted. The claims have always been that BitCoins could become widely adopted. The reason we are arguing in circles is because you kepp forgetting this and using it as a straw man.

@filc

As Clayton said there is no use for direct exchange.

I have stated this many times and you keep ignoring it. BitCoins have use for direct exchange for someone (maybe multiple someones). This person isn’t you or me but they are out there. Just because BitCoins don’t have direct value to you personally doesn’t mean no one values them.

@filc

Notice that we’ve talked now for 20ish pages. My postiion has remained the same. Micah on the other hand has had to change his arguments, verbage, and termonology. And he is the one doing the slicing and dicing eh?

There are two reasons for my change in argument, verbage and terminology.

The first is because I actually changed my position. I do not see this as a fault but rather the opposite, a willingness to be proven wrong. My original argument was that Mises Regression theorem was flawed. However, after some discussion I have come to the conclusion that I was defining “value” too tightly. I now believe that Mises’s regression theorem holds in the BitCoin case, and in other cases I previously felt it did not hold.

The second reason is because my original wording wasn’t getting through to you (or so it seemed from my point of view). I have many times now tried to word my argument in different ways in an attempt to facilitate our discussion. This does not mean that my argument is not sound, it only means that we do not appear to be effectively communicating so I am trying alternative methods. In my opinion this is a strength, not a weakness since trying different means of conveying an idea shows an ability and willingness to adapt in an attempt to communicate effectively which is my ultimate goal here.

[Amanojack]

@filc: Of course no one has any responsibility to refute him. I merely offered a second opinion to your assessment. At this point it would make sense for you not to reply to him, given what you think of his posting quality. I just posted because I hope to encourage someone to.

[filc]

@Micah71381

I am not sure if you are not understanding me or if you simply are not reading my posts at this point but I am not claiming the regression theorem is broken. I am claiming that BitCoins meet the requirements set forth by the regression theorem.

Yes I am trying to understand you just. At this point it seems like your trying to state that BTC’s were at some point traded for direct exchange. Whats odd about the argument is, unless I am mistaken, the whole purpose for creating bitcoins in the first place was for indirect exchange. What purpose does it serve in direct exchange? Who ever traded BTC’s for consumption? Can you consume a BTC?

I know it’s dissmissive of me but I write such arguments off as being silly. BTC’s were always intended as a mediumf of exchange. Direct exchange would imply that they had some other purpose, they do not. So again, sorry to be dissmissive, but I write the argument off as extremely unthoughtful.

@Micah

No one here, as far as I know, has stated that BitCoins will become widely adopted. The claims have always been that BitCoins could become widely adopted. The reason we are arguing in circles is because you kepp forgetting this and using it as a straw man.

Then as I said before, your talking past me as you and I are not discussing about the same things. The issue I raised, and I repeat, was that it will not become a generally accepted(Widely adopted) medium of exchange. See link. Your the one that chose to engage me on topic. If your one of these people who allegedly, “Are not arguing that BTC’s will become widely adopted” then why are you addressing me at all?

@Micah

BitCoins have use for direct exchange for someone

Bitcoins were invented/created/ and designed for what purpose? Hint(It says “Coin” in the name #$#%)

[Micah71381]

@filc

Yes I am trying to understand you just. At this point it seems like your trying to state that BTC’s were at some point traded for direct exchange. Whats odd about the argument is, unless I am mistaken, the whole purpose for creating bitcoins in the first place was for indirect exchange. What purpose does it serve in direct exchange? Who ever traded BTC’s for consumption? Can you consume a BTC?

I know it’s dissmissive of me but I write such arguments off as being silly. BTC’s were always intended as a mediumf of exchange. Direct exchange would imply that they had some other purpose, they do not. So again, sorry to be dissmissive, but I write the argument off as extremely unthoughtful.

Are you suggesting that items can only be consumed in their designed way? That it is impossible for someone to consume an item in a way other than what it was designed for? I can say that this is untrue because I have used items and seen items used for purposes other than their design in the past. A chair as a ladder. A phone book as a booster seat. A cardboard box as a fort.

