One day, while I was learning about cipherspace, I discovered BitCoin. BitCoin is a completely decentralized, anonymous online monetary system that relies on a distributed database to facilitate transactions. The creator put a great deal of effort into ensuring that the system is secure and reliable. Unfortunately, there are no real assets backing he currency of BitCoin (and no coercive government backing it either). Thus ends BitCoin.
I can imagine, though, a system like BitCoin that allows people to write promissory notes and sign them with an RSA digital signature (to prevent couterfeiting). These promissory notes could be backed by gold, silver, fiat currencies, stocks and bonds, or pretty much anything. Then, these notes could be transfered from one person to another anonymously.
Couple this with an ebay-like service that allows people to swap these virtual currencies. Say, for example, that I have a gold note issued by a bank in South Africa. Since taking delivery of the gold could be a problem, I trade my notes for notes issued by a bank in U.S.A. Then, I can redeem those notes and have them FedEx me the gold (insured, of course).
This system would be Fed-proof, IRS-proof, FBI-proof and judgment-proof. This system would protect the users against monetary inflation, making it Fed-proof. Since nobody has a bossman ratting out their earnings, it is IRS-proof. It is FBI and NSA proof because all transactions are encrypted and anonymous. And, most importantly, it is judgment-proof because it is perfectly legal.
There are, at present, no laws that could be used to criminalize what I propose. Laws against money-laundering, for example, do not apply because there is no way to prove that the money came from an illegal source, such as drug dealing. Laws against tax-evasion do not apply either, because no taxes have ever been levied on imaginary currency. In addition, if you had your day in court, you could defend yourself on First Amendment grounds. Besides, international free trade agreements also have generous loopholes.
So what we are dealing with is anarcho-capitalism and wildcat banking on a global scale. If not for my non-existant programming skills, I'd be forking a new project off BitCoin right now.
Anybody here know C++?
"As long as there are sovereign nations possessing great power, war is inevitable."
@gabriel: Oh, man, you're begging for a flame-war.... ;-)
Of course, C++ and Perl are not even in the same solution-space... but I absolutely love Perl. Unfortunately, Perl has lost its roots with Perl6, which I think is going to be a fork, I don't think Perl5.x is ever going to be truly end-of-life'd, the code base is a large part of what makes Perl so powerful. Ruby and Python are Perl's closest relatives but they both lack the "down-and-dirty" quality of Perl5 that I fell in love with.
Clayton -
No worries, I'm just being inflammatory. I write C/C++ (C#, and some assembly) for a living, so I have a certain affection for them :). Now if there's any "God that Failed" book that should be written about a programming language, it's Ruby. Not a fan.
Micah I already conceded that a BTC could be made a currency, just like the EUR, if it's currency by decree. When your plan is backed up by force and guns it's easy to do whatever you want.
NewLibertyStandard: Edit: I've been reading by email and I have not been paying attention to who is who because I wasn't expecting to discuss, but y'all sucked me in. :-P In any case, y'all are so polarized (myself included) that it's really just like listening to two collective consciousnesses talk round and round in circles. Indeed. http://critical-thinkers.com/2011/03/critical-thinking-the-rational-discussion-flowchart/a-flowchart-to-help-you-determine-if-yoursquore-having-a-rational-discussion/ | Post Points: 35
Edit: I've been reading by email and I have not been paying attention to who is who because I wasn't expecting to discuss, but y'all sucked me in. :-P In any case, y'all are so polarized (myself included) that it's really just like listening to two collective consciousnesses talk round and round in circles.
I don't agree with the first point in that flowchart. If I can envision something that would change my mind then I would already have discussed the topic with myself. I am guessing though that the flowchart really means "are you open to having your mind changed". I do not need to have an idea ahead of time how that would come about, I only need to be open to it occuring if/when it does.
MoonShadow:http://critical-thinkers.com/2011/03/critical-thinking-the-rational-discussion-flowchart/a-flowchart-to-help-you-determine-if-yoursquore-having-a-rational-discussion/
I answered "No" and result is "This is not a discussion, I will not talk to you about this subject. I think I have already stated that I haven't the energy to teach you all regression theorum. Furthermore it's definately not a discussion. I don't discuss with people that the color of the sky is blue.
I know many of you are dissapointed because you wanted to suck me into some kind of silly internet debate but I agree with the flowchart. This is not a discussion and I am not interested in discussing ludicrous things. If your interested in the topic you'll spend more then 5 minutes searching through human action to find an answer(At least Micah did that much, thats more then almost everyone else can say here).
So no, this is not a discussion, and I thought I made t hat clear. I don't know why Moonshadow that you persist in assuming it is a discussioN? I am not making an argument against BTC's, I am telling you. Period. I am not going to try and teach 100-200 years worth of economics over an internet forum.
