gotlucky: So I think the point is that bitcoin lacks certain qualities that would make it commonly accepted. Certainly, if bitcoin were a commonly accepted indirect medium of exchange, it would be money. What is holding bitcoin back is that most people have no reason to use it as money. Most people have a reason to use fiat money - it has been used as money previously (and this is where the regression theorum kicks in). But bitcoin has not been used as money previously by most people. So, they problem facing bitcoin is how is it going to be commonly accepted. If I understand Smiling Dave correctly, he is asserting that it is not enough that bitcoin be easy to trade. People have to actually want it first. And that's the problem, most people don't want it, and they don't have a reason to want it. So it cannot become commonly accepted. At least with gold or silver, it can be used for vanity. Certainly someone can buy bitcoins for vanity's sake too, but again, the problem is that most people would have to want to do this. Most people do not.
So I think the point is that bitcoin lacks certain qualities that would make it commonly accepted. Certainly, if bitcoin were a commonly accepted indirect medium of exchange, it would be money. What is holding bitcoin back is that most people have no reason to use it as money. Most people have a reason to use fiat money - it has been used as money previously (and this is where the regression theorum kicks in). But bitcoin has not been used as money previously by most people. So, they problem facing bitcoin is how is it going to be commonly accepted.
If I understand Smiling Dave correctly, he is asserting that it is not enough that bitcoin be easy to trade. People have to actually want it first. And that's the problem, most people don't want it, and they don't have a reason to want it. So it cannot become commonly accepted. At least with gold or silver, it can be used for vanity. Certainly someone can buy bitcoins for vanity's sake too, but again, the problem is that most people would have to want to do this. Most people do not.
The same critique can be made for gold coins today, in the absence of a gold standard anywhere in the world. Most people don't want to own a gold coin, yet most people could recognize that it was valuable if they saw one and knew with certainty that it was really gold. The authenticity of any given bitcoin can be verified to a greater degree of confidence by my android cell phone in a couple thousand clock cycles. Honestly, I can't do that with gold or silver, and yet they are money, are they not?
difficulty verifying the authenticity of gold is a product of an entrenched non-gold economy. One major reason gold is so good as money is that it is hard to fake. Most metals are silver/grey in color. Gold also responds to acid tests, and has a high specific gravity, making it hard to counterfeit even if you can get the appearance right.
MoonShadow: Some of you bitcoin supporters are worse than opponents.
GotLucky: And that's the problem, most people don't want it, and they don't have a reason to want it. So it cannot become commonly accepted.
Seraiah: MoonShadow: Some of you bitcoin supporters are worse than opponents. Excel isn't a supporter as far as I'm aware, unless you're referring to someone else?
I'm not referring to anyone in particular, just the fact that myths about bitcoin get posted here and remain unchallenged even by the bitcoin cheerleaders. I've even seen a few of the cheerleaders get details wrong when they describe things.
Well, in the interest of me and the people that might read hereafter (but mostly me) I'd like to see what wasn't addressed. :) At the end of the day I think we've established that the biggest libertarian detractors have put forward the following argument: 1.) Bitcoin is not money. (It's not used alot). a.) In spite of the fact that it is used "alot" by some standards. 2.) It will never be used alot because people don't use it alot, and because people don't like it. a.) In spite of the fact that the first part is circular reasoning. b.) In spite of the fact that lower transaction costs will force businesses to use them to stay competitive, regardless of public perception. 3.) People don't like it because they can't feel it or find other uses for it and because they percieve it as being repudiated easily. a.) In spite of the fact that money need not be felt or have other uses to function as intended. b.) In spite of the fact that Bitcoins have the least rational incentives for repudation out of all competing currencies. 5.) More people will not like it in the future because people tend to prefer mediums of exchange that they can touch and find other uses for. a.) In spite of the fact that Bitcoin has better attributes as a medium of exchange than any competing commodity or fiat currency.
1.) Bitcoin is not money. (It's not used alot). a.) In spite of the fact that it is used "alot" by some standards.
a.) In spite of the fact that it is used "alot" by some standards.
2.) It will never be used alot because people don't use it alot, and because people don't like it. a.) In spite of the fact that the first part is circular reasoning. b.) In spite of the fact that lower transaction costs will force businesses to use them to stay competitive, regardless of public perception.
a.) In spite of the fact that the first part is circular reasoning.
b.) In spite of the fact that lower transaction costs will force businesses to use them to stay competitive, regardless of public perception.
3.) People don't like it because they can't feel it or find other uses for it and because they percieve it as being repudiated easily.
a.) In spite of the fact that money need not be felt or have other uses to function as intended.
b.) In spite of the fact that Bitcoins have the least rational incentives for repudation out of all competing currencies.
5.) More people will not like it in the future because people tend to prefer mediums of exchange that they can touch and find other uses for. a.) In spite of the fact that Bitcoin has better attributes as a medium of exchange than any competing commodity or fiat currency.
a.) In spite of the fact that Bitcoin has better attributes as a medium of exchange than any competing commodity or fiat currency.
