jmorris84: Graham Wright:Why do people use bitcoin as a medium of exchange? Because it lowers their transaction costs. What else do you need explaining? Is it really being used as a medium of exchange though? From what I gather, more people are holding on to bitcoins rather then passing them around as a medium of exchange but maybe your definition of medium of exchange is different from what I understand it to be. Would you mind defining it for us?
Graham Wright:Why do people use bitcoin as a medium of exchange? Because it lowers their transaction costs. What else do you need explaining?
Is it really being used as a medium of exchange though? From what I gather, more people are holding on to bitcoins rather then passing them around as a medium of exchange but maybe your definition of medium of exchange is different from what I understand it to be. Would you mind defining it for us?
Sure. I'm using the standard definition, as per Mises and Rothbard, which is an intermediary used to facilitate an indirect exchange. In Mises' words "a medium of exchange is a good which people acquire neither for their own consumption nor for employment in their own production activities, but with the intention of exchanging it at a later date against those goods which they want to use either for consumption or for production." To use Rothbard's example, if I have eggs and want your shoes that are for sale, but you don't want eggs but do want butter, I can exchange my eggs for some butter, then exchange the butter with you for the shoes, and there I have used butter as a medium of exchange, facilitating the indirect exchange of shoes for eggs.
Clearly people are using bitcoins as a medium of exchange, to buy things from Bitcoinstore, Bitmit, Silk Road, etc.
Government Explained 2: The Special Piece of Paper
Law without Government
Ok, I see where you are coming from. Maybe I need to be more specific because I don't believe I was earlier. I was talking along the lines of bitcoins being used more widely as a medium of exchange to the point of being money. I don't see that being the case or ever becoming the case. This is really my only argument against bitcoin and others who see it differently then that.
Malachi, what gives you the impression that I don't believe further investigation is required?
your astonishment at the idea of someone writing 90 pages on something that, according to you, Dave clearly showed to be worthless.
I said Dave has given the best explanation in here; that doesn't mean that I don't continue to read what he and others write about the subject.
no it "doesnt mean" that, you had to make two different statements.
I'll tell you I'm definitely not reading a 90 page thesis on the subject right now though.
right, you said that a bunch of times. why are your reading preferences germane to the topic?
Oh, I'm posting in this thread because this is a message board and that is what you do on message boards; discuss things.
yes, people discuss things they have an interest in. what is your interest in bitcoin? can you tell me why it isnt money?
I don't believe it is money because it is not a commonly used medium of exchange right now, as money is defined to be. I have yet to see it used or accepted as a form of payment for a service or good even once, at any of the merchants I have frequented since bitcoin's inception. I use the internet to pay for or buy things a lot as well and have never seen it as an accepted form of payment there either.
bitcoin is commonly accepted on the darknet and at a variety of merchants on the regular web. everything at some agorism festival in new hampshire was purchasable with bitcoins. bitcoin is commonly accepted by certain individuals. these people make up the economic context within which bitcoin is money.
I have never seen anything for sale with the price listed in rupees or francs either. but as an interested person, I can find markets where those currencies are commonly accepted and then know that they are money.
Ok but my point is, until I can go almost anywhere and use a specific something as a medium of exchange, that specifc something won't be considered money. There are thousands of different businesses in the area that I live (Philadelphia). I don't know of a single one that I can walk into and pay for something with Bitcoins. It's not money here. You might be able to find a small number of online sites or meetup groups that pass these things around but until it is used as a medium of exchange as frequently as, oh I don't know, a USD, it's not money. Hell, I'd bet a silver coin that cigarettes are exchanged for different goods and services within prisons more frequently then bitcoins are.
I'm curious; can you tell us at least 20 transactions that you've made with your bitcoins this year, who they were to, and when? This is the 109th day of the year, so that should be fairly easy to do. I could probably tell you 20 transactions that I've made with USD in the last 2 weeks!
I can go almost anywhere and use a specific something as a medium of exchange, that specifc something won't be considered money.
like francs, rupees, dinar, etc. none of those are money because you cant go "almost anywhere" and use them.
There are thousands of different businesses in the area that I live (Philadelphia). I don't know of a single one that I can walk into and pay for something with Bitcoins. It's not money here.
you seem to be on the verge of realizing that "money" is contextual which puts you ahead of Smiling Dave.
