is that a real question? fuel and grocery prices change daily. I can remember watching the price of raspberries climb as they went out of season.
Not prices of individual products, but prices in general. Do they change on a daily basis? Jump or fall as much as 20% a day? What merchant would want to use this ‘currency’. Neither transactional, nor a currency.
its the bitcoin hater two-step: you cant buy anything with bitcoins, and if you could, you wouldnt want to because markets are volatile sometimes.
neither an argument, nor a proposition. what kind of person would consider this persuasive?
Sorry, by calling me a bitcoin hater, you have given up any claim to rationality. Bitcoin is what it is. I have 40 bitcoins. Doesn’t make it a currency.
Merchants need some stability in their ‘transactional currency’. Just look at all the Silk Road vendors that got taken to the cleaners.
lots of people have lost money dealing in gold, dollars, and other currencies besides bitcoin. I’m not really concerned about my credibility with you because you identified yourself as a “bitcoin hater” (read it again, I didnt call you that) and you seem cognitively impaired with regard to this subject. youre expecting me to agree with you that bitcoin isnt a currency because of market volatility. well it may not be a very good currency right now because of market volatility, but as you said, bitcoin is what it is. digital cryptocurrency. you can understand what makes it a currency, or you can refuse to understand. you can understand what makes it a good or bad currency, or you can refuse to understand. its no concern to me.
It isn’t a currency. It may be in your fevered imagination, but it isn’t a currency today, nor has it ever been a currency. Cryptographic tokens (probably not bitcoin, in my opinion) may become a currency once day, but it certainly isn’t a currency now. Educate yourself - http://www.searchasite.net/outsitesearch.html?domains=www.searchasite.net&client=pub-1307489338039489&forid=1&ie=ISO-8859-1&oe=ISO-8859-1&safe=active&cof=GALT%3A%23008000%3BGL%3A1%3BDIV%3A%23FFFFFF%3BVLC%3A663399%3BAH%3Acenter%3BBGC%3AFFFFFF%3BLBGC%3A150567%3BALC%3A000000%3BLC%3A000000%3BT%3A0000FF%3BGFNT%3A0000FF%3BGIMP%3A0000FF%3BLH%3A0%3BLW%3A0%3BL%3Ahttp%3A%2F%2Fwww.feynd.com%2FFeynd200x50.gif%3BS%3Ahttp%3A%2F%2Fwww.feynd.com%3BFORID%3A11&hl=en&channel=3043951928&q=bitcoin&sitesearch=http%3A%2F%2Fwww.economicpolicyjournal.com%2F&sa=Search+Within!
Robert Wenzel from the Economic Policy Journal agrees with me.
Economic Policy Journal, March 23
http://www.economicpolicyjournal.com/2013/03/man-lists-home-for-sale-in-terms-of.html
Bitcoins can only be considered money when people are comfortable to price products in terms of bitcoins and nothing else. That is, they think in terms of bitcoins as a reference and not translate it into their native fiat currency before making transactions. Bitcoins would also have to be accepted by a broad base of the populous in a given area, since money is the most liquid commodity. Bitcoins are not there yet.
Will this ever occur? It is not known. The more the government oppresses the people by limiting transactions, such as street drug transactions, the more people will seek out the relative anonymity of bitcoins. If enough transactions occur with bitcoins, people are apt to start thinking strictly in terms of bitcoins in their exchanges, without translating back to a native fiat currency—at that point, if that ever occurs, bitcoins should be considered money. At present, bitcoins should be considered a combination fluctuating price receipt for money, price inflation hedge and interesting speculation on a climb in their value as bitcoins become more popular.
EPJ Daily Alert April 14
I want to devote an important amount of this morning to bitcoins.
First, a few basic points:
1, Bitcoins are not money.
-
They are a floating priced electronic receipts for money—but as a
receipt it has the potential to become money in the future. -
It is possible that in the future they could become money IF people
are willing on a broad base to accept bitcoins in exchange for goods.
Remember, a money is the most liquid form of commodity. Bitcoins are
currently not such. Try going to your local gas station and buying gas
with bitcons. At present, we are nowhere near bitcoins becoming money.
appeals to authority arent usually good arguments. but this is one of the worst. why dont you educate yourself instead of linking and quoting irrelevancies.
You haven’t answered any of my previous objections. They are objections that Robert Wenzel raised too (chronologically, I raised them first here).
When did bitcoin become a currency, Malachi? On what date?
Something doesn’t suddenly “become money” unless you mean by legal fiat.
