this is the crux of the argument. clearly bitcoin was valued. what for? Dave explains that bitcoin was never actually valued, bitcoin is the byproduct of the thing that was valued. and, if we could not find value in bitcoin, perhaps Dave would be right. but its easy to find an industrial value in bitcoin, no one here can deny that the sending of messages to another person, digitally, with a pseudonym, and in code, over a network that is publicly accessible, redundant, and encrypted is valuable. after all, you are on the internet. how valuable? thats up to the individual to decide. remember that salt was money at one time. if you dont like bitcoin, you can think of Dave as that guy in your clan who didnt like the taste of salt.
…its easy to find an industrial value in bitcoin, no one here can deny that the sending of messages to another person, digitally, with a pseudonym, and in code, over a network that is publicly accessible, redundant, and encrypted is valuable. after all, you are on the internet.
Jones was ecstatic. The computer store sold him some software that allows him to send encrypted messages. He quickly sent one to his girl friend. “We elope tonight. Meet me by the lake at midnight.”
Jones was at the lake at midnight. No girl friend. He went to her window to investigate, and heard her gentle breathing as she slept.
“Didn’t you get my message?”
“Sure did. It said I now own a bitcoin.”
You get the idea. Software for sending secret messages is useful, if you get to choose the message. But if the only possible message is, “Psst, you own a bitcoin”, it’s useless. Unless having that message in that your computer has intrinsic value, which it doesn’t.
While we are at it, may as well refute the “non monetary use is speculation” mistake.
A popular fallacy recently is saying bitcoin’s initial value, unrelated to its use as money, is its value as a speculation. People bought it because they thought it would go up in price. The possibility of getting rich if you buy some is its initial non monetary value.
Which totally misunderstands the nature of speculation. A speculator thinks the current market price of something is less than it will be in the future. Today bitcoins sell for a dollar; a year from now they will sell for ten. But the question is, why should a bitcoin sell for ten dollars a year from now? What usefulness will it have then that it doesn’t have now? A year from now it still has no non monetary use.
People are very excited about this speculation answer. They think they have solved the riddle of bitcoin. Heaven help us.
And what’s the intrinsic industrial value of gold, then?
I think it was it’s beauty. And that you could convince a girl to escape with you for it, away from her father’s alternative marriage plans. As an eternal indestructable proof of your love.
What was ever constructed industrially with gold at the time it became money? Not even a piss pot? Oh!
Helloween,
You have to read Bitcoin Takes a Beating a few times. Especially the quotes from Mises.
If you read the Mises quotes about industrial use very very slowly, not as a comic book, but a dense meaningful text in which every word is there for a reason, you will find the answer.
Or maybe someone here will volunteer to enlighten you.
I have read your link “as a comic book”. But I certainly get your point: Gold has a value even when it is not used as money by anyone. Bitcoin hasn’t. Right?
But neither has USD or EUR! Bitcoin is just a bit better than those fiat currencies. That’s why people might wanna move from them to Bitcoin instead. Just like other money is exchange into safer haven currencies, like maybe now CHF, all the time in the financial markets.
If gold starts to be used as money, I’d give Bitcoin small chance to dominate. But as it is now, it stands up against much weaker competition and might well succeed.
Fiat currencies are all backed. No, they really are: they will always buy one temporary relief from the thugs that issue it.
Helloween,
Well done.
As for the difference between fiat currencies and bitcoin, the difference is the following [to be read a few times, not as a comic book, you get the idea].
When the fiat currency was first introduced, the public was able to exchange their old currency for the new at a fixed rate for along time, with ease. The govt accepted their old money and gave them new money at a fixed rate, on demand. Thus it was clear to all the relation of the new currency to the old.
With bitcoin, that is not the case. No one was exchanging bitcoin for dollars on demand, and there was no fixed rate. Most people never even heard of the stuff. The few who did had no idea what the minimum price bitcoin would trade for in a week or a year. Maybe fools would chase it like some fad, but maybe it would trade for it’s intrinsic value, meaning zero.
Really, Helloween. I’ve said this all so many times. The sequence is always the same. First, some foolish imputation of value to bitcoin,delivered in a spirit of arrogance and condescension. Dave explains why it is foolish. Then when it dawns on the fellow that actually bitcoin is worthless, he asks why Dave is discriminating against it but is OK with fiat money. Dave explains the difference. Then comes the claim that who cares about the past, or the regression theorem, somehow bitcoin did the miraculous and became a money as we speak, because it is traded on mtgox.com, or because some stores in Germany accept bitcoin. Feel free to read my blog. Bitcoin All in One Place is the article to start with.
SD, you got some ‘splainin’ to do!
Coinbase Now Processing $15M Per Month In Bitcoin Buys and Sells
Dave, I’m disappointed. I thought you were a lot better informed on computer science than to think that one could not send messages over the bitcoin network. surely you understand that an encrypted message isnt readable unless its been decrypted. and you have heard of steganography, and other encryption techniques where crypttext resembles a different plaintext, so nonrecipients dont even know that there is a message.
wrong. Bitcoin can be used to communicate.
