Guys,
what do you guys think about plethora of cryptocoins (bitcoin, solidcoin, litecoin, namecoin etc.), I don't see any economists in the development panel of these cryptocoins. Some have an upper limit (eg: bitcoin has 21 million) and some don't have any (eg: solidcoin)... although I hope cryptocurrencies to take off but am am not convinced and somehow I feel they are just few hours away from a totall collapse.
Since I am not an economist, I would rather hear from you guys on the topic.
As you can imagine, there's been quite a bit of discussion about this...
Is BitCoin the currency of the future? Aug 6 2009
Underground currency Mar 16 2010
Bitcoin, the New Digital Money - Interview on One Radio Network. Dec 3 2010
virtual money to make government money obsolete? Apr 4 2011
Mises's Regression Theorem and a Logical Proof Apr 18 2011
Don't buy Bitcoins (video) Apr 22 2011
Bitcoins - a deflationary spiral? May 21 2011
How To Use Bitcoin – The Most Important Creation In The History Of Man Jun 3 2011
Skilk Road: Online Drug Marketplace Jun 5 2011
Against The Gold Standard Jun 21 2011
Peter Schiff interviews the Bitcoin Guy, Donald Norman Jun 20 2011
The Economics Of Bitcoin – Challenging Mises’ Regression Theorem Jul 7 2011
Bitcoin drops again Aug 26 2011
Bitcoin Refutes ABCT Oct 21 2011
Bitcoins *prove* Mengerian account of money creation? Jan 4 2012
Keynesian blog: bitcoins are being hyperinflated Jan 13 2012
PROOF PROOF PROOF that Mises is right about money. Mar 14 2012
The End of Money Apr 14 2012
Bitcoin DO NOT WANT!? Jun 14 2012
Do a search for Mises Regression Theorem.
Warning: cranks and nutjobs will be all over this one.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
I have been vociferous in my opposition to the idea that "Bitcoin is money." However, I think that there is one argument in favor of Bitcoin - the US and allied governments have had stunning success - particularly since 9/11 - in wrapping the globe in the chains of financial surveillance and "OECD-compliance", that is, elimination and/or discreditation of tax havens. With almost nowhere left to hide your wealth and no practical way to implement a backed digital currency that is credibly immune to the global control grid, an unbacked digital currency is actually an attractive alternative.
The fact that it is unbacked does make it "hours from collapse" at any point in time. Any scaling back of the global control grid could collapse unbacked digital currencies overnight. But the fact that it is unbacked is actually a feature, not a bug, in that its purpose is to make uncompromisable financial privacy possible.
As long as the New World Order continues its headlong march into a Brave New Cashless World, I think that unbacked digital currencies will be able to act as more-or-less stable stores of value. But this should be understood in a very cautionary light. The value of Bitcoin is directly proportional to global financial tyranny. If the government were to simply ban all money in any form (including its own) overnight... people would resort to trading with cigarettes or some other commodities. This is what Bitcoin/et. al. really are. They are the "cigarettes" of a prison economy. They are in line to act as a "pressure release" for the global economy as the global control grid is being welded shut into a hermetically sealed, airtight container.
But there are countervailing forces against the global control grid. China and Russia have both openly speculated about a non-dollar/non-SDR commodity-backed, international money. If such a money were brought into being, unbacked digital currencies could suffer a significant fall in value. Even more dangerous, China could conceivably reinstitute its anonymous bank accounts and allow international customers. Any country or group of countries that can credibly deliver financial privacy and inflation-sheltering - despite the best efforts of the US and OECD to the contrary - would inadvertently trigger a sharp drop in the value of unbacked digital currencies.
Another thing to worry about is that the market cap of Bitcoin is still really small - and it's the largest unbacked digital currency. This makes it vulnerable to engineered collapses.
So, Bitcoin is "use at your own risk." If you buy Bitcoins, you should read the financial news daily and maybe consult a fortune-teller from time to time to try to foresee any sudden shifts in the global financial order away from the suicidal race to the cliff of a global cashless financial system that we are currently locked into. But for as long as the NWO is going full steam ahead, your unbacked digital currency will be safe and will only increase in value so long as it maintains a good customer-base.