Seraiah: 1.) Bitcoin is not money. (It's not used alot). a.) In spite of the fact that it is used "alot" by some standards.
1.) Bitcoin is not money. (It's not used alot).
I have a better reply to this: every money was not used a lot before it became money. Some people seem to think that money pops up instantly fully matured with everyone accepting it immediately. This is contrary to the evolutionary catallactic process described by Menger, Mises, Rothbard, De Soto and so on.
Seraiah: Well, in the interest of me and the people that might read hereafter (but mostly me) I'd like to see what wasn't addressed. :) At the end of the day I think we've established that the biggest libertarian detractors have put forward the following argument: 1.) Bitcoin is not money. (It's not used alot). a.) In spite of the fact that it is used "alot" by some standards.
Well, in the interest of me and the people that might read hereafter (but mostly me) I'd like to see what wasn't addressed. :) At the end of the day I think we've established that the biggest libertarian detractors have put forward the following argument: 1.) Bitcoin is not money. (It's not used alot). a.) In spite of the fact that it is used "alot" by some standards.
To be accurate, Bitcoin is not money. At least not in the Austrian sense. Neither is the US FRN or the Euro. Both are deliberately designed/altered & offically supported mediums of exchange that are wholly detached from a commodity support/backing. At least the US FRN once had such a backing, while the Euro never did. This is not to say that "well, what we have now is worse"; but that is a real market driver for the adoption of Bitcoin as a medium of exchange. However, Bitcoin's (deliberately deflationary) design model is also likely to make it a reasonable store of value, if Bitcoin should ever become a true & widely accepted medium of exchange. While this is not likely to occur while the US FRN & Euro systems remain stable and trusted, I'm operating on the assumption that stability is unlikely in the long term. While most people here might favor a gold standard of some sort, I find such a future to be politically unlikely. There is simply too many powerful forces that have a vested interest in not returning to any kind of sound money system for that to occur openly or naturally. Bitcoin avoids the main methods of government/political resistance altogether.
Malachi: This isnt significant to anyone but Misesians, as first world peoples have had two generations of fiat money, and are used to thinking of it like poker chips.
Malachi: What if an emp wipes out all computers with memories of bitcoin lol.
Malachi: Theres a lot of risk in adopting a digital crypto money, most people are not computer people and they are not cryptographers. Theres a lot of unknowns, and it is entirely reasonable to take a wait-and-see attitude.
Malachi: Money qua money has no counterparty risk.
Malachi: Seraiah: In spite of the fact that Bitcoins have the least rational incentives for repudation out of all competing currencies. that doesnt make sense either. People who dont use bitcoin arent going to change their minds simply because you tell them that their reasons "arent rational."
Seraiah: In spite of the fact that Bitcoins have the least rational incentives for repudation out of all competing currencies.
Malachi: it has better and worse attributes than other exchange media ... for instance specie is totally anonymous and has much more accessible industrial value
Seraiah: Malachi: What if an emp wipes out all computers with memories of bitcoin lol. lol! We'd have more than our currency to worry about if that happened!
I'd also like to add that if some emp, or deep impact, or whatever disaster were to befall the United States on this scale; the US FRN is at greater risk of destruction due to the facts that 1) roughly 98% of all FRN in circulation are actually digital, not paper and 2) the computers that hold those records, while they are sufficiently backed up, are not massively redundent like Bitcoin.
Malachi: it has better and worse attributes than other exchange media ... for instance specie is totally anonymous and has much more accessible industrial value First of all, if I say that Bitcoin has better attributes for use as a medium of exchange, it doesn't make sense to say "Well gold can be used in jewelry". We get back to the butter knives vs swiss army knives debate again. Swiss army knives are great for other things, fine, but butter knives are better for buttering bread. Just like gold is great for other things, but Bitcoin is better for being a medium of exchange.
Furthermore, I have specie and I have bitcoin. I can say with certainty that in any economic condition short of something out of MadMax or Jerico, Bitcoin has huge advantages over silver as a medium of exchange. Not the least of which is that, under certain conditions, it's actually impossible to prove that I have the bitcoins at all. Silver simply requires a patdown and it's found a new owner. Silver remains in my possesion for two reasons, first they are pretty coins and I like to have them, just like my daughter likes her American Girl dolls; and second, silver has anti-microbial properties that make certain that even if I do find myself in Jerico with the only copy of the blockchain left on Earth, the silver has value to me in my first aid kit.
Secondly, if you want to trade with a commodity money you can do two things: 1.) You can give it to them face to face. 2.) You can mail it/electronically transfer (Sort of.). If you're transferring Bitcoins from one smart phone to another, it is absolutely as anonymous as giving someone some money in a pawn shop.
Moreso even, because the pawn shop security cameras take your picture. On the Internet, no one knows you're a dog.