You might be able to find a small number of online sites or meetup groups that pass these things around but until it is used as a medium of exchange as frequently as, oh I don't know, a USD, it's not money.
and you lost the context. using the usd as your standard sets the bar pretty high. do you realize that most fiat currencies in the world dont meet your criteria for consideration as money? does that mean they arent money? are mexican pesos money?
Hell, I'd bet a silver coin that cigarettes are exchanged for different goods and services within prisons more frequently then bitcoins are.
does that make cigarettes into money outside the context of prisons? do you deny that cigarettes are money inside prisons. surely you dont believe that cigarettes are used as an exchange medium as frequently as us dollars, do you?
The USD was an example, my friend. My point is, where I live, there are thousands upon thousands of different types of goods and services that I can pay for and I do not have to worry about anyone NOT taking USD from me as a form of payment. There isn't a single one that accepts a Bitcoin, though. I don't know how else to explain this to you so that you will understand. But even if 1 local pizza joint accepted a Bitcoin, compared to the thousands upon thousands of others, it still would not be considered money though. Again, hopefully you understand this.
perhaps instead you could tell me why the economic context within which bitcoin is "commonly accepted" doesnt satify your requirements? please note that you moved the goalposts, first you wanted it to be commonly accepted, now its frequency of use equal to or greater than usd. which determines monetary status, once and for all?
I'll just take that as, "I've never actually used a Bitcoin to pay for anything."
My point is, where I live,
thats an economic context. dollars are money there. lets move on.
There isn't a single one that accepts a Bitcoin, though.
as far as I am aware, no one on mars accepts us dollars. must mean us dollars arent money, right?
But even if 1 local pizza joint accepted a Bitcoin
why does it have to be local? is it perhaps because of the economic context? do you now understand that if bitcoin is commonly accepted in an economic context, it becomes money in that context?
compared to the thousands upon thousands of others, it still would not be considered money though.
thats a false basis for comparison. anything can be non-money if you try to spend it where people dont accept it. what you need to do is look at contexts where bitcoin is commonly accepted and tell me whether you think its money there or not, and why.
you can take it however you want, but my use (or lack of use) of bitcoin is irrelevant to the discussion. kind of like how the frequency of use of the usd is irrelevant to the monetary status of bitcoin. I note that you decline to respond to my points. should I take that as a concession?
jmorris84:Ok, I see where you are coming from. Maybe I need to be more specific because I don't believe I was earlier. I was talking along the lines of bitcoins being used more widely as a medium of exchange to the point of being money. I don't see that being the case or ever becoming the case. This is really my only argument against bitcoin and others who see it differently then that.
People are finding new uses for bitcoins all the time. Some people buy bitcoins to transfer funds internationally because its cheaper; some organisations (like Fr33 Aid) operate in bitcoins to avoid interference by the state; Redittors tip each other with bitcoins, and bloggers and podcasters accept donations in bitcoins, to avoid paying fees; Bitmit sellers accept bitcoins for the same reason and Bitmit buyers benefit from lower prices; some people buy bitcoins to buy products on Silk Road that they can't buy with any other currency; speculators buy bitcoins to try to benefit from a price increase; some people buy bitcoins to avoid contact with the banking system; some people buy bitcoins for the anonymity; some people buy bitcoins as a social signaling device; miners create bitcoins to sell for a profit; some people buy bitcoins because they see it as a way to end the current monetary/banking paradigm.
If the bitcoin userbase keeps growing as it has, then there is undeniably a possibility of it reaching that "commonly accepted" criterion that qualifies it as money. And if it is so useful for all the above things (and reasons that I haven't even thought of, or nobody has yet thought of), why would its userbase not keep growing as it has - even to become money? Or, even if growth does stop and the userbase hits a ceiling for some reason or starts declining, why wouldn't it continue to be used as a not-commonly-accepted medium of exchange? Why would it fail? What will cause people who find bitcoins useful now to stop finding them useful?
Malachi, I have never ever seen Bitcoin used as a medium of exchange. Ever. I've never even read of it being used as a common medium of exchange. Ever. I asked you to tell me the last 20 transactions you've made using it, for clarification of this, and you came up with some hocus pocus to avoid doing that.
This whole Bitcoin thing is starting to get weird. So many advocates for it, calling it money, and not a single one that I've ever come across has ever even used the damn thing to buy anything.
Malachi, I have never ever seen Bitcoin used as a medium of exchange. Ever. I've never even read of it being used as a common medium of exchange. Ever.
well, if you havent experienced it, then it must not exist. DOWN WITH BITCOIN!