There may be some wisdom in putting aside a small amount of cash into a Bitcoin wallet, particularly if you are doing a lot of under-the-table business. You might be able to pay a lawyer from that wallet while your other assets are seized, thus increasing the likelihood that you might actually get those assets back. Whatever you don't put into a Bitcoin wallet, you may want to consider putting into gold and literally burying it. Geocaching may be a good skill to develop so that a person could hike out into the wilderness and bury a small stash of gold at some GPS coordinate which you might memorize or store in encrypted form.
Clayton -
Even when what you're saying is correct in what respects to states. You have a big mistake in what is concern to Bitcoin.
Bitcoin is backed by itself.
Is an ebook an economic good? You may agree with me that it is. Because it has to be created before trading with it, is useful and it is scarce, isn't it? The ebook is backed by itself.
A bitcoin (speaking of a coin and not the network) must be created before you can trade with it (the miners do it). And because it was created before you trade with it, you are trading with something, which is scarce and useful. That's where its value comes from.
Bitcoin, the network, is not backed by laws, like fiat money is. Is backed by the MARKET. The market is adopting the system. So, if the market is adopting bitcoin, there must be something you may be missing. I hope that reading this thread you understand the mistake.
I admit, this is a new idea, one I would never have thought of. But then again, it makes no sense whatsoever.
...an ebook...
1. You can read an ebook. Thus it is intrinsically useful. A bitcoin cannot be used for anything but trading it for something else. You cannot eat it, or read it, or wear it. Thus it violates Mises' Regression Theorem.
A nut or crank will respond to this post with a mixture of insult and idle verbiage, ignoring the essential question. The essential questions is:
Please show how and why Mises is wrong, or why bitcoin does not violate Mises' theorem.
Just to make sure we are on the same page, please summarize Mises theorem first, as behooves a serious response.
2. Oh, and one last thing. Scarcity and labor do not make something valuable. It takes a lot of labor to find and dig up horse manure from 5,000 years ago, a very rare thing. But that doesn't make ancient horse manure valuable.
If a thing has value, scarcity can increase its value.
Labor does not increase or decrease the value of a thing. Labor is an expense, nothing more.
it was created before you trade with it, you are trading with something, which is scarce and useful. That's where its value comes from.
Nonsense. If I create a razor-edged back-scratcher, does it become useful and valuable simply because I created it?
I typed a big post then accidentally closed my browser. Here's the summary.
I don't like Bitcoin specifically, but I have come around on the question of unbacked, digital currencies. They are possible because of the clear intent of the global ruling Elite to close down all tax shelters and bring the entire global financial system to heel under their financial surveillance systems.
I don't like Bitcoin in part because I am suspicious about the need of its creator to use an alias and in part because of the very rapid influx of "shiny, new money" into the early adopting Bitcoin websites. Digital currencies are fringe activities and Bitcoin was fringe even among digital currencies, yet it became rapidly adopted by deep-pocketed investors? I don't think so.
In particular, I suspect Bitcoin is actually the creation of Nick Szabo who wrote about the idea more than a year before Bitcoin hit the scene. The creator of Bitcoin - "Satoshi Nakamoto" - clearly used an alias. Why he chose to do this is not clear but if my suspicions are correct, it could be because he was at a university known for its ties to US intelligence.
What's the purpose? It's difficult to guess but I will note that while Bitcoin is - in principle - completely anonymous, it is in fact quite technically difficult to achieve strong anonymity. If you really wanted to trade in Bitcoins without even, say, the FBI being able to trace your activities back to you, you'd need to run all your transactions over Tor and use an anonymous email proxy. Needless to say, the vast majority of people won't do this, so their transactions are traceable, given sufficient effort. Bitcoin could be a "honey pot" operation. Or, what I suspect, its purpose is to surveil for any "big fish" trying to escape the global financial grid and set up their own, unregulated alternative markets through unbacked, digital currency.
Anyway, I would really like to see someone write a decent alternative to Bitcoin - someone who doesn't need to hide behind an alias. I think that it is clear that unbacked, digital currency has a role to play at the present time where we are racing to this insanity of a global financial control grid where all things are open and revealed to the prying eyes of the State. The more successful the Elites are, the more viable unbacked digital currencies will become.