For bitcoin, it becomes money when it is used as such, to facilitate exchange. Thus it’s money for you if you use it as money, and not money for those who haven’t yet. It’s praxeologically money when used as such. When a large number of people begin using it so, then the masses will be comfortable calling it money, but that doesn’t mean it cannot be used as money right now or is not being used so right now, it can and is.
There are a lot of things, a whole lot of things, that I’ve never personally used as money. The vast majority of things in fact. But bitcoin I have used as money, to buy a good in fact.
From a friend: "…did you guys know the ASIC servers are coming online in the next 2 months? The network difficulty is about to go right through the roof. There’s going to be really dramatic unloading and shuffling until the network stabilizes around the new production paradigm
I should add that GPUs have additional costs which ASIC servers do not. Namely, you can hook more than 2 ASIC servers to a single computer. Most PCs max out at 3 or 4 GPUs. With a series of USB hubs, it would be possible to hook an unlimited number of ASIC servers into a single computer. As such, you save a ton of money on support (non-revenue generating) hardware. Really, who wants a dozen motherboards anyway?
…There’s more costs associated with hardware than the GPU. Namely, a PC can only hold three or four of those bad boys. Believe me when I tell you, the cost of extra mother boards, memory, power supplies, ram, and monitor switches adds-up quickly. Not to mention the heat. 15 GPUs can raise a sealed 20x20 room’s ambient temperature by 75 degrees in less than 5 minutes. It takes some serious engineering to expel that much heat from an enclosed space. I thought a plastic fan might work in the window…then the fan melted. A cluster of GPUs needs an actual exhaust system, and the space to hold all the equipment. When you cost average non-revenue equipment into the cost of GPU mining, the cost per MH becomes rather prohibitive… Well, it was prohibitive when BTC were trading at less than $10. However, the difficulty was under 1,000,000. With the difficulty over 7,000,000 (it’s gonna break 8 million at the next difficulty check), it’s impossible to make a profit with any number of GPUs. The power costs alone will eat the miners alive.
This bubble is the last chance for GPU miners to recover their sunk costs and turn a profit.
I pay $.11 per kWh. With 24 GPUs @ 750,000 difficulty I could make 2-3 BTC per day through pooled mining. The power costs were $750 per month. I could break-even while BTC stayed above $10. I never recovered all my sunk costs.
Assuming power costs are comparable everywhere, a 24 GPU system (which is a big cluster computer) @ 7,500,000 (or 10x difficulty) should be able to produce .2-.3 BTC per day. I’d say that’s, at most, 14 BTC a month. The price needs to stay above $50 to break even. I guess fifty is the new zero while there’s still GPU mining.
I assume all miners, prior to the current bubble, have been running at a loss for a very long time.
The major source of cost is power. The ASIC systems use 5 to 10 times less power than GPU systems. To me, that means the ASIC miners can sell their coins for less than GPU miners’ coins. I would assume the ASICs will drive the price of BTC back down to $20 or so.
The ASIC boxes are quiet, cool, and consume almost no power. Not to mention the fact that you can hook dozens of them into a network of USB hubs. One computer, dozens of miners. To me, that equals very low barriers to entry. Lots of competition in a zero-sum game. Thanks anyway."
This virtual mining is some real serious business. A pity the computation isn’t solving some useful problem.
Thus it’s money for you if you use it as money, and not money for those who haven’t yet.
Big boo boo right there. Economists of all schools disagree with this. From the first line of Wikipedia on Money:
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country.[1][2][3].
“Generally accepted”. Write it down. Those words are there precisely to say you are wrong.
It’s praxeologically money when used as such.
Wrong again.
A definition per se is not part of praxeology.
And to my fellow readers, we see an important lesson here. If you see a post with the word “praxeology” in it, count your silverware.
Our fellow Smiling Dave is saying above that “generally accepted” has a precise meaning.
Well, i don’t know about that. When I say stock options are generally accepted as compensation, for instance, what is the precise meaning of “generally” here?
I’m almost sure I cannot buy bread with stock options. Perhaps the meaning of “generally accepted” comes within a certain context, say, when we’re talking about how senior executives get their bonus payments.
This whole thing looks like a medieval theology debate where people are more occupied in dissecting linguistic categories than in analyzing real world phenomena.
There are no distinct categories of money-things versus non-money-things, so there’s no point in trying to make a case on bitcoin falling in one or another.
To the extent that a number of people keep reserves of bitcoins so to make future transactions, it is money.
