Today, June 20 2011, you can dowload the interview free from schiffradio.com
Tomorrow by 10 AM or so it will be gone.
Schiff gets it. It’s so typical that the promoters of bitcon only want to talk about all the technical issues instead of the economics. The guy had no answer to the question how we can differentiate bitcoin trading from a faith-based speculative bubble (because as Schiff says, and I have said: they’re not consumer or producer goods, nor are they required to pay taxes), and instead of realizing the weight of this question he just kept going enthusiastically.
It’s sad that Schiff is an IP shark, or else I could repost the important part on my channel.
Aside from the cost-effectiveness of counterfeiting proof-of-work, I still don’t see how is it impossible to counterfeit Bitcoins.
Well, to counterfeit Bitcoins you would either need to make your own edited version and get a lot of people to accept it and set up an exchange rate, or you would need to crack the encryption. The first is unlikely and wouldn’t work very well, and if you can manage the second then you would make far more money selling state secrets and selling nuclear launch codes since government agencies, the NSA, etc use the exact same encryption.
It’s is just computer code. It will get hacked especially if it claims to be producing wealth. They want regulation to legitimize what money peopl have investment in it. It is classic uncompetitive competition behavior.
However, there is no reason why some company should not rise to challenge PayPal. I use PayPal and hate the fact that they can “put a hold” on my account for just about any reason and there is no phone line to resolve. You are FORCED to comply with whatever ridiculous demands/accusations they may be making.
Not to mention it is a globalist multi-national bank.
What if you break into Bitcoin’s office and steal the encryption?
But, ah-ha! So whoever knows the encryption can counterfeit.
So whoever knows the encryption can counterfeit.
Well, if you studied your alchemy you can create gold, too.
But seriously, I think you raise a major issue. Despite the bragging that the whole thing is decentralized, there is one guy with the keys to the safe, as it were, and all bitcoin customers have to trust him.
He promises to increase the amount of coins at a certain predefined rate, and never ever ever make more than that. Cross his heart. And you have no way of knowing if he is keeping his promise.
But the key point is, once again, the thing has no intrinsic value. The people who created bitcoin have no clue that this is even a problem; nor do their faithful followers.
It would be nice if they would seek to educate themselves in basic [Austrian] economics without bias. Meaning that they would be ready, should their enlightenment justify it, to close up shop and say “Sorry guys we blew it; never grasped this intrinsic value thing until now. Guess I’ll have to lose many potential millions, but so be it.”
Instead they seem to be making stuff up on the fly, them and their apologists.
When bitcoin collapses, as it will sooner or later, let the record show that we told you so. We have earned the right to stick out our tongues at you, pending the collapse of course.
Wrong analogy. A gold mint could counterfeit gold bars.
This.
Nothing has intrinsic value. The notion of intrinsic value is entirely incoherent to anyone with a basic understanding of economic theory. I don’t know much about bitcoin, but it simply isn’t money, which is defined as a commonly accepted medium of exchange. Bitcoin seems to be, at very best, a tertiary medium of exchange whose value is entirely contingent upon the expectation that it can be readily exchanged for money proper (dollars, pounds, etc). You cannot pay salaries with bitcoin, and you cannot go to the market and buy groceries with bitcoin.
But it if Bitcoin ever did become money, it would be a serious theoretical problem for Mises’ regression theorem.
But it if Bitcoin ever did become money, it would be a serious theoretical problem for Mises’ regression theorem.
Why is that?
It never had an industrial or secondary use, and its value was never directly tied to either (a) commodity money which, at some point in time, had a secondary/industrial use, or (b) fiat money which was, at some point in time, directly tied to commodity money (which, again, had a secondary/industrial use). In order for it to be consistent with Mises’ regression theorem, you should be able to tie the employment of bitcoins as money all the way back to the emergence of commodity money.
Okay I have no idea where all this counterfeit talk came from, but there is a lot of confusion about how the network works…
That doesn’t even make sense.
This makes even less sense. I’m not attacking you, you’re my bro, but there’s really no other way to say this: you have no idea what you’re talking about.
