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.
Peter:Could you please specify what do you mean "by decree"?
No you made a comparison between fiat and BTC's. SO I was pointing out that moneys by decree could easily be established as money, by way of force.
banned:No. Bitcoins are exchanged for US dollars on an open market and are therefore not proxies.
Unless there exists a contingent medium of people where all economic and accounting calculations are done in bitcoin denominations. You are 1000% percent wrong and oyu haven't bothered to consider a single thing any of your opponents have stated here on this thread.
Feel free to post a link of someone's accounting books written all in BTC's.
Peter:Your objection to Bitcoin is like an objection to tax consultants.
As stated before, many many times. I have no objection to bitcoins. Especially as a radically useful laundering mechanism. I just think it's fraudulent to sell it to people as money. In truth I don't think you know what my arguments are. Thats why I ignore your posts. =p
http://blog.mises.org/17294/a-clear-concise-look-at-bitcoin/
The only thing that I have posted based on emotion in this thread has been how humorous that you people are wasting your time with this discussion. Bitcoin is not viable, and it will fail. It will fail, because of the lack of people willing to support such a ridiculous notion, So Peter, your argument here is irrational. Not to mention that you are arguing on this of the basis of the irrationality of Man, while not seeing that the irrationality end's when there is something that is obviously absurd as Bitcoins.
Like I read on Youtube earlier, it's only good for virtual hooker's. Other than that, you are wasting your time.
Yes, I was the emotional one here all this time. Give me a break. Half of the people on this forum wouldn't know a rational argument if they made one.
/rant
Filc,
so basically the whole point of your posts is that you are obsessed with an obscure meaningless definition which is shared by a miniscule proportion of population.
NidStyles,
in other words, you have no argument and are not actually interested in a debate about this topic.
Well I don't know of a single firm or household that does economic calculation in terms of gold or any other exchangable medium besides fiat currency either.That's largely because incomes and expenses need to be calculated in terms of dollars for tax purposes and because the white market is essentially forced to do all calculation in terms of dollars. Plus, gresham's law has basically eliminated the use of any medium that does not depreciate at the same rate of fiat currency. I still think it would be wrong to say that gold isn't a form of money or that it is a dollar proxy.
Anyways, I'm pretty sure the only disagreement we have is in how we are using the word "proxy". To my knowledge, a proxy is something that can be used in leiu of some other good, which is why credit cards and banknotes are proxies as they represent a direct liability to pay a certain amount of some good in the future. Bitcoins are not proxies; they do not represent future fiat money since they have a variable price. They may be used to launder other monies, but that does not mean they can be called a proxy. They are only a medium of exchange that allows for more anonymous transactions.
banned:Well I don't know of a single firm or household that does economic calculation in terms of gold or any other exchangable medium besides fiat currency either.
Correct. Gold is not current a widely accepted medium of indirect exchange.
This whole thread, as far as researching and doing your homework, has gone down the poop shoot.
Peter Šurda:so basically the whole point of your posts is that you are obsessed with an obscure meaningless definition which is shared by a miniscule proportion of population.
Huh?
Correct. Gold is not current a widely accepted medium of indirect exchange. This whole thread, as far as researching and doing your homework, has gone down the poop shoot.
Fine, but the idea that exchanges made in gold are proxy exchanges for dollars or any other sort of fiat doesn't follow from this. It only seems like that is the case because any legal material exchange is required to be evaluated in dollars and reported to the IRS.
Even absent IRS and legal tender laws it will take time for economic calculation and accounting calculations to move away from one currency to another. As exchange ratio's begin to dwindle in one currency higher frequency exchange ratio's occur in various other candidate currencies.
All of this was explained a while ago when I summarized the regression theorem.
My point was that you cannot demonstrate through praxeology that exchanges made in terms of gold, or any other medium for that matter, are proxies for dollar based exchanges absent of a fixed exchange rate. The fact that almost all economic calculation is done in terms of dollars only suggests that the white market is controlled by legal tender, but not that people don't value or treat other commodities as money.
I'm going to expand on my previous post.
I am confused by your claims that if a good does not satisfy the regression theorem it can not be considered money. I'll admit It's been a while since I read ToMC, but I just had the chance to reread the first chapter of it.
From what I understand, the regression theorem was Mises's way of marying nominal prices with Megner's Origin of Money so that the existance of monetary pricing could be explained from a marginalist perspective. In other words, Mises was explaining why money and prices existed and was not constructing a historical requirement for good to be considered money.
In fact, it would seem that any good that provides a medium of indirect exchange among a group of people is money, regardless of that good's historic nature. However, I would certainly agree that a longer/more tracable history of exchange rates makes holding and dealing in a specific money less uncertain.
Since both gold and bitcoins are used to fascillitate transactions among groups of people and they are exchanged with currencies on an open market (they are not fixed or indexed to any other currency) I do not see the logic in claiming that they are not independant forms of money.
I'm no economist though, so perhaps I'm simply misinterpreting Mises.
The issue here is that you need to stop and fundamentally think about what an exchange ratio is. How it links to praxeology and why its relevant to economic calculation.
filc:Huh?
The statement that Bitcoin is not money is equally useless as the statement that Bitcoin is not bread. It's praxeologically irrelevant.
filc:The issue here is that you need to stop and fundamentally think about what an exchange ratio is. How it links to praxeology and why its relevant to economic calculation.
Throughout my life (which is not even that long), I used at least four different currencies for economic calculation, depending on where I lived and how the monetery system of that country changed. None of those currencies were gold or USD. Your objection has nothing to do with praxeology, it's a normative statement.