• Premise: BitCoins can be used for purposes other than their designed purpose (see paragraph above).
• Premise: BitCoins must be used for a non-exchange purpose before they can be used for indirect exchange.
• Premise: BitCoins are currently used for indirect exchange purposes (as seen in the “hobbyist market”).
• Conclusion: Someone must have consumed BitCoins for a non-exchange purpose.

@filc

Then as I said before, your talking past me as you and I are not discussing about the same things. The issue I raised, and I repeat, was that it will not become a generally accepted(Widely adopted) medium of exchange. See link.

See my response to your link here: https://forum.freecapitalists.org/t/is-bitcoin-the-currency-of-the-future/7363/329

@filc

Your the one that chose to engage me on topic. If your one of these people who allegedly, “Are not arguing that BTC’s will become widely adopted” then why are you addressing me at all?

Because you are trying to claim that BitCoins cannot become widely accepted. I believe this statement is not true. I believe that BitCoins can become widely accepted. I am not claiming that BitCoins will become widely accepted. I am not making any claims for any level of probability of success. Only that it’s possible.

I believe I backed up my point in the link above, particularly the two tables. One table shows a potential route to wide acceptance while the other table shows a potential route to non wide acceptance. Both are possible outcomes unless you know the minds of every human on the planet (or at least the majority of them). Since I do not believe you can predict the action of a significant number of humans I therefore do not believe you can predict the failure of BitCoins.

[skylien]

@AJ

The question that seems unanswered isn’t only, “Why would enough people be like Saro?” but also, “Why are there people like Saro at all?” Without knowing that, I don’t see how we can know there won’t be more.

It is my understanding that BCs have a certain special temporal utility, which enables its users like Saro, to satisfy one need: To become more independent from flawed government money scheme that they (rightly) feel rips them off and suppresses all other attempts of commodity backed private money. The higher the pressure of deception becomes the higher the urge to find different ways to trade.

The flaw in BCs is that they need the very entity that they want to circumvent. If the above mentioned preconditions intensify I consider it possible that the use of BCs gains traction. But I only see dead ends for it at a certain point:

A: The monetary system of the government becomes sound again, so this special utility vanishes.
B: The government hijacks BC and integrates it into its structure, which means it is nothing more like Pay Pal etc. (I don’t know if technical possible, if not A,C or D will apply)
C: The government declares it illegal and fights it actively and throws its users into jail (as described in an earlier post you cannot do large business without the IRS noticing it)
D: The government stops to suppress private money. In this case the special utility vanishes as well and other commodity backed private currencies would outgrow BC easily.

A and C do not exclude one another.

It’s a bit like prisoners who develop their own secret sign language to communicate within the prison in a concealed way because the guards control and restrict what they want to say. Outside of the prison they would immediately stop using it, and it would be very unrealistic to believe that this will become the new main language outside or within the prison. Though within the prison, it might be quite useful if done not too conspicuously.

[Micah71381]

@skylien

It is my understanding that BCs have a certain special temporal utility, which enables its users like Saro, to satisfy one need: To become more independent from flawed government money scheme that they (rightly) feel rips them off and suppresses all other attempts of commodity backed private money. The higher the pressure of deception becomes the higher the urge to find different ways to trade.

The flaw in BCs is that they need the very entity that they want to circumvent. If the above mentioned preconditions intensify I consider it possible that the use of BCs gains traction. But I only see dead ends for it at a certain point:

A: The monetary system of the government becomes sound again, so this special utility vanishes.
B: The government hijacks BC and integrates it into its structure, which means it is nothing more like Pay Pal etc. (I don’t know if technical possible, if not A,C or D will apply)
C: The government declares it illegal and fights it actively and throws its users into jail (as described in an earlier post you cannot do large business without the IRS noticing it)
D: The government stops to suppress private money. In this case the special utility vanishes as well and other commodity backed private currencies would outgrow BC easily.

A and C do not exclude one another.

