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.
rawfreedom:Bitcoin has a predermined fixed inflation that is known in advance and is completely decentralized meaning no government or group of theifs can steal bitcoins from a bank and cripple the mon
Aside from it's function as an alleged "medium of exchange" for what purpose would I chose to carry BTC's?
Micah71381: In order for something to be a proxy currency to currency X, doesn't that require it to be pegged to currency X? That is, if some medium of exchange has a variable X:USD ratio which fluctuates in response to market forces doesn't that mean, by definition, it is not a proxy to the USD but rather an independant currency in it's own right? If this is not the case then I don't think I understand how you are using the phrase "proxy currency". As stated previously, would the EUR, GPB, RMB, YEN, etc. all be considered independant currencies because they are not pegged to any other more popular currency or would they be considered proxy currencies to whatever preceded them, even though they are no longer pegged?
In order for something to be a proxy currency to currency X, doesn't that require it to be pegged to currency X? That is, if some medium of exchange has a variable X:USD ratio which fluctuates in response to market forces doesn't that mean, by definition, it is not a proxy to the USD but rather an independant currency in it's own right? If this is not the case then I don't think I understand how you are using the phrase "proxy currency".
As stated previously, would the EUR, GPB, RMB, YEN, etc. all be considered independant currencies because they are not pegged to any other more popular currency or would they be considered proxy currencies to whatever preceded them, even though they are no longer pegged?
Micah I will concede one point to you. If me and my buddies make a closed circle of trading special trading cards that I print in my basement. Lets call these cards Better Trading Currency, we could exchange any good we demand from each other with these cards. We could all agree to these rules. By your standards I have just created a new currency. Thats what BTC's are, a closed group of hobbyists essentially trading cards(BTC's) with each other. By your standards this a money.
What I am talking about when I refer to currency and money is the most vendable good. The most liquid of goods is money. This establish's the most reliable historical record of exchange ratio's available. BTC's is not the most vendible good and thus far no one has bothered to explain to me how BTC would ever even get to that point.
Further more all goods priced in BTC's are actually priced in dollars and converted to BTC's. I already cited an example of a graphics card. The BTC price is the same as the dollar price on newegg. Beyond that all of the accounting done in all of these firms who trade in BTC's is actually done in dollars. If company's had so much faith in these BTC's they would try and do as much of their accounting as possible in BTC's, not in dollars.
Economic calculation thus far is still in dollars, not BTC's.
filc: NewLiberty Standard:My thought is that it is glaringly obvious that you have no more than superficial understanding of how Bitcoin works. So now there is a learning curve before using BTC's? Doesn't sound like a medium of exchange that is very accessible.
NewLiberty Standard:My thought is that it is glaringly obvious that you have no more than superficial understanding of how Bitcoin works.
So now there is a learning curve before using BTC's? Doesn't sound like a medium of exchange that is very accessible.
NewLibertyStandard: That is not a fact, that is verifiably false.
That is not a fact, that is verifiably false.
You can cite an example of a company who's accounting is done in BTC's? How does a vendor know that selling a graphics card at 70BTC's will give him a profit?
I noticed you are annoyed my tone. I apologize but I need to point one thing out. I have already given everything here ample enough explanation and you guys seem to be demanding more of my time. However it's very clear that we are going in circles. Most of the BTC crowd has repeated themselves on several occasions.
I will not invest a great deal of time explaining everything I have already explained a second time around. Especially if the information falls on deafs ears. At any time you like your welcome to agree to disagree with me.
NewLibertyStandard:he worst language that has been complained about in this thread is common place on this forum,
If you think I am being rude please point out where that was the case. I beleive you can do so at the members forum.
filc: So now there is a learning curve before using BTC's? Doesn't sound like a medium of exchange that is very accessible.
NewLibertyStandard: How bitcoin works internally has nothing to do with its ease of use for the end user.
How bitcoin works internally has nothing to do with its ease of use for the end user.
I just thought it was really strange that you said.
:Who flocks to Bitcoin? The people who understand it. "
Sounds a bit esoteric to me.
filc: NewLiberty Standard:My thought is that it is glaringly obvious that you have no more than superficial understanding of how Bitcoin works. filc: So now there is a learning curve before using BTC's? Doesn't sound like a medium of exchange that is very accessible. NewLibertyStandard: How bitcoin works internally has nothing to do with its ease of use for the end user. I just thought it was really strange that you said. :Who flocks to Bitcoin? The people who understand it. " Sounds a bit esoteric to me.
I believe you missed the point. I wasnt refering to it's core mechanics.
What do you mean by "Real Economics"?
filc: NewLibertyStandard: That is not a fact, that is verifiably false. You can cite an example of a company who's accounting is done in BTC's? How does a vendor know that selling a graphics card at 70BTC's will give him a profit?
filc: I believe you missed the point. I wasnt refering to it's core mechanics. What do you mean by "Real Economics"?
NewLibertyStandard: filc: NewLibertyStandard: That is not a fact, that is verifiably false. You can cite an example of a company who's accounting is done in BTC's? How does a vendor know that selling a graphics card at 70BTC's will give him a profit? binarysecurity.webs.com
You will forgive me if I find this obviously lacking.
NewLibertyStandard: filc: I believe you missed the point. I wasnt refering to it's core mechanics. What do you mean by "Real Economics"? *facepalm*
I must be missing something. When you say "Real Economics" you seem to imply that the opinions of those who you disagree with do not follow "Real Economics".