I do not quite get your claim… Bitcoin is tied to currencies. Why cant this flow chart work:
bartered use commodity - medium of exchange - fiat currency - Bitcoin
I was kind of disappointed with this interview, but I can’t really say I didn’t expect as much. I could have easily guess Schiff wouldn’t have done any homework. This is why I’m so looking forward to Murphy’s article. I want to hear a real assessment from someone who understands both ecnoomics and the technological workings of bitcoin.
If anyone wasn’t able to download the show, the interview portion should be available in the sidebar under “Broadcast Central” at the SchiffRadio.com site until the end of the week.
This flow chart could work, and bitcoin is not directly tied to any currency (the value of paper notes were directly tied to gold).
Bitcoin would have to become directly tied to money proper, to the point where the two are interchangeable. Next, individuals would have to choose/prefer the employment of bitcoin over fiat paper currency, to the point where they suspend the employment of the latter altogether. This can occur organically or through government intervention (decree), as was the case with the employment of fiat paper money. If it occurred in this way, then it would not constitute a serious problem for Mises’ theory. If, on the other hand, people just decide to employ bitcoin as money over fiat paper-currency, without a direct link, then Mises’ theory would be empirically invalidated.
So in other words, Mises’ theory would be compromised if tomorrow individuals just stopped using dollars altogether in favor of bitcoins.
[Edited for clarity]
I really cannot grasp your view here. Bitcoins are linked to currencies though, right?
Please re-read my previous comment. I edited it for clarity. But to answer your question:
there is an exchange rate between bitcoins and dollars, the same way that there’s an exchange rate between apple pies and dollars, gallons of gas and dollars, etc. But this does not mean that apple pies and gallons of gas = money. When I say a “direct link,” I mean that 1 unit of bitcoin is, for all intents and purposes, absolutely identical to a unit of dollars; when they are interchangeable as a medium of exchange.
Just a quick note: the sign of a good theory is falsiability. I don’t see anything wrong with proving some theory invalid because it contradict reality. Problem would be if it was impossible to disprove it.
Indeed. Isaac seems to think that Mises’ theory is absolutely unfalsifiable; that money can emerge in anyway and it will be absolutely consistent with Mises’ theory. This simply isn’t so. Mises’ theory asserts that money must emerge, and may change over time, in a very specific way (which is why it’s a theory in the first place).
"I do not quite get your claim… Bitcoin is tied to currencies. Why cant this flow chart work:
bartered use commodity - medium of exchange - fiat currency - Bitcoin"
Because you’ve omitted the part about legal tender laws… allowing fiat currency to remain in existence.
bartered use commodity (freemarket) → medium of exchange (__*__freemarket) → fiat currency (state intervention → legal tender laws etc. cut ties to gold completely for USD in 1971) → Bitcoin (built on top of fiat currency)
Bitcoin is merely a reaction to the existence of the state. It is not a valid free-market money. Does anyone know if there’s anyone exchanging their gold coins for bitcoins? Haha!
Can someone give me the ‘positives’ / ‘arguments for’ bitcoin - that would still exist, if there was a voluntary society? Are there any?
*[Daily Bell](http:// http://www.thedailybell.com/1936/Anthony-Wile-with-Dr-Hans-Hermann-Hoppe-on-the-Impracticality-of-One-World-Government-and-Western-style-Democracy.html): You have also written extensively on money and monetary affairs. Is a gold standard necessary for a free society?
Dr. Hans-Hermann Hoppe: in a free society, the market would produce money, as all other goods and services. There would be no such thing as money in a world that was perfectly certain and predictable. But in a world with unpredictable contingencies people come to value goods also on account of their marketability or salability, i.e., as media of exchange. And since a more easily and widely salable good is preferable to a less easily and widely salable good as a medium of exchange, there is an inevitable tendency in the market for a single commodity to finally emerge that differs from all others in being the most easily and widely salable commodity of all. This commodity is called money. As the most easily salable good of all it provides its owner with the best humanly possible protection against uncertainty in that it can be employed for the instant satisfaction of the widest range of possible needs. Economic theory has nothing to say as to what commodity will acquire the status of money. Historically, it happened to be gold. But if the physical make-up of our world would have been different or is to become different from what it is now, some other commodity would have become or might become money. The market will decide. In any case, there is no need for government to get involved in any of this. The market has provided and will provide some money-commodity, and the production of that commodity, whatever it is, is subject to the same forces of supply and demand as the production of everything else.