Even if everyone in the world were using Bitcoins every day it would still not fall into the Austrian definition of money. Which is kind of messed up if you ask me. Reminds me of Noam Chomsky's Libertarian Socialism. How can you slaughter a word that badly?
The Austrian definition of money is very narrow, but the Austrian perspective doesn't exclude mediums-of-exchange that do not fit that narrow definition. Austrian economic theory can include other forms of value that most economic analysis doesn't even recognise as legitimate value. There are several examples of this, for which I don't have the time to dive into. However, it's important to note that Bitcoin does qualifty as a currency under an Austrian perspective, which places it on the same theoretical plane as US FRN's Euros Pounds & Ithica Hours. The relative merits of these currencies being a rather subjective conversation, Austrian economic theory would not pretend to be able to know the 'proper' relative value of such currencies. Only a free & unhindered exchange market can tell us this.
Furthermore, I have specie and I have bitcoin. I can say with certainty that in any economic condition short of something out of MadMax or Jerico, Bitcoin has huge advantages over silver as a medium of exchange. Not the least of which is that, under certain conditions, it's actually impossible to prove that I have the bitcoins at all.
Silver simply requires a patdown and it's found a new owner.
If you're transferring Bitcoins from one smart phone to another, it is absolutely as anonymous as giving someone some money in a pawn shop.
I'm not sure that all money has no counterparty risk, particularly fiat money, but even if I grant that, there would be virtually no risk if Bitcoin had even a tiny fraction of the market share that dollars or Gold has today. Even .1% would do wonders.
First of all, if I say that Bitcoin has better attributes for use as a medium of exchange, it doesn't make sense to say "Well gold can be used in jewelry". We get back to the butter knives vs swiss army knives debate again. Swiss army knives are great for other things, fine, but butter knives are better for buttering bread. Just like gold is great for other things, but Bitcoin is better for being a medium of exchange.
Malachi:I'd also like to add that if some emp, or deep impact, or whatever disaster were to befall the United States on this scale; the US FRN is at greater risk of destruction due to the facts that 1) roughly 98% of all FRN in circulation are actually digital, not paper and 2) the computers that hold those records, while they are sufficiently backed up, are not massively redundent like Bitcoin. people can still have physical dollars.
People can have physical bitcoins, too. I just don't consider them of any greater utility than sliver rounds
Furthermore, bank deposits are held with a bank, meaning there is someone you can sue. If people wake up to a failing bitcoin network they cant sue anyone.
If you wake up into Waterworld, who are you going to sue about your CD at your non-existant bank? Where are you going to find a judge? If it ever gets to the point that a natural return to silver & gold occurs, we've returned to a local barter condition already. You'll have been the lucky one just to have survived the Zombie Uprising (TM)
Furthermore, I have specie and I have bitcoin. I can say with certainty that in any economic condition short of something out of MadMax or Jerico, Bitcoin has huge advantages over silver as a medium of exchange. Not the least of which is that, under certain conditions, it's actually impossible to prove that I have the bitcoins at all. thats true but under certain economic conditions it can be proved that you own bitcoins, and the transaction history can be pulled.
True. Under certain conditions. So what? Under no conditions can you hide the silver in your pocket during your shakedown at that "checkpoint"
Malachi:I'm not sure that all money has no counterparty risk, particularly fiat money, but even if I grant that, there would be virtually no risk if Bitcoin had even a tiny fraction of the market share that dollars or Gold has today. Even .1% would do wonders. fiat "money" has counterparty risk, but the only reason people use it is because that same counterparty enforces the mandate to use it. So its like reverse counterparty risk, its counterparty mandated. When I said "money qua money" I meant sound money. Money's lack of counterparty risk is the reason money requires industrial use. You could put gold nuggets in the freezer and use them to cool your beverages even if every other person on earth was dead (assuming you had electricity and refrigerant to operate the fridge). What can you do with bitcoin besides transfer balances and information? First of all, if I say that Bitcoin has better attributes for use as a medium of exchange, it doesn't make sense to say "Well gold can be used in jewelry". We get back to the butter knives vs swiss army knives debate again. Swiss army knives are great for other things, fine, but butter knives are better for buttering bread. Just like gold is great for other things, but Bitcoin is better for being a medium of exchange. It does make sense, because industrial value is a large part of what makes something a good medium of exchange. Its like we are comparing knives, and you only want to cut one thing, butter (you only want to trade under the easiest conditions). Whereas I say this knife might be a little clumsier for cutting butter in your kitchen, but its much better for cutting all sorts of thngs under all sorts of conditions (media of exchange with strangers who have no use for intangible money). Offering bitcoin to someone who doesnt appreciate its characteristics is like offering them an expired coupon. They dont want it, and you cant call their reasons irrational because value is subjective. They dont want it because they want to cut things besides butter.