What is the feasability of a backed-digital currency, traded over a smallerr network?
I'm thinking, could there be a network of individual tobacco dispensaries that would accept a digital encryption they could trade in for tobacco?
...that would accept a digital encryption...
After they accept it, what will they do with it? Buy cigarettes in their own machines?
Hold it until they restocked there tobacco reserve. The person would cash in their encrpytion possibly to trade with someone outside of the network that didn't accept the encryption.
Being brick-and-mortar is costly and exposes you to the risk of State-confiscation. Nobody wants to lose the business they've worked so hard to create. So long as the US government can rampage around seizing anything it likes and shutting down anybody for any reason, don't think for a second that any legitimate business is going to risk using its inventory as commodity backing for an online currency, especially after the Feds have made example after example after example. These are not isolated examples, these the equivalent of Hoover's G-men going after the Mob and putting the smackdown on them to make it clear who rules the roost.
I worked on an idea that would have been kind of like "peer-to-peer banking" where the network consists of thousands of people holding tiny reserves that are constantly being transferred to enable the reserves to be held anonymously and without audit. I wasn't able to figure out a way to make it work where there's no arithmetical incentive to join and then walk off with any excess cash. Maybe someone else can give it a shot but I think there's an arithmetical problem with the whole idea.
The root problem is that auditing and anonymity - both of the reserve and of the customer - are desirable features that are diametrically opposed to one another. If you build a system the government can't raid, you have built a system that can't be trusted to hold your money, either. If you want a system that absolutely cannot be raided or shut down by any means, then you need an unbacked digital currency. One disadvantage of the system is that it cannot be integrated into the brick-and-mortar banking establishment (at least, not without their permission, regulation, taxes, "Know Your Customer" rules and so on).
But as mobile device technology continues to scale down to where more people have "the Internet in their hand", we could have a system where it simply doesn't matter. I can just transfer thus many digital tokens from my phone to your phone. I walk away with a loaf of bread and you walk away with some more tokens on your phone. We each walk away happy. I think this is the niche in which the black market will be able to continue to operate unhindered by financial regulations even as they continue the war on cash and put the finishing touches on their wet-dream of a worldwide financial control grid.
Do you think there could be a sort of spontaneous backing arising regionally due to different demands?
Interesting posts Clayton. (Everything I had time to ready anyway!) Strikes me as being overly paranoid as the Bitcoin code is completely open source. If I were to exchange my currency for a cryptocurrency, I'd want the value to be relatively stable or deflationary, secure, anonymous, and fluid. The price stability is the only issue at the moment, and is ironically a self-fulfilling prophecy. It will be interesting to see what kind of mind games the future competing currencies may try to ease the fears of the general public. Or maybe with time Bitcoin will just ride through it all. As long as a black market transacts using Bitcoin, there will always be a floor.
For this to be true a Bitcoin has to have intrinsic value. I would argue that it does have intrinsic value, as money, because of its utility as a medium of exchange and its inflation-proofness, as well as its other desirable features such as being anonymous, not subject to taxation, not reliant on any government power, etc. All of these are reasons why one might prefer to translate a transaction into bitcoin rather than another currency.
Considering what has been used as currency in the past, everything from tulip bulbs to ten-ton boulders, there's nothing strange about the advent of a digital currency.
intrinsic value, as money,
oxymoron
Smiling Dave: "intrinsic value, as money," oxymoron
"intrinsic value, as money,"
Not at all. Why does wheat have intrinsic value? Because it can satisfy some need. Do you suppose there's no need for money?
Just because bitcoin doesn't have any physical existence people get tripped up in their thinking about it. Bitcoin is exactly like a fiat currency, except that it is not inflateable. That would be an impossible retriction to maintain with paper money, but digital money makes it possible.
If some moneys didn't have intrinsic value over other kinds of money, then Gresham's law wouldn't exist, which says, "Bad money driveth out the good." That was when cheap coins replaced pure silver coins in the British economy. That's not really a fair analogy because the cheap coins were forced into the market and silver was already a commodity.
But, in a competition between two fiat currencies, between the US dollar and Bitcoin, only one of these cannot be inflated, and that's progress, and thus value. And then there's all the other benefits too over the dollar.