THe only person I can say with confidence who's done the homework here is Clayton. His conclusions might even be at odds with mine but at least I know that he's done the reading. I have to admit that I have gotten lazy with this thread but you guys are tryign to real me into a debate and I have no motivation to do so. Your all welcome to disagree with me, and Mises, and Carl Menger(I know appeals to authority suck).
But before you disagree with them at least give them the benefit of the doubt and read their arguments for yourself. Expecting me to teach it to you is just not fair.
Micah71381: I don't agree with the first point in that flowchart. If I can envision something that would change my mind then I would already have discussed the topic with myself. I am guessing though that the flowchart really means "are you open to having your mind changed". I do not need to have an idea ahead of time how that would come about, I only need to be open to it occuring if/when it does.
Honestly, there are many things wrong with the chart, I posted it mostly to antagonize. And for my own entertainment.
filc: MoonShadow:http://critical-thinkers.com/2011/03/critical-thinking-the-rational-discussion-flowchart/a-flowchart-to-help-you-determine-if-yoursquore-having-a-rational-discussion/ I answered "No" and result is "This is not a discussion, I will not talk to you about this subject. I think I have already stated that I haven't the energy to teach you all regression theorum. Furthermore it's definately not a discussion. I don't discuss with people that the color of the sky is blue.
I can honestly believe that you think that your position is self-evident.
And it seems to be more than you have done, certainly so in the last several days.
I do understand that you are 'telling me', and that's probably the extent of your ability here. I don't believe that you could teach me much about economics, regardless of the forum.
THe only person I can say with confidence who's done the homework here is Clayton. His conclusions might even be at odds with mine but at least I know that he's done the reading. I have to admit that I have gotten lazy with this thread but you guys are tryign to real me into a debate and I have no motivation to do so. Your all welcome to disagree with me, and Mises, and Carl Menger(I know appeals to authority suck). But before you disagree with them at least give them the benefit of the doubt and read their arguments for yourself. Expecting me to teach it to you is just not fair. I'm read them. Admittedly, it has been some time, and memory fades. It is possible that the last time that I looked at either author's works with intent was before you were born. I think that I have gleaned some more insight into your position, due to your responses with Micah. I believe, that you believe that a currency can only be a medium of exchange (without the support of 'the most vendible/marketable good') with government force. This is a strange position for a self-described 'capitalist anarcist' to take. Do you really not believe in emergent order? Is a free people incapable of agreeing to a common form of economic rules in the absence of force? If so, you should consider altering your avatar. | Post Points: 20
MoonShadow:Honestly, there are many things wrong with the chart, I posted it mostly to antagonize. And for my own entertainment.
Posting to antagonize is trolling. We're not interested in trolling.
liberty student: MoonShadow:Honestly, there are many things wrong with the chart, I posted it mostly to antagonize. And for my own entertainment. Posting to antagonize is trolling. We're not interested in trolling. Wouldn't 'trolling' be antagonizing without cause? I would think that repeatedly refering to other list members as "intellectually lazy" would be this medium's version of "fighting words", particularly without support for that position. Therefore, since he initiated the force to begin with, I am justified in returning in kind, am I not? Do you intend to chastise him for his comments? I have no problem with deferring to a just & fair moderator, but you are not exactly calling for calm. So far, you seem to be 'policing' this thread, and we all know such responses are always simplistic and usually unjust. And it's really telling that no one here has resorted to true 'flaming' retoric. Don't you think that you might be a bit jumpy? | Post Points: 20
MoonShadow:Don't you think that you might be a bit jumpy?
If I was jumpy, you would be banned already. Don't make me jumpy.
MoonShadow:I can honestly believe that you think that your position is self-evident.
No I certainly do not think it is self evident. I believe I have stated several times that it takes a little bit of homework though. :)
MoonShadow:I don't believe that you could teach me much about economics, regardless of the forum.
Yup.
Moonshadow:I believe, that you believe that a currency can only be a medium of exchange (without the support of 'the most vendible/marketable good') with government force.
Lol my goodness, absolutely not. I am merely pointing out the difference between money, and money by decree.
liberty student: MoonShadow:Don't you think that you might be a bit jumpy? If I was jumpy, you would be banned already.
If I was jumpy, you would be banned already.
Well, I suppose I can't argue with that.
I've been reading the comments in this thread and am appalled by the level of ignorance and arrogance by anyone too scared to accept that a non-commodity backed currency could ever work.
You all seem to forget that the sole purpose for money is to facilite exchange. One of the main reasosn you'd want your money to be a commodity is in the case if people lose faith in that money as a medium of exchange. Now why would anyone lose faith in a gold-backed currency? Most notable reasons include the possibility of fraudulant fractional reserves and theft - including government seizures. All reasons for losing faith in a gold-backed currency are inherently inexistant with Bitcoins; this is why Bitcoins do not need to be a commodity. You can't seize Bitcoins as they are decentrilized and encrypted. You can't print Bitcoins because the proof-of-work prevents it by design. As long as these two concerns are secure, money does not need to be backed by a commodity.