What do you need it to do besides transfer balances & information? After all, even under a natural gold standard; banks, letters-of-credit & halwala transfer networks formed. The ability to transfer value across distances in a reliable and rapid manner is an industrial utility. One that gold & silver were particularly poor at, and required and encouraged the development of financial institutions to permit such distance transfers. Bitcoin does not require many of the modern functions of these institutions, and therefore does not require their overhead costs.
What do you need it to do besides transfer balances & information?
After all, even under a natural gold standard; banks, letters-of-credit & halwala transfer networks formed. The ability to transfer value across distances in a reliable and rapid manner is an industrial utility.
Bitcoin does not require many of the modern functions of these institutions, and therefore does not require their overhead costs
True. Under certain conditions. So what?
Under no conditions can you hide the silver in your pocket during your shakedown at that "checkpoint"
Malachi:What do you need it to do besides transfer balances & information? I need it to do something useful for the bearer of the note, if he, for whatever reason, decides not to exchange it for other goods. After all, even under a natural gold standard; banks, letters-of-credit & halwala transfer networks formed. The ability to transfer value across distances in a reliable and rapid manner is an industrial utility. you are equivocating on "industrial utility" perhaps without meaning to. Money as money has no counterparty risk. The banks And such you mentioned are means of exchanging value using credit, instead of money, and using hundreds of counterparties in order to spread out risk. Bitcoin does the same thing, as you mentioned above, that doesnt make it money. Money has no counterparty risk. Bitcoin does not require many of the modern functions of these institutions, and therefore does not require their overhead costs the tradeoff is the assumption of risk.
While it's true that Bitcoin substitutes for credit functions over natural money, Bitcoin doesn't have any counter-party risk either. A US FRN has counterparty risk, but that counterparty is the US government, for it is the US government that recognizes it as a note with "the full faith and credit of the United States". Without the US government as your FRN's counterparty/backing institution, those pretty pictures would have no more value than a Confederate Dollar. Probably less, because a Confederate Dolllar probably has collectors' value these days. My point is that it doesn't have to fit into the Austrian definition of money in order to be an effective monetary system, and it's already a fairly complete one even before additional services such as escrow are added by others. It has value because it's useful (as a monetary & distance value transfer system) and because they are of limited quantity. The many qualties of an ideal money were deliberately designed into it, so it's about as close to a money as has yet been designed by mankind.
Malachi:. Bitcoin does not require many of the modern functions of these institutions, and therefore does not require their overhead costs the tradeoff is the assumption of risk.
What risk would that be?
While it's true that Bitcoin substitutes for credit functions over natural money, Bitcoin doesn't have any counter-party risk either.
A US FRN has counterparty risk, but that counterparty is the US government, for it is the US government that recognizes it as a note with "the full faith and credit of the United States". Without the US government as your FRN's counterparty/backing institution, those pretty pictures would have no more value than a Confederate Dollar.
My point is that it doesn't have to fit into the Austrian definition of money in order to be an effective monetary system
It has value because it's useful (as a monetary & distance value transfer system) and because they are of limited quantity. The many qualties of an ideal money were deliberately designed into it, so it's about as close to a money as has yet been designed by mankind.
MoonShadow: Malachi:. Bitcoin does not require many of the modern functions of these institutions, and therefore does not require their overhead costs the tradeoff is the assumption of risk. What risk would that be?
Malachi:People can have physical bitcoins, too. I just don't consider them of any greater utility than sliver rounds they are far less utility, since one must "destroy" the physical bitcoin in order to use the digital bitcoin, and outside of the digits, bitcoin loses big in every category vs. Au and Ag If you wake up into Waterworld, who are you going to sue about your CD at your non-existant bank? Where are you going to find a judge? If it ever gets to the point that a natural return to silver & gold occurs, we've returned to a local barter condition already. You'll have been the lucky one just to have survived the Zombie Uprising (TM) yes, it would have to take a zombie apocalyse or another worldwide flood to be bad enough conditions for the massive difference in counterparty risk between bitcoin balances and bank balances to be hidden. Why cant you zealots be honest enough to admit the very real disadvantages of bitcoin, along with the advantages? No one who wears a suit to work is going to take you seriously until you do.
I'd be glad to, if you can enumerate them. As you mentioned, I'm the advocate in this debate, so it's not my responsibility to point out it's downsides. It does have some, particularly compared to the return of a true gold standard, but even those are simply theoretical since that is not the world we live in. I shouldn't have to point out the remote conditions for which bitcoin is likely to fail. It's my place to point out your errors when you try to do that. Besides, what makes you think that I care about being taken seriously? Bitcoin will succeed or fail on it's own merits, nothing we say or do here will make any difference in that regard. The only difference I can make here is help others remain relevent.
True. Under certain conditions. So what? so, the future is uncertain. You hand-wave away the conditions that are unfavorable to bitcoin, instead of acknowledging the possibilities. This makes you a zealot.
Name those condtions, and let's see if I can't dispute them.