It’s a bit like prisoners who develop their own secret sign language to communicate within the prison in a concealed way because the guards control and restrict what they want to say. Outside of the prison they would immediately stop using it, and it would be very unrealistic to believe that this will become the new main language outside or within the prison. Though within the prison, it might be quite useful if done not too conspicuously.

B is not technically possible. The government could participate in BitCoin but they couldn’t take control of it like they can with things such as PayPal, eGold, etc.

I am willing to accept that A, C or D will eventually come to pass. However, I don’t necessarily agree with the outcome that you are suggesting. For example, if the occurance of A/D is far enough in the future that BitCoin is able to become a commonly used currency (reach mass market) do you still believe that it will lose favor over a competing currency?

Let’s say that none of the options you have proposed comes to pass for 1000 years. In that time BitCoin grows slowly and after 750 years everyone is using it for all day to day transactions. At the 1000 year mark the government returns to sound money and also allows private money. Do you think people will switch away from BitCoin in favor of some other form of currency when they already complete all of their daily transactions in BitCoins? What would be the driving force behind this change? What advantages to BitCoin can a new currency offer to lure people away from BitCoins once it is a well established currency?

In your prisoner scenario, if everyone in the world spoke this prison language and the prison language served the purpose of language as well as any other language, would people switch when outside of prison?

In the case of C the only option is rebellion, unfortunately. If BitCoin were to become the dominate currency before the government outlawed it then it’s possible that such a thing would push people over the edge to rebellion but it’s hard to say when the camel’s back is going to break.

[filc]

@Micah

Are you suggesting that items can only be consumed in their designed way? That it is impossible for someone to consume an item in a way other than what it was designed for? That it is impossible …

This is why I have a hard time discussing with you. I don’t even know how you draw the conclusion that I would be insinuating that. But it would be dishonest of you and very disingenuous for you to try and argue that BTC’s were created for any other purpose other then indirect exchange.

Your essentially creating a position for me, then trying to tackle that fabrication. Strawmanning.

@Micah

Premise: BitCoins can be used for purposes other than their designed purpose (see paragraph above).

What purpose would that be exactly?

@Micah

Conclusion: Someone must have consumed BitCoins for a non-exchange purpose.

So describe to us in what way they can be consumed?

Even if I conceded to you that a collector could or would even want to just collect BTC’s and you could somehow prove that they would never want to trade them away at a later date, we could still easily make a safe entrepreneurial guess that BTC’s are just likely to fail in gaining wide-scale acceptance. But if your not arguing that then why are you engaging me? (A point I frequently ask)

Who amongst us collected BTC’s without the intent of at least hoping to trade them away at a later date? Who amongst us collected BTC’s for their own sake? Can you point someone out? All you’ve done is created a hypothetical that fails even your own analysis. Since the first people who adopted BTC’s did so under the hope/objection that they could eventually be tradeable. In other words they collected BTC’s with the intent of exchanging them at a later date. They never collected them for their own sake to keep and hold.

@Micah

See my response to your link here: https://forum.freecapitalists.org/t/is-bitcoin-the-currency-of-the-future/7363/329

The response is completely non-relevant to anything I have argued. Which is why I ignored it in the first place and is why I further think you continue to be confused. I could use your argument to claim that lumps of crap could eventually be widely accepted.

What you did was explain mechanically how any object could ultimately become widely accepted, yet you ignored the fundamental logic of why someone would adopt lumps of crap(BTC’s Dollars, or anything) in the first place. Your response completely evades my whole discussion. And as I just stated you are talking past me. In fact I don’t even know what your response is relevant for.

Too add insult to injury it looks like your just typing for it’s own sake without ever addressing the issue. 20 pages of nonesense and you can’t stay focused. To add insult to injury AJ’s has to(innoscently) support the continued miscommunication.

@Micah

I believe this statement is not true.

Yet you can’t prove it. Your desperately trying to argue that BTC’s are useful in direct exchange. Explain why someone would want to directly hold BTC’s for any purpose other then to trade away later in exchange.

Do you understand the difference between Direct Exchange and Indirect Exchange? Do you know how frustrating it is to debate someone who at the same time must be taught the core principles of the discussion?