Anenome,
A few years from now, when you are better grounded in the basics, you will reread that post and say, "What was I thinking?"
You may want to educate yourself by reading my blog, specifically the article Bitcoin Takes a Beating.
Why don't you read your own quote of Mises in that very article, where he says,"
The amount of other goods which can be obtained in giving away a medium of exchange, its "price" as expressed in terms of various goods and services, is in part determined by the demand of those who want to acquire it as a medium of exchange. If people stop using the good in question as a medium of exchange, this additional specific demand disappears and the "price" drops concomitantly.
Von Mises here agrees that something can be desired, at least in part, because of its value as a medium of exchange. Bitcoin, having no utility outside exchange, has only that value. Thus, intrinsic utility as money.
Rather than attack regression, I would simply walk backwards to pure, agnostic supply and demand. Why are bitcoins $17 (or w/e price now), because people demand bitcoins, supply is limited. Why is gold what price it is, because of both supply and demand, but the demand of gold too is limted by physical reality.
You think a currency can -only- serve as a currency by having physical value at some point in the regression. But this isn't necessarily so. As I pointed out, several currencies used around the world in the past have no utility apart from being currency, including the 10-ton boulders of some pacific islanders, the cowrie shell of some Indian tribes, colored beads, etc. Many of these beads and shells used as currency didn't even have artist application in those societies.
Here's my main point:
What really is the difference between having intrinsic value, such as gold or any commodity does, and having invested-value? Because for anyone to get a bitcoin they largely must purchase it, or mine it (ie: purchased direclty or indirectly). Both of which cost money. That means that value is translated into the bitcoin as surely as gold itself has intrinsic value. A digital currency can be invested with value that it did not have intrinsically, and that value is quite real.
And this is where bitcoins achieve their fail. There is no reason for bitcoins to suddenly become worth a dime, or any other price.
No reason at all, except that people are demanding bitcoin. You want to quibble over why, but people are demanding it now. And bitcoin has a value now. Maybe you don't realize it, but the US dollar works exactly the same way. You really want to claim the dollar has a certain value it does because it has commodity value? For what, wiping your ass?
They are totally useless as jewelry, or anything else. So that there is no reason people should accept them as being worth a dime, much less $17.
Again, the same is true of the dollar and any other fiat currency. All you've done in this entire article is 'out' Bitcoin as analogous to a fiat currency. Great going.
Your smugness is not warranted.
I'm still feeling smug.
You read my article.
Hopefully you read the instruction labels on medicines or dangerous machinery with more understanding.
An excercise for those who need the practice: How many errors can you spot in Anenome's latest post?
Not in the mood to correct you, for it would be speaking to the disinterested.
Good luck in your study of this fascinating subject.
*** BEHOLD! The post that, either through profound stupidity or brilliance, ended Dave's discussion... forever! ***
Dave: How many errors can you spot in Anenome's latest post?
Seriaiah,
Thing is, I am experiencing strong feelings of been there, done that, w.r.t. bitcoin and its fanatical adherents who have no clue. My many blogs [do a search for bitcoin] and many posts here make very clear what's what. None of said fanatics have refuted Mises' regression theorem, or shown why it doesn't apply to bitcoin.
Anenome showed new levels of ignorance, though, when he wrote "intrinsic value, as money". I have the energy to point out his error, but not to engage in the sure to be long back and forth about it, because, like I say, I've been through it all before.
So go ahead, feel good, thinking you have defended bitcoin's integrity and value. I leave to the reader to figure things out, having provided my side of the story [which most Austrians agree with, btw] in easy to read fashion on my blog.
My last post on this subject.
dave: My last post on this subject.