Under no conditions can you hide the silver in your pocket during your shakedown at that "checkpoint" youre also woefully undereducated on physical security.
Perhaps I am. Let me rephrase then. Under no conditions for which I am aware can I hide the silver in my pocket during a shakedown at that "checkpoint". Therefore I can see a grand advantage in the use of Bitcoin as a store of value, particularly while traveling, in any future that a global Internet exists and several possible futures for which one does not.
Happy?
And, just for good measure WE WOULD HAVE BIGGER THINGS TO WORRY ABOUT THAN MONEY THEN
Undoubtedly, we would. Likewise, if the Internet fails in any future that I can imagine, we will also have bigger things to worry about than gold or silver. Again, silver has real anti-microbial, chemical & electrical properties. Gold is just pretty lead that isn't poisonous, and has few practical uses beyond it's monetary uses, and that includes industrial uses. Many others have pointed out that gold is unlikely to retain it's value under such extreme conditions. The vast majority of the value of gold is as a store of value, regardless of just how it gained it's monetary status, it has it now. So does Bitcoin, so the arguments about whether or not regression theorm should apply or not are moot. Bitcoin has value, and a history of value, and thus an expectation that it will continue to have some value. Thus it does what it claims to do.
2)digital currency affective malware
3)loss of confidence in markets in general (meaning higher time preferences all around)
4)counterparty erosion
As you mentioned, I'm the advocate in this debate, so it's not my responsibility to point out it's downsides.
Under no conditions for which I am aware can I hide the silver in my pocket during a shakedown at that "checkpoint". Therefore I can see a grand advantage in the use of Bitcoin as a store of value, particularly while traveling, in any future that a global Internet exists and several possible futures for which one does not.
Likewise, if the Internet fails in any future that I can imagine, we will also have bigger things to worry about than gold or silver.
Gold is just pretty lead that isn't poisonous, and has few practical uses beyond it's monetary uses, and that includes industrial uses.
Bitcoin has value, and a history of value, and thus an expectation that it will continue to have some value.
Malachi:While it's true that Bitcoin substitutes for credit functions over natural money, Bitcoin doesn't have any counter-party risk either. yes, it does. People could choose not to accept it because they cant use it for anything and you are stuck with nothing.
Exactly the same thing can be said for gold, silver, USD's or Wiemar Marks; or anyting else for that matter. Perhaps you don't understand what the term "counterparty risk" actually means?
Its a service, not a good, which implicitly states counterparty risk, as it entails people doing something for you.in this case the risk is spread out over the entire peer system. This mitigates it, it doesnt eliminate it.
Suspition confirmed. You don't understand the terms you are using. If there is counterparty risk, it is because there is a specific & identifiable party that has contracted/promised to exchange for the item even if no one else will. In this case, it's also the 'backing' of a currency. Gold has no backing, it's gold. Gold certificates, however, have counterparty risk because someone has promised that those certificates can be exchanged for gold with them, even if no one else will accept them at face value. Bitcoin has no counterparty risk, there is no one that promises you something in return for your bitcoins in advance of you accepting them. They have value, or they don't, entirely independently of any particular promises.
A US FRN has counterparty risk, but that counterparty is the US government, for it is the US government that recognizes it as a note with "the full faith and credit of the United States". Without the US government as your FRN's counterparty/backing institution, those pretty pictures would have no more value than a Confederate Dollar. right, and without a significant portion of the network meaning meaningfully connected to an individual, the bitcoin is worth less than a confederate. Meaningfully connected doesnt just entail connectivity, but profitabke connectivity. If they dont have goods and services to trade, the fact that they can trade balances doesnt help them. Ergo, no industrial use. Most people arent spies or international arms dealers.
While it's true that bitcoin requires the 'network effect' but it's also true that every other currency does as well. Fiat currencies have that established by an act of government, bitcoin has done this in an entirely different manner. You are expressing doubt that it is sustainable. That's your opinion. While mine is different, neither of us can predict the future. There was not one objective statement or logical argument in the above tirade, ergo no need to repudiate your opinoins. I will note this, however; spies and international arms dealers have to eat, too.
My point is that it doesn't have to fit into the Austrian definition of money in order to be an effective monetary system no, it just has to be money in order to be money, and not a form of credit. Business has functioned on credit for hundreds and thousands of years.
False. Just because bitcoin is not money, does not mean that bitcoin must be credit. It is not credit, nor is it debt of another party (another definition of counterparty risk). You earn bitcoins by performing a service or selling a good, therefore it is evidence of valuable worked already performed. One must contribute to the bitcoin economy in advance in order to participate. It's structurally similar to a LETS system designed for the Internet. Comparing it to systems for which you are already familiar is prone toward error, since it is so different than such systems that most are already aware.
It has value because it's useful (as a monetary & distance value transfer system) and because they are of limited quantity. The many qualties of an ideal money were deliberately designed into it, so it's about as close to a money as has yet been designed by mankind. but it still cant beat money that God designed as a risk-free medium of exchange, store of value, or unit of account.
