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Don't buy Bitcoins (video)

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Ladyattis, do you have also no interest in gold because you can't pay with it on Amazon or Ebay? Just wondering.

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Yes, I don't own any gold or silver. It's a hedging commodity, not money in the modern sense or usage.

"The power of liberty going forward is in decentralization.  Not in leaders, but in decentralized activism.  In a market process." -- liberty student

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AJ replied on Tue, Aug 9 2011 8:47 PM

Smiling Dave:

Second, are you familiar with Mises' regression theorem? If yes, have you thought out the implications?

Finally, Smiling Dave to the rescue. Here is a quote from my humble blog, just to show you I have understood the argument Suede is presenting:

... just because gold might be worth a few pennies as a trinket doesn't really give it an advantage over bitcoins.

The razor sharp rebuttal is right here: http://smilingdavesblog.blogspot.com/2011/06/bitcoin-takes-beating.html

Excellent article, Dave. Now I understand the regression theorem. 

However, it seems the process has already been started some way or another, whether by geek cred value or who knows what. 

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AJ replied on Tue, Aug 9 2011 9:02 PM

Smiling Dave:
Now, call me suspicious, but I fear that the next ridiculous defense of bitcoin will be that 25 geeks in their mothers' basement who use bitcoin for geek cred, and certainly the number of people using bitcoin right now, constitutes "wide" "general" and "common" use. After all, the term is admittedly vague, and up to the judgement of the historian, meaning anybody at all who wants to. I will not bother to argue about that. You have every right to your opinion, however foolish and misinformed, about the meaning of those words. To me, "wide", "general", and "common" means you can buy most everything for sale in Walmarts or in a Sears catalogue with a bitcoin, which is hardly the case.

The vague part about Mises's regression theorem is indeed this question of what constitutes "wide/general/common" usage. 25 (let's be generous and say 2,500) geeks scattered around the globe a hundred years ago would not have been able to use bitcoins to trade with, even supposing the computer technology could handle it, since there was no Internet.

But suppose those 2,500 were all in one place. They could trade BTCs for physical goods easily, as well as services of course. With the Internet, they can at least trade services: software development, writing, translation, web design, consulting, sexual services, teaching, cooking advice, advertising, etc. To the extent that they trade such services, the physical scatteredness of them makes no difference. To the extent to which their trade is limited to such services, it is scarcely different than a small town of them in one place. And I'm sure there have been plenty of historical examples of money developing even among small settlements of a few thousand people.

So I don't see that the regression theorem is universally applicable in its present form in the Internet age with the interpretation of "common usage" needing to be localized geographically, nor that there is any reason in principle that Bitcoin cannot succeed now that any community can be "virtually localized." That is after all how we are here on this forum, with posters all over the world having the norms and conventions of discourse that would normally only ever have formed in a small town pub.

Note: The price action, even if it goes to zero and stays there, doesn't necessarily mean anything for Bitcoin-like currencies, although it may spell the end of Bitcoin itself. More hacking and more people losing their BTCs might get people to abandon it, but if it's just a matter of security there could well be another service that comes along with better security, and then Bitcoin's price charts won't necessarily mean a thing. So the price of Bitcoin itself is not an issue, unless we are looking only at Bitcoin (rather than a successor).

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However, it seems the process has already been started some way or another, whether by geek cred value or who knows what.

I like to think that it has been started by speculation. Meaning people are only buying bitcoins expecting to sell them to the next sucker when the price goes up. In other words, we have another tulipmania on our hands.

All that geek cred value is nonsense. It is a testament to the bitbugs reaching the bottom of the barrel. Here are my reasons:

1. If you and your sister decide to trade tarot cards back and forth in exchange for food or other things, is that enough to give a valuation for tarot cards? Of course not, it has to be a significant slice of population that values the thing. How many geeks are there who care about such a thing, enough to pay for it?

2. After a week or so, the geek cred of having a bitcoin vanishes. When the bitocin is no longer a novelty, nobody cares about showing it off. 

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It's easy to refute an argument if you first misrepresent it. William Keizer

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AJ replied on Tue, Aug 9 2011 9:19 PM

The main point is that the word "common" generally seems to refer to "obtaining in a significant percentage of the population." But we must ask, "What is the population?"

Before the Internet, "the population" was always the local one, bound by geography. With the Internet, "the population" could be any subset of the global population, not sliced along geographic lines. The population could be a community of geographically disparate individuals, like us. And since geeks can and do form close-knit online communities, the effective population in which the word "common" is to apply must be allowed to be cut along online community lines as well, not always and for everyone along geographical lines.

In other words, if Bitcoin is in common/wide/general use within an obscure community, what is that difference between that and a money being in common/wide/general usage within a remote mountain village or on an island like Maui?

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I have no problem with them being scattered. My problem is that it is not generally accepted, meaning, that even among that community, they do not use bitcoin in, say, 95% of their business transactions. They use dollars for almost everything, and buy the occasional item with a bticoin.

So in what sense is it already money?  That you can buy a t shirt with it? That is not enough to reassure someone that when he gives away his hard earned money in exchange for a bitcoin, that he will be able to then use the bitcoin to get what he wants. What if he has enough t shirts, and wants food or furniture? Meaning Mr Average Person is not going to accept it; only speculators and enthusiasts will.

My thesis is that bitcoin will eventually go to zero anyway. The various hacks only hasten its demise. They make people say, " What was I thinking? Do 'I want to be stuck with this garbage? Or would I rather have dollars?"

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AJ replied on Tue, Aug 9 2011 9:30 PM

As to speculation, I'm not sure that word is well-defined enough for the current discussion, at least not yet. That is, it seems to have something to do with timescale, and the relevance of timescale in this age of rapid changes is perhaps different than back in tulipmania times (not to mention that tulips are perishable). In that case, it is conceivable to me that what would once qualify as a speculative timescale for holding some investment might now qualify as a savings timescale or something (no idea; depends on the definition).

Re: geek cred, I don't know, at seems some people do value it for that. Who knows what goes on in the minds of men? (Less yet, women.) So I think you are making a bit of a leaky generalization when you say "nobody" when you probably mean "very few people." If you're not careful you'll run into a "rounding error" from that, if you get what I mean.

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AJ replied on Tue, Aug 9 2011 9:35 PM

Smiling Dave:
I have no problem with them being scattered. My problem is that it is not generally accepted, meaning, that even among that community, they do not use bitcoin in, say, 95% of their business transactions. They use dollars for almost everything, and buy the occasional item with a bticoin.

On this I simply do not know to what extent such communities exist nor to what extent they use BTC for their transactions. Perhaps one of the Bitcoin proponents here would like to address this? 

The rest seems to hinge on this. If there exist such gung ho pro-bitcoin communities, supposing I became a member I could buy a T-shirt with bitcoins. Just as I could buy a T-shirt with feathers if I settled in a certain remote village in Borneo or someplace, even though we may say that only a few hundred headhunting otaku value them.

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