This is particularly interesting considering you've never actually addressed my criticisms from like 10? pages ago. I notice how no one is trying to refute Mises and Menger any more.
filc: Micah I will concede one point to you. If me and my buddies make a closed circle of trading special trading cards that I print in my basement. Lets call these cards Better Trading Currency, we could exchange any good we demand from each other with these cards. We could all agree to these rules. By your standards I have just created a new currency. Thats what BTC's are, a closed group of hobbyists essentially trading cards(BTC's) with each other. By your standards this a money.
In this example, what is stopping a new friend from joining me and my old friends in trading BTCs for goods/services we offer? If people can freely join in trading BTCs for goods/services then there is nothing stopping BTCs from becoming a world currency, even if the chances are unlikely. At this point in our discussion I am not arguing the probability of success of BTCs, only the possibility of success.
Using your example it would seem that there is nothing stopping BTCs from spreading one person at a time until it is the most common medium of exchange. I get the impression that you disagree and do in fact believe that there is something stopping your hypothetical BTCs from becoming the most common medium of exchange. This is the part that I don't understand.
filc: What I am talking about when I refer to currency and money is the most vendable good. The most liquid of goods is money. This establish's the most reliable historical record of exchange ratio's available. BTC's is not the most vendible good and thus far no one has bothered to explain to me how BTC would ever even get to that point. Further more all goods priced in BTC's are actually priced in dollars and converted to BTC's. I already cited an example of a graphics card. The BTC price is the same as the dollar price on newegg. Beyond that all of the accounting done in all of these firms who trade in BTC's is actually done in dollars. If company's had so much faith in these BTC's they would try and do as much of their accounting as possible in BTC's, not in dollars. Economic calculation thus far is still in dollars, not BTC's.
Once again it seems we are back to your definition of currency/money. You keep using the word "most" which is a term that, by definition, is singular. You can not have two "most"s, one of them has to be less than the other and therefore not the most (possible exception in the case of a perfect tie). So, would you say that on a global scale there is only one money (USD I assume) and all other currencies (GBP, YEN, RMB, EUR, etc.) are not money?
filc: You can cite an example of a company who's accounting is done in BTC's? How does a vendor know that selling a graphics card at 70BTC's will give him a profit?
This seems like a pointless determinate for whether something is a currency/money or not. I could easily do all my record keeping in BTCs and when I am required to make a purchase or a sale in USD or EUR (because it is most economical for me to use USD or EUR in some situations) I convert it to BTCs for book keeping. This doesn't change anything at a macroeconomic level, this is just the language I choose to use for my personal book keeping. Chances are I will use a unit of measurement that is most convenient for me.
If I purchase business supplies in USD, sell products to people in RMB, and spend my profits in EUR I may choose to do my book keeping in any of those three currencies. Which currency I decide to go with depends on which I find most convenient for my company. I could choose to do my book keeping using bottle caps as my unit of measurement of choice.
This is loosely analogous to arguing that my car drives miles versus drives kilometers. How I choose to measure my distance is entirely unrelated to how my car got there, how far it actually went, and whether it used unleaded or diesel fuel to do it.
Micah71381:In this example, what is stopping a new friend from joining me and my old friends in trading BTCs for goods/services we offer? If people can freely join in trading BTCs for goods/services then there is nothing stopping BTCs from becoming a world currency, even if the chances are unlikely. At this point in our discussion I am not arguing the probability of success of BTCs, only the possibility of success.
Demand to carry in the first place is what stops it. People have to have a reason to want to hold it. Currently BTC's offer nothing that gold can't already do. I believe this point has been stated numerous times. Do you want to keep raising it or directly address it?
Micah:Using your example it would seem that there is nothing stopping BTCs from spreading one person at a time until it is the most common medium of exchange.
Except that there already exists other more demanded candidate currencies. Stocks and commodities come to mind. More people currently barter with stocks and commodities then the entire exchange history of BTC's offered. The exchange ratio's for those objects would be far more historical and acurate for traders. This point has also been brought up already.
Micah:You can not have two "most"s, one of them has to be less than the other and therefore not the most (possible exception in the case of a perfect tie).
Money can be interchangable with money. Gold/silver ect... Gold is divisible in silver, silver into copper. All of these are extremely vendable goods(More then any others) and can be equally demanded in a hypothetical gold standard economy. The same could apply to security backed stocks. The point of the exercise is that "money" is highly liquid. You keep ignoring that point and focusing on inconsequential details of my wording. Dont turn this into a semantics argument please. Stay focused.
BTC's are not highly liquid, they are not a marketable good. They have a very short exchange ratio history and that will likely remain that way forever.
Micah: So, would you say that on a global scale there is only one money (USD I assume) and all other currencies (GBP, YEN, RMB, EUR, etc.) are not money?
Stay focused and keep the red-herrings out of the discussion if possible. We are not talking about Money's of decree which are artificially limited to an arbitrary geographical region. Furthermore USDollars are in fact demanded around the world and are accepted in many countries outside of the US.
HA Pg 401: Money is a medium of exchange. It is the most marketable good which people acquire because they want to offer it in later acts of interpersonal exchange. Money is the thing which serves as the generally accepted and commonly used medium of exchange. This is its only function. All the other functions which people ascribe to money are merely particular aspects of its primary and sole function, that of a medium of exchange. | Post Points: 5