So your argument falls back to, "bitcoin isn't as good as gold coins traded in person, so it's a fail"? I'll be the first to say that bitcoin isn't as good as gold, but so what? I can't send my gold around the world, in sub-gram weights, for roughly a nickel's value, in an hour or less. Bitcoin I can. Bitcoin doesn't compete with real money anyway, because that is not the reality we live in. We live in the fiat currency world, and in that world, Bitcoin wins hands down.
Its a shame that they didnt design a broader industrial use to the bitcoin network, as that would answer the principle objection from the austrians. Oh well, thats why I await cryptocurrency 2.0
I'll also admit that if anyone can design a proof-of-work system that also has an industrial value, that cryptocurrency would eat Bitcoin's lunch. Again, that's not the world we live in, and very smart people have been trying to do exactly that for three years. If such a thing were ever found, you would still rail against it because it's not gold. You'll keep railing against it until half your own family is using bitcoin to buy stuff online, and then eventually you will just shut up and use it yourself, still beleiving that it has no market use.
Malachi: MoonShadow: Malachi:. Bitcoin does not require many of the modern functions of these institutions, and therefore does not require their overhead costs the tradeoff is the assumption of risk. What risk would that be? Catastrophic loss of confidence due to the fact that no one wants any of your bitcoins anymore.
A market crash than? Gold can crash too.
Malachi:1)legal prohibition of cryptocurrency
Bitcoin is deliberately designed in such manner as to render this risk irrelvent for the majority of Internet users.
Exists. Bitcoin still has a market value.
The risk of gold confiscation also exists, and yet gold still has a market value.
Street muggers exist, yet US FRN's still have a market value.
This risk isn't unique to bitcoin.
See above.
An economy cannot be considered a counterpary. No such risk exists.
As you mentioned, I'm the advocate in this debate, so it's not my responsibility to point out it's downsides. its a convention of rhetoric to acknowledge the weaknesses in your argument, failure to do so makes you less trustworthy.
Acknowledge them, perhaps. Introduce them, no. If you don't understand the topic well enough to know what the downsides actually are, then they are not likely a large enough of a downside to even mention. How do I know what aspects of bitcoin that others might consider a real concern, unless they are mentioned? Perhaps there are other mitigating factors to even those issues that you don't understand that would lead to me not considering them a problem. Do your research & know your topic before you engage. A good lawyer never asks a question he doesn't already know the answer to, and neither do I.
Since bitcoin is a form of credit, you can see how your trustworthiness has bearing on your advocacy.
Bitcoin isn't credit by any common definition of the term. Nor is it credit by an Austrian definition. My own trustworthiness has no bearing on Bitcoin, only on myself.
Under no conditions for which I am aware can I hide the silver in my pocket during a shakedown at that "checkpoint". Therefore I can see a grand advantage in the use of Bitcoin as a store of value, particularly while traveling, in any future that a global Internet exists and several possible futures for which one does not. right, but just like other people need to educate themselves on crypto, you could educate yourself on physical security, and use money that doesnt entail the assumption of risk for the person you are buying from.
Bitcoin does not transfer risk. It's not a debt. And your next argument in favor of a gold standard is that users should educate themselves in the matters of physical security, and then it would be more secure than the automatic security designs of a computer network? I bet you think that you are winning this, don't you?
Likewise, if the Internet fails in any future that I can imagine, we will also have bigger things to worry about than gold or silver. thank you for acknowledging that the systemic failure argument applies to bitcoin.
Well, you're welcome. The systemic failure argument applies to every alternative as well.
Now my answer is that this is akin to saying that "if I get shot or blown up, the fact that the projectiles were composed of radiolucent material is irrelevant, as I have bigger things to worry about." actually the type of exchange media that one has stored is of prime importance in the discussion of any catastrophic event, and specie has advantages and disadvantages. I prefer canned food and distilled water, and gasoline, but we all know the value density and durability of those goods is much less than Au/Ag.
I agree with that last statement. However, so long as the Internet exists, the density and durability of bitcoins is much greater than Au/Ag.
Gold is just pretty lead that isn't poisonous, and has few practical uses beyond it's monetary uses, and that includes industrial uses. thats not true, its just that most of those industrial uses are submarginal due to the fact that it makes such good money.
You just contradicted me and then restated my claim.
Bitcoin has value, and a history of value, and thus an expectation that it will continue to have some value. the volatility counts against you here,
Voltility counts against you, too.
and you have very limited history to appeal to anyway.
A subjective assessment that has no bearing on the statement I made.
Furthermore you beg the question when you suggest that it will have value because of the "expectation" as the critics argue against it based on their expectation that it will not have value.