I asked you to tell me the last 20 transactions you've made using it, for clarification of this, and you came up with some hocus pocus to avoid doing that.
ok, youre trolling now.
This whole Bitcoin thing is starting to get weird.
I'll say. so many haters, none of them can even have a reasonable discussion. must be something to that bitcoin stuff, if so many people who are uninvolved are really really focused on (not-) explaining how bad it is.
because youre clearly smart enough to understand "economic context." and its not like there was some enormous span of time between replies, youre obviously, deliberately avoid responding to my points.
So many advocates for it, calling it money, and not a single one that I've ever come across has ever even used the damn thing to buy anything.
yes there are "so many" advocates but its not "commonly accepted" in your neighborhood. troll away, troll.
I'll check back every so often to see if you've told us a few things that you've purchased with Bitcoins. :)
of course you will, after all what else can you do? we have already seen that your "argument" consists of willful noncognitivism.
wouldnt want to answer any of my questions, after all, that would be a discussion! on a discussion board!
jmorris84:I was talking along the lines of bitcoins being used more widely as a medium of exchange to the point of being money. I don't see that being the case or ever becoming the case. This is really my only argument against bitcoin and others who see it differently then that.
The 'commonly accepted' argument is not a great argument, and if it's your main or only or pillar-argument against bitcoin then you will likely become a bitcoin supporter soon (unless you're a SD sock).
What does it really mean to be 'commonly accepted'? It just means that many people will accept X as a medium of exchange because they know that they can turn around and exchange X for what they want.
Let me flip the scenario now. Suppose we go back a few hundred years to when the Cowrie shell was being used by primitive cultures as a form of money, and along come the Spanish with a new technology: gold money.
According to you, gold cannot be money in this scenario, it's not commonly accepted in this culture. But time passes, the Spanish explain the wonders of gold, and do business in gold with the people, and gold-use as money is on the rise. It ends up outcompeting the cowrie shell because of its superior properties in its use as money compared to cowrie.
Soon demand for gold exceeds demand for cowrie and better money outcompetes the worser.
Now, compare bitcoin and fiat. Many people prefer bitcoin for a whole host of reasons to fiat, reasons ranging from privacy, coolness-factor, investment hoarding and the expectation of deflation, and the more ethereal removal of 3rd party trust and thereby avoiding the whims of bankrupt politicians (aka Cyprus).
The market will decide if bitcoin is a better money than fiat, over time. And then comes a tipping point, as it surely came for gold among the cowrie-using society. The tipping point is generally said to be the 15% - 18% adoption rate within a population. This doesn't need to be judged on a worldwide basis, can be culture by culture, even city by city.
Bitcoin is certainly not there by any means, but you cannot sustain the argument that because it's not there right now that it can never get there. If that were true nothing would ever achieve a tipping point. But if it achieves that someday, then we can say surely that it is now commonly accepted, because at that point it's likely that any person would accept bitcoin because of reasonable surety that they can exchange it for anything else they want.
jmorris84:This whole Bitcoin thing is starting to get weird. So many advocates for it, calling it money, and not a single one that I've ever come across has ever even used the damn thing to buy anything.
I've never bought anything with the Chinese Yuan. Does that mean it's not money?
jmorris84: I'll check back every so often to see if you've told us a few things that you've purchased with Bitcoins. :)
I'll give you one, just to see the look on your face. I once bought a month of Reddit gold with bitcoin.
Your move.
Do the vendors adjust their prices according to the exchange rate?
Anenome: The 'commonly accepted' argument is not a great argument, and if it's your main or only or pillar-argument against bitcoin then you will likely become a bitcoin supporter soon (unless you're a SD sock). What does it really mean to be 'commonly accepted'? It just means that many people will accept X as a medium of exchange because they know that they can turn around and exchange X for what they want. Let me flip the scenario now. Suppose we go back a few hundred years to when the Cowrie shell was being used by primitive cultures as a form of money, and along come the Spanish with a new technology: gold money. According to you, gold cannot be money in this scenario, it's not commonly accepted in this culture. But time passes, the Spanish explain the wonders of gold, and do business in gold with the people, and gold-use as money is on the rise. It ends up outcompeting the cowrie shell because of its superior properties in its use as money compared to cowrie. Soon demand for gold exceeds demand for cowrie and better money outcompetes the worser. Now, compare bitcoin and fiat. Many people prefer bitcoin for a whole host of reasons to fiat, reasons ranging from privacy, coolness-factor, investment hoarding and the expectation of deflation, and the more ethereal removal of 3rd party trust and thereby avoiding the whims of bankrupt politicians (aka Cyprus). The market will decide if bitcoin is a better money than fiat, over time. And then comes a tipping point, as it surely came for gold among the cowrie-using society. The tipping point is generally said to be the 15% - 18% adoption rate within a population. This doesn't need to be judged on a worldwide basis, can be culture by culture, even city by city. Bitcoin is certainly not there by any means, but you cannot sustain the argument that because it's not there right now that it can never get there. If that were true nothing would ever achieve a tipping point. But if it achieves that someday, then we can say surely that it is now commonly accepted, because at that point it's likely that any person would accept bitcoin because of reasonable surety that they can exchange it for anything else they want.