The good thing about all of this, is that 99% of people don't believe in gold as money anyway. They are therefore easier to persuade than gold bugs to use Bitcoins as money :p
'Non-commodity backed currency" i.e. fiat money, already does work. No one denies that fiat money exists and is possible. But it is a theorem of Mises's that money cannot arise in a competitive market for money but from such goods as have real value in the market prior to their becoming money. Perhaps Bob Murphy is as ignorant as I am and you can enlighten us both.
You all seem to forget that the sole purpose for money is to facilite exchange. One of the main reasosn you'd want your money to be a commodity is in the case if people lose faith in that money as a medium of exchange. Now why would anyone lose faith in a gold-backed currency? Most notable reasons include the possibility of fraudulant fractional reserves and theft - including government seizures. All reasons for losing faith in a gold-backed currency are inherently inexistant with Bitcoins; this is why Bitcoins do not need to be a commodity. You can't seize Bitcoins as they are decentrilized and encrypted. You can't print Bitcoins because the proof-of-work prevents it by design. As long as these two concerns are secure, money does not need to be backed by a commodity. The good thing about all of this, is that 99% of people don't believe in gold as money anyway. They are therefore easier to persuade than gold bugs to use Bitcoins as money :p
Do you people get paid to promote Bitcoin or do you just do this in your free time? Bitcoin could certainly become a money with coercive backing, just as any other fiat money has come into existence. Without that coercive backing, there isn't a snowball's chance in hell that Bitcoin will become money. Keep dreaming.
Just now noticed this old post...
The intrinsic value of bitcoins to the average person who likes bitcoins is higher than the intrinsic value of gold to the average person who likes gold. The average person who likes gold, primarily likes it because it is expensive. If gold was as common as dirt, gold would be 100% worthless.
Fine - let's say that scientist discover that just below the crust of the earth is a solid layer of liquid gold that can be pumped as cheaply as oil anywhere, anytime. The price of gold plummets to almost zero. But what of the other precious/monetary metals? Silver, platinum, palladium? The prices of these would, in turn, go up as people sold off their gold holdings and bought alternative commodities to continue hedging against fiat money inflation.
It's not about gold or even metal (cowrie shells, dried tobacco, salt, fur pelts and so on have all been used as commodity monies at different times and places), it's about real goods that have real value in real exchange. Only from such goods can money arise in whatever form the market chooses.
Gold jewelry would be valued no more than play jewelry, but hammer the gold jewelry and it would again be worthless. It would still have industrial use, but they would never buy it. In fact most people would pay to dispose of it. Bitcoins are immaterial and potentially infinitely divisible, yet they are valued much more than dirt by people who have a more accurate sense of worth than you.
Valuation cannot be accurate or inaccurate, it is subjective. Each person values whatever they like however they like.
Their value arises not from meaningless chance geological existence, but from the infinitely exquisite mind of man. The discovery of gold was the culmination of 'hey, look at these purdy rocks!' The discovery of the correct implementation of the calculations that makes bitcoins possible is the culmination of seemingly infinite man hours of blood and sweat, toil and trial, to loose the chains of the gold backed currency tyranny unto the prosperity of fiat currencies that fostered sufficient peace, wealth and creativity to create computers, computer science, cryptography, modern society and the Internet, all cumulatively culminating in the magnificent intellectual miracle that is Bitcoin.
Oh my. Very poetic but Bitcoin is not an intellectual miracle, at all. As far as I can tell, there is not one original idea in Bitcoin (which isn't in itself a bad thing, but Bitcoin is no "miracle", for sure). Hashcash is the first protocol to use hashes to create digital "scarcity" and Bitcoin just imitates this in its own way. This is what makes Bitcoins "scarce" and is the central feature of Bitcoin (the rest pretty much has to do with mundane token exchange protocols). I'm completely unimpressed.
Clayton, you should know your definitions before spouting nonsense. "Fiat money is money that has value only because of government regulation or law." This is not the case for Bitcoin and is therefore not fiat money.
The value of bitcoins do not come from physical properties, but from much more important properties that gold/silver-backed currencies do not hold, as non-counterfeitability, anonimity, no need for third party (banks, PayPal), impossibility of fractional reservers, etc.
Value is subjective, and Mises never stated that money cannot arise from a competitive market; in fact it did, gold and silver outcompeted all other commodities to become money.
You are definitely clueless about monetary issues and should know better, perhaps store.mises.org is a good start? I realize I am not trying to be civilized saying this, but I just can't help it :p Don't take it personally ;)