While true, such a practice is considered bad form, and would be very expensive on network resources.
Not that it hasn’t happened anyway…
I’ve been following this thread for some time, and I think that you guys are arguing over how many angels can dance on the head of a pin.
Let me simplify things a bit. Gold and silver are ideal monies, but are not currencies in any practical sense in our modern, global economies. They also both suffer from some weaknesses that make their revival as the root of value calculations unlikely. The greatest of which is that men with badges and guns can take it away from you. Bitcoin is not gold, nor is it “as good as gold”. In a world without governments and bankers who are willing to use force against those who attempt to circumvent their financial regulations to any significant scale, Bitcoin has no practical advantages over a digital gold certificate (i.e. eGold). But that is not the world that we live in. Bitcoin’s greatest market advantage is that it mimics some of the more important features of gold as money and cash as currency on the Internet, and does so at a transactional cost far below what fiat currencies can compete against. If any major, western society were willing to drop the whole financial regulation thing and offer a digital gold cert as an official currency, that same currency would conquer the world if the other nations didn’t conquer them first, and Bitcoin wouldn’t stand a chance either. Again, that’s not the world we live in. Bitcoin is better than fiat as an international trade currency, is resistant to regulations, indifferent to tax regimes, and incrediblely difficult to counterfit even with the best color laser printer ever built. All that, and we haven’t even touched the advantages of Bitcoin “contracts”, which cannot be replicated by fiat or gold money in any practical sense, central banker or not.
https://en.bitcoin.it/wiki/Contracts
Bitcoin is past infancy, and won’t be fading away to non-existance within my lifetime. Anyone who still thinks otherwise is either willfully ignorant or materially invested in it’s demise. That is not to say that Bitcoin is necessarily as valuable as some may believe, but it’s not valueless either.
Sorry, but you’re misinformed. No such offical FAQ exists, and it never can. The only official document is the white paper published by Satoshi Nakamoto, and I seriously doubt that he will have anything more to say on the matter. If certain speculations are correct, that Satoshi was actually a Japanese native pretending to be a British national, he may very well be dead. His last posts on the forum (and his last marks on the Internet anywhere) under that name were just prior to the tsunami that hit Japan in 2011. Anyone else’s opinions are no more authoritive than my own, and I don’t agree that Bitcoin is anything like MySpace.
Moon,
We do try to keep the level of conversation here above that of an infomercial. You know, stuff like giving evidence for otherwise empty assertions.
So how do you know the future? Are you Dr Who?
BTW, how have you refuted the regression theorem w.r.t bitcoin?
Malachi,
Even if we grant bitcoin can be used to send love letters, which more informed posters here say has prohibitive transaction costs, but it in fact has never been used that way. So that no one looked at their bitcoin and said. “I really want this so I can send encrypted messages”. Thus it is not valued for that use by anyone.
Quick poll: All you readers used their botcoin to send secret messages unrelated to the fact of them having a bitcoin, raise your hand. Nobody? Nobody.
Aneneome,
What’s to explain? Tulipmania? Bitcoinmania?
The drop today from $125 to $106?
that is a preposterous series of arguments by assertion. first of all, you are proposing to settle a praxeological claim with a thymological observation, and secondly, that observation you cannot make, by necessity of the bitcoin message being encrypted. its actually an incredible feat because the crypttext is publicly viewable, indeed it is redundantly distributed all over the world. but the message remains so private that no one even knows it exists except for the author and receipient.
thats like an individual refusing to believe that a given woman has nipples in her breasts because no women have ever shown him or her their breasts. the messages are private. why would someone, or anyone, do the ridiculous things you guys expect of them? “what secret messages have you been sending? what was the last thing you bought with a bitcoin!?” its the antibitcoin geheimnisvoll statsipolizei
Oh boo-fuckin-hoo bitcoin lost a few dollars in value today, oh noes! Must mean tulips! Lol, get a grip dude. You don’t get to claim victory until it comes crashing down. Until it does, every proceeding day makes you look more and more like a fool. Own it.
thats not really true. its always possible that we will discover an element even more suitable for money than gold. does that mean gold isnt money?
My assertions are not empty, I’m jsut not interested in repeating myself. Particularly in a fruitless attempt to convince someone on the Internet. The relevant data is on this forum, as well as much more of it in bitcoin forums. If you don’t like Bitcoin, don’t buy it.
Bitcoin does not violate the regression theorem, you’ve been misapplying it. And since this has been pointed out to you in the past, repeatedly, well over a year ago; I assume you do so deliberately. If nothing else, you remain willfully ignorant of the facts.
And that would mean what, gold reverting to its purely commodity price of perhaps a couple hundred an ounce, if that.
Bitcoin’s commodity value is–virtually zero. So if its exchange value disappeared it’d be gone.