Is that what happened though? Was there this massive debate about gold becoming money back then like there is today about Bitcoin becoming money? I wasn't aware that there was. As far as I know, gold has been a pretty valuable thing in many different communities for THOUSANDS of years and has been being used as a medium of exchange for an extremely long time.
Anenome:I've never bought anything with the Chinese Yuan. Does that mean it's not money?
Are billions of people using Bitcoins to purchase goods and services like they are with Chinese Yuan? Didn't think so.
go cry in your haterade, irrationalbot.
I just got back from the bar and used USD to buy ribs, a crab cake, 3 different glasses of beer and a sixpack. I also purchased 3 plane tickets today. What have you bought with your Bitcoins recently?
Was there this massive debate
this isnt a massive debate. this is a few haters arguing against reality.
because its all about me, isnt it sweetiepie?
You kidding? I'm a member of many different forums and each one has people like you defending their Bitcoins as if they can be used like money. Not surprisingly though, no one has stepped up and actually shown that you can go literally anywhere within your community and use it as such.
jmorris84: I just got back from the bar and used USD to buy ribs, a crab cake, 3 different glasses of beer and a sixpack. I also purchased 3 plane tickets today. What have you bought with your Bitcoins recently?
aka "I just got back from the bar, want to dump out my purse and compare receipts?!"
want to engage me in a productive discussion? you never responded to my questions above.
Not surprisingly though, no one has stepped up and actually shown that you can go literally anywhere within your community and use it as such.
whats a community? is that like the darknet?
I'll be taking my car to the shop in a couple of days to get inspected. Also need a haircut. Probably going to use some USD because I'm pretty sure that neither one takes a Bitcoin as a form of payment for their service.
in light of that fact do you retract your earlier acknowledgement that Chinese Yuan are money?
Are you ready to admit you haven't and will not be using Bitcoins (which at this point I'm doubting you even have any) as money? Just looked in my fridge by the way and I'm low on raw milk. I'll probably be hopping in my car at some point this weekend and driving 15 miles out to the store that sells it to make my purchase. I'll ask them if they take Bitcoins as a form of payment but I really wouldn't be surprised if they never even heard of the damn thing. I bet they at least know what Chinese Yuan are though.
perhaps one day youll understand why my personal finances arent a part of this discussion. it has to do with context. the big question is why someone who doesnt value bitcoins would keep wanting to talk about them, but not as an economist. as a peanut in a gallery?
Right. Why be bothered by the fact that you'll never purchase anything with a Bitcoin, which happens to be an important function of money.
shackleford: Do the vendors adjust their prices according to the exchange rate?
Bitpay allows a vendor to price in dollars and the bitcoin price will be updated in realtime to match the exchange rate, minimizing exchange risk for a vendor that wants to keep the dollar as their unit of account, as most will (initially), since they have to pay vendors in dollars also. But they can choose to keep profits in bitcoin too, or take bitcoin and sell to dollars themselves as needed, as I've heard of some companies doing.
jmorris84: Right. Why be bothered by the fact that you'll never purchase anything with a Bitcoin, which happens to be an important function of money.
Hello. Guy right here who has purchased things in bitcoin. Get lost.
1) why indeed? its not as though the monetary status of bitcoin depends on my behavior. its already money in the bitcoin market, no need dor me to do anything.
2) as the future is uncertain, your proposition can hardly be considered "fact" so its even more puzzling why you would think such a prediction would be bothersome,
3) still wondering why you seem obsessed with people and refuse to discuss the issue at hand.
You mean the issue of not being able to use your bitcoins as money anywhere? By the way, I'm going to the movie theatre today to watch the new Evil Dead. Might even buy some soda and popcorn while I'm there. You think they'll accept Bitcoins?
no I mean the issue of you not understanding what makes something money and reveling in that ignorance.