I'm not begging the question here, you just don't understand that I was directly referencing the logic of the Regression Theorm. Users of any currency have an expectation of a particular value range in the future due to the recent history of exchange values. The fact that detractors have an expectation of zero value is inmaterial in this context because these same people don't have any bitcoin and don't intend to buy any.
""""anyting else for that matter""""
you simply dont understand what money is. Its exchange media that are free from this risk because you can use them yourself for something besides cash. Unless you think you might need to send information pseudonymously bitcoin isnt that for you. Bullion is good for things.
Suspition confirmed. You don't understand the terms you are using. If there is counterparty risk, it is because there is a specific & identifiable party that has contracted/promised to exchange for the item even if no one else will.
Bitcoin has no counterparty risk, there is no one that promises you something in return for your bitcoins in advance of you accepting them. They have value, or they don't, entirely independently of any particular promises.
So your argument falls back to, "bitcoin isn't as good as gold coins traded in person, so it's a fail"?
We live in the fiat currency world, and in that world, Bitcoin wins hands down.
If such a thing were ever found, you would still rail against it because it's not gold. You'll keep railing against it until half your own family is using bitcoin to buy stuff online, and then eventually you will just shut up and use it yourself, still beleiving that it has no market use.
then those submarginal uses will become affordable and people will use gold for more things and it will appreciate again. What submarginal uses are going to sustain bitcoin through the crashes? Or are you banking on not having any?
Exactly the same thing can be said for gold, silver, USD's or Wiemar Marks; or anyting else for that matter. Perhaps you don't understand what the term "counterparty risk" actually means? no, the same thing could not happen to gold or silver.
What you described certainly can. Anyone can refuse to accept that your gold coins as payment. In our current world, that's actually likely. What you described isn't counterparty risk, however. Gold has no counteryparty risk, because there is no one that needs to make you promises in order for it to have exchange value on the open market.
As for fiat "money", that was addressed earlier wherein I described it as a kind of reverse counterparty risk described as "counterparty mandate." in this kind of situation you know the counterparty is going to fail eventually. Are you sure this reflects favorably on bitcoin, which has no mandate but the same type of risk?
Bitcoin does not have the same type of risk, because there is no counterparty. The risks of a market crash are different than counterparty risks. Counterparty risks exists because some things don't have a market value without a counterparty, and it's the creditworthyness of the counterparty that supports it's value. Insurance is one such product, so are fiat currencies. No one promises you anything with bitcoin, and the verifiable fact that bitcoin has a market value at all proves that it doesnt require such backing to those who understand it.
you simply dont understand what money is. Its exchange media that are free from this risk because you can use them yourself for something besides cash.
I understand this point fine, it's not a relevent point. Bitcoin isn't money, it's a currency & a transfer system designed for that currency. Bitcoin still doesn't have any counterparty risk. Look up the term, please. There is no need to trust me on this matter.
Unless you think you might need to send information pseudonymously bitcoin isnt that for you. Bullion is good for things.
Again, a true yet inmaterial point. Bullion is good for things, sure. It can be used as a material input for manufacturing of particular products. That's still not what it derives it's market value from in our modern world. Gold is significantly more abundant in above ground, refined state than silver; and dispite this fact those industrial uses of silver that have reduced it's bullion volume do not drive it's value anywhere near gold's market value. This is because gold's market value is a direct result of it's desirablity as a store of value, while silver's value is largely due to it's industrial demand. Said another way, it's gold's monetary utiltity that dominates gold's market value. Few market players care that gold has any industrial utility at all, they desire it for monetary purposes, and so do you.
Bitcoin has value because, and only because, of it's monetary utility; and it's better than gold at that, even though it's not valued that way by the general public. What do you think would happen to bitcoin's market value if nearly as many people viewed bitcoin in the same light as gold? I'm not claiming that will ever happen, but if it did I think that you know that bitcoin's value would be comparable to that of gold's, if not higher due to it's inherent security and distance transfer costs. On the Internet, no one cares what color your digital gold certificates are.
Suspition confirmed. You don't understand the terms you are using. If there is counterparty risk, it is because there is a specific & identifiable party that has contracted/promised to exchange for the item even if no one else will. The counterparty is simply the other party in the transaction.
The counterparty is simply the other party in the transaction.
Twice confirmed. No, the counterparty is often not the other person in the current transaction. Please research the term before you mangle it again.
Bitcoin is a service, the counterparties are the people who own the computers that provide the service(s).
Again, no. That is not what a "counterparty risk" refers to.
These people are your counterparties, there is risk involved, no amount of hand-waving will change this.
Oh, there are risks, but you are using one term that refers to a particular type of risk, and you are using it incorrectly. Certainly there is a risk that when I send bitcoin to someone over the Internet that I won't get the services that I have paid for, but this is a fraud risk, not a counterparty risk. Please look up these terms.