Lmao, you win the internets today ^_^
Seraiah: *** BEHOLD! The post that, either through profound stupidity or brilliance, ended Dave's discussion... forever! *** Dave: How many errors can you spot in Anenome's latest post? Challenge accepted! As a bonus, I'll do yours as well! Correct/Incorrect statements in Anenome’s last post. Correct: 1.) Dave quoted Mises. 2.) This quote asserts that currency has “intrinsic utility as money”, since ceasing to use an item as money reduces its value. 3.) Supply of Bitcoins, like gold, is limited. 4.) Many currencies in the past had no physical utility apart from being a medium of exchange. 5.) Bitcoins can retain value invested into them just as well as gold. 6.) Bitcoins are demanded and valuable. 7.) Fiat paper money has value though it has virtually no commodity value. 8.) “All you've done in this entire article is 'out' Bitcoin as analogous to a fiat currency.” 9.) Dave’s smugness is not warranted. Incorrect statements by Anenome 1.) $17/bitcoin. It’s around $6/bitcoin right now. Correct/Incorrect statements in Dave’s last post: Nothing either way. Ad Hominems: 1.) Suggests that Anenome does not have a firm understanding of the basics of economics. 2.) Suggests that Anenome may not be able to comprehend basic warning label instructions. 3.) Suggests that he is more educated than Anenome. Incorrect statements by me: You really seem to be a noble pursuer of truth Dave!
Smiling Dave: Thing is, I am experiencing strong feelings of been there, done that, w.r.t. bitcoin and its fanatical adherents who have no clue. My many blogs [do a search for bitcoin] and many posts here make very clear what's what. None of said fanatics have refuted Mises' regression theorem, or shown why it doesn't apply to bitcoin. Anenome showed new levels of ignorance, though, when he wrote "intrinsic value, as money". I have the energy to point out his error, but not to engage in the sure to be long back and forth about it, because, like I say, I've been through it all before.
Keep ignoring that your own Mises quote proves my point. Keep ignoring it. Good Dave.
Can someone answer this question?...
How does Mises's Regression Theorem explain the use of shells as money? I find it hard to believe they were useful in any way before they became money.
As to Bitcoin. It's unique. It's an artificially created good (commodity) with the express purpose of becoming money or a medium of exchange.
As any economist knows - you can sell items to get other items that have more exchange value. Bitcoin is not even close to being there for mainstream goods. It most definitely IS there in illicit realms.
As to price fluctuations - happens with EVERY commodity including money. You don't notice it as much with the mainstream currencies because we are like a fish in water with them. A simple way to avoid massive fuctuations in a commodity market is to immediately exchange the commodity into currency that is not very volatile.
One of the most unique features of Bicoin is that you can "deposit" your money while not even online. You can also have the retrieval code memorized in your mind so that there is no instance of it anywhere in the physical world.
The beauty of gold, silver, etc. are their decentralized properties. The problem is they are easily stolen no matter where you hide them. With Bitcoin you can hide it in plain site of the entire world and no one will a. be able to get it and b. be able to find out it's yours. The added benefit is your Bitcoins take up zero space.
These features are nice but not perfect. Nevertheless the idea of a decentralized currency that has the privacy benefits of metal cash is a good one and (in my opinion) headed in the right direction.
1. Wikipedia on wampum:
When Europeans came to the Americas, they realized the importance of wampum to Native people. While the Native people did not use it as money, the New England colonies used it as a medium of exchange.
2. Wikipedia on Shell money:
The use of shells in trade began as direct commodity exchange, the shells having value as body ornamentation.
It seems like you have a need to prove "Mises's Regression Theorem" even with evidence to the contrary.
The Theorem (in essence) says that a thing must be valued for one or more non-exchange purposes by one or more people before it can be used for indirect exchange.
Bitcoin violates the theorem. 1. It was not valued for one or more non-exchange purposes before it was used for indirect exchange. 2. There can be no argument that it IS used for indirect exchange. It is.
Now you could say that cryptology itself was valuable before it was adapted to create a virtual commodity useful as a medium of exchange but that would be really pushing it - don't you think?
Your error, of course, lies in the phrase "one or more". It's like saying "A mountain is a mound of earth one or more inches high"
Not sure what you mean. Does it matter whether one person or a hundred used it for something other than exchange purposes before it was a medium of exchange? No one valued Bitcoins for any reason before they became a medium of exchange. They were created specifically for that purpose ( a medium of exchange). Again, the underlying encryption was valued before Bitcoins but I think that would be stretching the facts to fit the Theorem.
So I guess I don't understand your point.
docsulo,
Let's begin at the beginning.