It might be not a very “widespread and accepted” money outside a very specific group, but neither is the Sri Lanka rupee.
Money is whatever behaves like money. And anything that is used as a buffer for transactions behaves, to some extent, as money.
In some prisons, cigarettes are very similar money. In school yards, kids have commodities they actively trade, like baseball cards and so on.
Even immaterial things like reputation and endorsements can manifest money-like features.
And anything that can be converted to “money” fast and at low transaction cost is almost “money”.
Maybe bitcoin was used more as money at its inception and now its basically a speculative tool, that can be interesting argument, because it’s based upon the fundamental understanding that the status of moneyness is gradient, and not categorical.
But some people seem to be locked in a very outdated mode of thinking.
Our fellow Smiling Dave is saying above that “generally accepted” has a precise meaning.
No I’m not. Quote the line where I say that. Answer: I don’t. Which makes most of your post besides the point.
This whole thing looks like a medieval theology debate where people are more occupied in dissecting linguistic categories than in analyzing real world phenomena.
Yes, to you it may look like that.
Let me explain what is really going on. Mises proved that bitcoin will never be “money”. The bitcoiners have their feelings hurt by that statement. They think, correctly, that they will be less able to pump and dump their useless bitcoins if people accept that bitcoin will never be money. So they are twisting themselves into pretzels, being very creative about what the word money means.
To help you understand, suppose someone claimed that a certain brand name protein drink contains no protein. The company then says that protein means different things to different people, and that this whole thing looks like a medieval theology debate where people are more occupied in dissecting linguistic categories than in analyzing real world phenomena.
That’s the situation here.
There are no distinct categories of money-things versus non-money-things, so there’s no point in trying to make a case on bitcoin falling in one or another.
Wrong.
A shy man tells a matchmaker he does not want to be set up with an ugly girl. But when date night rolls around, he finds himself before a hunchbacked lady with half her skin rotted by leprosy.
Upon complaining to the matchmaker, she defends herself by saying that there are no distinct categories of ugly things versus non-ugly-things, so there’s no point in trying to make a case on bitcoin the leprous hunchbacked girl falling in one or another.
Is she right? Nope. Why not? Because although the mid-range of pretty and ugly is vague and subjective, the extremes are not.
Bitcoin is at the extreme range of “almost nobody”. It’s not a subjective value at that range.
Of course, I’m not the first one to point this out. Mises and Rothbard did, too, about exactly this variable [how widely used as medium of exchange].
Also, besides being wrong, you are being irrelevant. The point of my post was that X being money to Mr A does not depend on Mr A using it or not.
To the extent that a number of people keep reserves of bitcoins so to make future transactions, it is money.
No. “A number” is not enough. You forgot about “generally accepted”.
It might be not a very “widespread and accepted” money outside a very specific group, but neither is the Sri Lanka rupee.
Did you even read my post? Here’s the Wikipedia on Money I quoted.
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given socio-economic context or country.[1][2][3].
Look at the last word. Look at it again. Now look at what you wrote.
Money is whatever behaves like money. And anything that is used as a buffer for transactions behaves, to some extent, as money.
I understand that you can make up your own language. In your new language,you can let “money” mean whatever you want. But in English, in a discussion of economics, money means what the Wikipedia quoted the standard economics textbooks as saying. And these texbooks are all saying the same thing, that money has to be generally accepted to fulfill the standard definition of money.
In some prisons, cigarettes are very similar money.
Prisons are "given socio-economic context".
Also, bitcoins are used way way less, even by bitcoiners, than cigarettes in prison. As Pete told me, of the 11 billion dollars worth of bitcoins out there, 350,000 dollars worth of them are used by bitcoiners to buy stuff. Which comes to about 3 thousands of one percent.
Of course, now that bitcoin has lost two thirds of its value, the numbers may differ a bit. But the principle is the same.
In school yards, kids have commodities they actively trade, like baseball cards and so on.
Pork bellies are actively traded in huge markets, way more than baseball cards in school yards. Are you saying pork bellies are money?
Even immaterial things like reputation and endorsements can manifest money-like features.
Maybe, maybe not. In any case, irrelevant. The hunchbacked leprous girl may have manifested pretty-like features, but she was not pretty.
And anything that can be converted to “money” fast and at low transaction cost is almost “money”.
The word "almost’ is vague. A gambler who bet on the dice showing seven and threw a six, losing his shirt, almost won. So what?
In any case, this is irrelevant to the question of Anenome being wrong.