Bitcoin has no counterparty risk, there is no one that promises you something in return for your bitcoins in advance of you accepting them. They have value, or they don't, entirely independently of any particular promises. bitcoins are cryptographic patterns, the value of which inheres in the transmission. Its hard for me to see how you dont recognize this as a service, or see that people are agreeing to work on your behalf (by mining bitcoins/verifying patterns). If your problem is that there isnt a written contract, thats a semantic argument and evidence for my position anyway.
Bitcoin is both a currency & a distance transfer service. I can & have acknowledged this. I don't need to argue over the fine points of things until you can manage to get the semantics correct.
False. Just because bitcoin is not money, does not mean that bitcoin must be credit. It is not credit, nor is it debt of another party (another definition of counterparty risk). You earn bitcoins by performing a service or selling a good, therefore it is evidence of valuable worked already performed. One must contribute to the bitcoin economy in advance in order to participate. It's structurally similar to a LETS system designed for the Internet. Comparing it to systems for which you are already familiar is prone toward error, since it is so different than such systems that most are already aware. I'm pretty sure adjusting ledgers is a service and not a tangible good. Intangible goods are called "services" because they are things people do for you, like changing numbers in accounts, computing cryptographic patterns, or massaging your tired muscles.
I'm pretty sure adjusting ledgers is a service and not a tangible good. Intangible goods are called "services" because they are things people do for you, like changing numbers in accounts, computing cryptographic patterns, or massaging your tired muscles.
To the extent that people pay for bitcoins, its because of the expectation of future cryptographic work, and not simply for cryptographic work already done.
So your argument falls back to, "bitcoin isn't as good as gold coins traded in person, so it's a fail"? quit crying in your lemonade, I never said its a fail We live in the fiat currency world, and in that world, Bitcoin wins hands down. so you think that if people abandon fiat currency they wont use bitcoin?
If such a thing were ever found, you would still rail against it because it's not gold. You'll keep railing against it until half your own family is using bitcoin to buy stuff online, and then eventually you will just shut up and use it yourself, still beleiving that it has no market use. more ranting that has nothing to do with my actual positions.
Malachi:""A market crash than? Gold can crash too."" then those submarginal uses will become affordable and people will use gold for more things and it will appreciate again. What submarginal uses are going to sustain bitcoin through the crashes? Or are you banking on not having any?
Bticoin has already had a bubble & crash, and it didn't kill it. I'm not banking on anything. If gold crashes down to it's submarginal uses, I'll buy your's for slightly more than lead, and use it to make non-toxic hunting bullets. You're still not going to be happy with what you could trade it for, and the fact that gold cannot drop to zero value while bitcoin could would be of little comfort.
Malachi:I get the idea that I'm wasting my time because youre a zealot and you cant be bothered to understand the concepts that words represent.
Okay, your failure to explain yourself is because I can't be bothered to understand the concepts that particular words represent. You just keep telling yourself that, but don't forget to pick up an economic textbook and try to find the term "counterparty risk" while you do so.
Malachi,
the primary reason why people use money is that it reduces transaction costs. Bitcoin reduces transaction costs. It can only be replaced by something that reduces transaction costs even more. A system based on money substitutes piggybacking on either fiat or gold cannot compete with a cryptocurrency, becacause the maintenance of money substitutes does not only have costs associated with the clearing system, but also with storage and redemption of the specie.
The internet also reduces transaction costs and it is unlikely that it will be replaced by post offices, coaches, trains or libraries unless there is a catastrophic failure.
the primary reason why people use money is that it reduces transaction costs.
Counterparty is legal term, not a technological one. With money, It means that a contract depends on legal obligations of someone who is not directly involved in a transaction. The operators of Bitcoin nodes and miners have no obligation to process your transaction, so they are not a counterparty. If you for example pay with a cheque and your car breaks down while driving to the bank to cash it, that is not a counterparty risk, that's a technological issue.
The primary purpose of money is not saving, but transacting. The ability to use money for saving is a derivative of the medium of exchange.
if you get paid with a check and on your way to the bank, the only physical location of the bank gets hit by a meteor and is physically unable to cash your check, thats intermediary counterparty risk, just as if people refused or were unable to compute cryptographic patterns for you.
paradoxically you in the same sentence show my point. What I meant is that counterparty risk refers to the legal, not technological, aspect of transactions.
you know, there is something of a meritocracy here, in that to deny someone the use of a term you have to make a case. That can be as simple as appealing to a reference, or it can be a logical exposition (the case against "purebred mix" comes to mind). Its funny that you guys are appealing to your own fiat for this one.
You are wrong, because you're misrepresenting techonlogical issues as legal ones. If the technology develops to the extent that we have bots operating at quantum level (like in The Quantum Thief), they can disassemble your gold or coal and you wouldn't be able to use it anymore. But that's not a counterparty risk, that's a technological issue.
Also, I cannot use gold myself. In order to validate whether it's really gold, I would need to either hire someone to verify its authenticity, or to read upon how it's done, get the materials and so on. This requires cooperation of many third parties, yet it's not a counterparty risk, it's a technological risk.