You go to a garage sale. There is some gizmo on the table you have never seen before. The owner wants ten bucks for it. Are you getting the bargain of the century or are you being ripped off? How would you decide?
Not sure how your question relates, I'll answer it though and then ask my own questions...
Answer: I personally wouldn't ask the price of something when I didn't know what it was. But to play along, I would ask what it's used for and I would judge it's value in relation to its usefulness to me and I'd then judge its price in relation to other similar objects that can do the same or a similar thing.
Now my question:
Put all theory aside. Do you agree that Bitcoins are being used as a medium of exchange? It doesn't really matter that a theory says they shouldn't. They are. Essentially Mises and Rothbard said it would be impossible for a medium of exchange to come from something just because someone said it should be so. Rothbard essentially said a commodity not already accepted in exchange for other commodities would have no basis to be valued as a medium of exchange. Bitcoins seem to go against that since they were created specifically as a medium of exchange and were not valued before that (since they didn't exist before that). Now they may not remain something that is used as a medium of exchange indefinitely - but they are now and that simple fact puts the Theorem in dispute UNLESS you want to skew the facts to fit the theorem.
Here is a direct quote from Rothbard:
This process: the cumulative development of a medium of exchange on the free market--is the only way money can become established. Money cannot originate in any other way, neither by everyone suddenly deciding to create money out of useless material, nor by government calling bits of paper "money." For embedded in the demand for money is knowledge of the money-prices of the immediate past; in contrast to directly-used consumers' or producers' goods, money must have pre-existing prices on which to ground a demand. But the only way this can happen is by beginning with a useful commodity under barter, and then adding demand for a medium for exchange to the previous demand for direct use (e.g., for ornaments, in the case of gold.
I have the utmost respect for Rothbard and Mises but in this particular case it seems that something has happened that they didn't forsee or something I don't see. Bitcoin was not a "useful commodity" that could be used in barter. It was a commodity created specifically to barter (or as a medium of exchange) and therefore skips the important first step in the whole regression.
Other virtual "currencies" are slightly different - there are some (like game currencies) that had a "usefulness" within a game and then began to be used as an medium of exchange in other areas. This is not the case with Bitcoin.
I don't want to go back and forth on this. If you think I'm wrong then explain your reasoning. I'd be more than happy to change my mind once given a reasonable explanation that doesn't try to stretch the facts to fit a theorem.
dosulo,
Fair enough.
Short answer. Rothbard was talking about something becoming "generally accepted" or "commonly accepted" as a medium of exchange or a money. If you look up Wikipedia on "money", that is the very first thing the article says about money. It has to be, by definition, generally accepted. And this is not some weird Austrian thing, it is the standard definition of money in the economist community.
When asked to please nail down what they mean by generally accepted, all economists give the same answer. There is no precise dividing line. This however, does not make the phrase meaningless. For example, "rich" is imprecisely defined, but a homeless vagabond is obviously not rich. Same with generally accepted.
"Medium of exchange". also, implies a great degree of acceptance. The only difference between money and medium of axchange is one of degree, how generally accepted is it. Generally accepted = medium of exchange. Very widely generally accepted = money.
The reason for this proviso is that a few friends or weirdos or what have you who agree among themselves to use something or other as a coupon in their transactions does not make that something into a medium of exchange, nor into money.
EDIT: For the same reason, they did not insist that a money be universally accepted within an economy, because then three or four nutjobs who refuse it would negate it from being money, which is obviously not the case.
Bottom line, momey means almost universally accepted with in an economy. You can get anyhthing you want with it.
Mises Regression Theorm deals with the question, how does something become money, meaning, by definition, how does it become widely accepted and able to buy almost anything from almost everyone within a given economy. And of course, the first step, he concludes, is that it was used by many people and valued by many people for its non-exchange value, like cigarettes in a prison.
With all that preliminary info, we now see why bitcoin has not contradicted the Regression Theorem. It is not in comon use by anyone. You can only buy a couple of items with it. Certainly you cannot buy everything even a tiny store, like a 7-11 or a gas station that sells food and a few other things on the side, would stock. Let's not even talk about WalMart.
And the few people who use bitcoin do not use it for all, or even most, or even 5%, of their transactions. They buy an odd slice of pizza, if that. What really interests the bitcoin guys is buying low and selling the bitcoin itself to the next sucker.