Maybe bitcoin was used more as money at its inception and now its basically a speculative tool, that can be interesting argument, because it’s based upon the fundamental understanding that the status of moneyness is gradient, and not categorical.
That is meaningless verbiage.
But some people seem to be locked in a very outdated mode of thinking.
Maybe it is outdated to insist on Anenome using the word money the way everyone else uses it when discussing what Mises said about money [who was using the word the way everyone uses it]. If that makes me old fashioned, so be it.
BTW, Toxic, please forgive me if I don’t reply to future posts of yours. You seem to have wildly different thinking processes than mine. I doubt we can understand each other.
Hayek writing in “The Facts of the Social Sciences”:
[the objects of the social sciences] can be defined only by indicating relations between three terms: a purpose, somebody who holds that purpose, and an object which that person thinks to be a suitable means for that purpose. If we wish, we could say that all these objects are defined not in terms of their “real” properties but in terms of opinions people hold about them. In short, in the social sciences the things are what people think they are. Money is money, a word is a word, a cosmetic is a cosmetic, if and because somebody thinks they are." (emphasis added)
Searle writing in Minds, Brains and Science:
…many of the terms that describe social phenomena have to enter into their constitution. And this has the further result that such terms have a peculiar kind of self-referentiality. ‘Money’ refers to whatever people use as and think of as money. ‘Promise’ refers to whatever people intend as and regard as promises. I am not saying that in order to have the institution of money people have to have that very word or some exact synonym in their vocabulary. Rather, they must have certain thoughts and attitudes about something in order that it counts as money and these thoughts and attitudes are part of the very definition of money." (emphasis added)(p.78)
Mises, Human Action:
Economics is not about things and tangible material objects; it is about men, their meanings and actions. Goods, commodities, and wealth and all the other notions of conduct are not elements of nature; they are elements of human meaning and conduct. He who wants to deal with them must not look at the external world; he must search for them in the meaning of acting men. (3rd rev. p.92)
Kirzner, The Economic Point of View:
[the praxeological] point of view makes possible the construction of chains of reasoning that are purely formal, in the sense that they refer to goods, services or factors of production only abstractly; they depend for their validity not on the specific objects which human action may be concretely concerned, but only on postulated attitudes of men toward them. (p.179)
Rothard, Man, Economy and State:
Here again, it is very important to recognize that what is significant for human action is not the physical property of a good, but the evaluation of the good by the actor. (p. 19)
Ok,
Forget about money, too complicated for a dumbass like me.
Let’s make it simple: Is bitcoin a commodity?
If not, why not?
ps: the question was asked to smiling dave but he doesn’t like to talk to me. So any anti-bitcoiner can participate 
we have been telling you this for a long time. the people who use bitcoin as money are context for bitcoin as money. since these people exist, you must either acknowledge that bitcoin is money or pretend they do not exist. so far you have chosen the latter.
That’s a difficult question. I probably wouldn’t describe it as commodity, rather maybe quasi-commodity or commoditised service. It’s more helpful to ask if bitcoin is a good. According to Menger, a good must have four requirements:
- existence of a human need
- the good being capable of satisfying this need
- human knowledge of this relationship
- ability to use the said good to satsify the relationship
Based on this, Bitcoin is a good. It satisfies the human need to reduce transaction costs of exchange, i.e. its utility is derived from the need to trade.
Frank Shostak’s “The Bitcoin Money Myth”
makes me sad.
He claims that Bitcoin is not money, but a way to do transaction with (other) fiatmoney, because Bitcoin is valued in other monies and does not have a value in themselves.
What this respected scholar fails to understand (in that blog text, with more afterthought he’ll see it clearly, I’m sure) is that Mises’ regression theorem is applicable only to the first emergance of money where no previous money exists. It is not applicable to, say, the shifting from silver to gold, from D-mark to euros or from euros to Bitcoin. Once there is money, once anything is money, there are clear relative prices of goods. Shifting to new money doesn’t directly change those relative prices. So Bitcoin is straight forward translatable to dollars and whatnot, as are all other monies.
Bitcoin is not a good in itself, it has no value in itself. But it is not fiatmoney, because there is not “fiat”, no authority manipulating their creation. Shifting from fiatmoney to Bitcoin eliminates that political control, and that’s the great advantage and long term guarantee for greater reliability.
(Sure, Bitcoin is not, yet, generally accepted as a medium of exchange, but Shostak makes a completely different argument, which is obviously false)