So that saying it is a money now, or even a mere medium of exchange, is laughable.
Dave: And the few people who use bitcoin do not use it for all, or even most, or even 5%, of their transactions. Where'd you come up with that statistic? Dave: They buy an odd slice of pizza, if that. What really interests the bitcoin guys is buying low and selling the bitcoin itself to the next sucker. What makes you say that? Dave: The reason for this proviso is that a few friends or weirdos or what have you who agree among themselves to use something or other as a coupon in their transactions does not make that something into a medium of exchange, nor into money. "Not a medium of exchange"? Now you want to call them "coupons"? I'm straining to see the similarity. Dave: So that saying it is a money now, or even a mere medium of exchange, is laughable. Bitcoin has solved all of the big hurdles of a cryptocurrency, nearly all of its attributes meet or surpass gold for being used as a medium of exchange. It is secure, anonymous, and scarce. It is as of this moment, being used to facilitate transactions between people. Since you have not, nor will you ever, be able to refute those points, you want to win a symantics game. How sad, but just for giggles, what kind of hoop does Bitcoin have to jump through to be "a medium of exchange" in your mind?
Dave: And the few people who use bitcoin do not use it for all, or even most, or even 5%, of their transactions.
Dave: They buy an odd slice of pizza, if that. What really interests the bitcoin guys is buying low and selling the bitcoin itself to the next sucker.
Dave: The reason for this proviso is that a few friends or weirdos or what have you who agree among themselves to use something or other as a coupon in their transactions does not make that something into a medium of exchange, nor into money.
Dave: So that saying it is a money now, or even a mere medium of exchange, is laughable.
Smiling Dave accuses Bitcoin proponants of being fanatics, but he is the one who clings to Mises like it is religious scripture. Mises did get things wrong you know, and if he was alive in the digital age a portion of his economic theory would be different, possibly this very subject.
So..... Bitcoin violates Mises Regression Thereom. So what? Look outside the window, its the digital age - people need an easy transaction medium and a crypto currency of this exact sort will eventually succeed and challenge State controlled fiat money.
Let me bring some reality here.... I open my wallet and take out a paper note. It probably violates Mises regression thereom, but I use it every day to buy stuff. So it is money. Its shiite money, and we much prefer to use something better, but its still money. To deny this is just an academic arguement over semantics.
After the collapse of our paper money systems, we will not be going back to carrying a sack of gold coins on the belt. There will be competing crypto currencies, and the price of them will be adjusted daily against real gold, just as USD is currently compared to gold.
Comparing a digital product like an ebook to bitcoin is not accurate. An ebook is not a scarce resource, it is infinitely reproducible.
A bitcoin account is not. Due the the cryptographic algorithm, there can only be one quantity of bitcoins in my account, they can only be transferred and used one time, this makes bitcoin a scarce resource unlike most digital products. The only way to get more Bitcoins is to trade for them, or use physical scarce resources to mine for them (electricity that powers the computer).
Bitcoin has all the other advantages of good money, portability, divisibility, no debasement e.t.c e.t.c
I really have no idea why there is so many whiners out there knocking it.
agisthos,
Do you tie your shoelaces without help?
agisthos: I open my wallet and take out a paper note. It probably violates Mises regression thereom, but I use it every day to buy stuff. So it is money.
Sure, my point is it's an academic arguement. It has no relevance as to whether a crypto currency will succeed or fail. Bitcoin is already used (in a very limited way) to trade for services in real physical goods. Bitcoin gets eveything right apart from the block chain being visible and unencrypted. Whether it breaks through and become a popular medium of exchange is another matter.
No gold exchange is going to work due to the need for central clearinghouses, that can and are easily shut down by the State. The only way to collapse the current paper money system is a black market in a new medium of exchange for the modern technological world. It will not be gold, it will be a crypto currency. Sam Konkin's counter-economics for the digital age.
agisthos: Bitcoin gets eveything right apart from the block chain being visible and unencrypted.
agisthos: No gold exchange is going to work due to the need for central clearinghouses
agisthos: Sure, my point is it's an academic arguement. It has no relevance as to whether a crypto currency will succeed or fail.