Bitcoin Fanatics Say the Darnedest Things

[NumberSix]

@st434u what do you use for investment/savings?  Setting aside the intrinsic value argument, Bitcoin still seems like best option.  The only other thing I can think of is gold and silver.  But, governments may confiscate gold from banks and it would be hard crossing a border with gold on you.

[Josh F]

The block-chain is not encrypted, it's signed,

I don't really understand how that pertains to my argument.  Additionally, my understanding is that every hash is an encryption puzzle being solved, every wallet includes a public key encryption, and the entire thing is called cryptocurrency, the word crypto coming from encryption.  The entire bitcoin system is predicated on encrypted data, and the blockchain itself is not read-protected but a write-protected encryption system, where people can't change the previous blocks even if they can see them. 

[TheRobin]

As I understand it there are two different kinds of encryption at work. Once you have the Public/Private encrpytion for wallets and for when you send BTC around the network. This encryption is based around the ECDSA. For the blockchain you only have hash-encryption, which serves as proof of work, which you want to check for the integrity of the blockchain (but doesn't actually encrypt anything in the sense, that it makes it impossible to read for others) 

 

From the bitcoin wiki (emphasis added by me)
"... Therefore, by being given a compact hash, you can confirm that it matches only a particular input datum, and in bitcoin the input data being a block-chain is significantly larger than the SHA-256 hash. This way, Bitcoin blocks don't have to contain serial numbers, as blocks can be identified by their hash, which serves the dual purpose of identification as well as integrity verification. An identification string that also provides its own integrity is called a self-certifying identifier."

Also short explanation between encryption and hashing from another site.

 

http://www.danielmiessler.com/study/encoding_encryption_hashing/

[ribuck]

The blockchain is an encrypted database or ledger shared by all the nodes in the bitcoin network.

 

The blockchain itself is not encrypted, and doesn't need to be. Anyone can see the transactions on it. However, you need to supply a cryptographic signature to spend an output of an earlier transaction that is recorded in the block chain.

[st434u]

I am extremely sincere, the arguments you've received counter to your points number in the dozens and are categorically dismissed and then this topic is introduce into another bitcoin thread for the whole thing to repeat itself.  This topic would be great to discuss with someone who gave the slightest consideration towards counter arguments.

No, you are the one who dismisses arguments out of hand and repeat yours as if they've never been answered before, while, as I said in the other thread, I address every argument.You don't even accuse me personally of doing it, you speak in impersonal terms and say that the arguments "are dismissed". Yes, they are dismissed, but not by me. 

The value of the gold at this point is said to be its "intrinsic value" by some though that term is a bit faulty and often criticized.

 I never said that the value at that point "is it's intrinsic value", I said the basis for the value is it's intrinsic value, then, now, or at any other point in history. Also, I defined carefully (and many times) what I mean by intrinsic value, and this strictly fits Mises's monetary theory, as does Rothbards', who improved on it. You continue to ignore this fact and say that "some people" mean other things by the term. 

Bitcoin is the name of an encryption based network being used as a currency now.  In order to understand its evolution into currency using Mises's argument we need to go back to a time when encrypted networking was not being used as a currency.

No, you need to go back to a time when *bitcoin* was not being used as a money (currency is a different thing). Bitcoin is only one of many many thousands of encryption networks. 

Here we can see the intrinsic value of encrypted networks in the modern market, most of which is used to keep personal, business, and government information secret and private at the lowest competitive cost.

Alright, then you're arguing that bitcoin is an information storage and transfer service, and that the coins in some way represent services provided or granted. But this is not the case. First, because each individual coin can be broken intro a quadrillion coins, and as I understand it, the same amount of secret, valuable (outside of bitcoin) information can be carried by a quadrillionth of a coin as can be by a whole coin.Secondly, as I understand it, the vast majority of the resources invested to run the network have nothing to do with transferring or storing personal information that the users added to coins or whatever. It's about solving mathematical algorithms that simply serve to grant the miner with a coin block. So you have a ton of waste here. What's more, because with every new transaction, every previous transaction must also be verified, the amount of resources needed to verify each subsequent transaction increase (again, as I understand it, I could be wrong here as with all things related to bitcoin's specifics, as I'm not an expert on bitcoin, I'm an expert on monetary theory).Thirdly, the bitcoin software can be copied in 10 minutes by anyone, and improved upon. In fact it already has. There are hundreds if not thousands of different copycats of bitcoin, all with their individual differences. And while they don't have the same network power since they don't have as many users, they have enough so that information can be transferred reliably.And finally, even if bitcoin was entirely a service provider of information encryption, transfer and storage (not related to the encryption required to run the service itself), it would have intrinsic value, but it would not be a form of sound money. Because, as I explained in the other thread, a sound money needs to be a store of value. And you can't store services. They must be consumed at the same time as they are being produced, and whatever is produced and not immediately consumed (or used in a further process of production) is gone.

 

So like a Roman Coin made out of Silver, Bitcoin is a brand name for a currency made out of something called encryption.

Without getting into the argument of roman coins: No, you can melt down a silver coin and get the silver. You can't melt down a bitcoin and get the encryption, or the computing power, or any of that. 

Hopefully that helps everyone reconcile the Mises theory and the empirical fact that bitcoin is money.

I didn't say it's not money, I said it's not sound money. US Dollars are money too, and they will still be confetti in 50 years. And so will bitcoin. (well, electronic confetti anyway)

[Wesley]

Alright, then you're arguing that bitcoin is an information storage and transfer service, and that the coins in some way represent services provided or granted. But this is not the case. First, because each individual coin can be broken intro a quadrillion coins, and as I understand it, the same amount of secret, valuable (outside of bitcoin) information can be carried by a quadrillionth of a coin as can be by a whole coin.

 

Is this a serious claim? My pizza can be broken into a quadrillion parts as gold can be and many other things. I am also assuming that you claim there is no information present in a large number in an account of having more or less money or pricing. This bit is a bit absurd.

Secondly, as I understand it, the vast majority of the resources invested to run the network have nothing to do with transferring or storing personal information that the users added to coins or whatever. It's about solving mathematical algorithms that simply serve to grant the miner with a coin block. So you have a ton of waste here.

 

This shows how you do not understand bitcoin and the innovation that exists. Yes, encryption has existed before. Yes, proof-of-work was an existing concept in cryptography. Yes, blockchain-like systems have existed before. However, these had never been put into one system which was a massive innovation. Miners waste no more resources than a checking or auditing system would need to in order to ensure the integrity of the blockchain in the long run. In the short run, they waste no more resources than someone finding and mining a patch of gold in order to produce a useable resource (in fact, I would think it would be much less waste of resources, but this is somewhat of a moot point). The more minig power that is behind bitcoin, the harder it is to take over the system to the point where it now is virtually impossible for a 51% attack to occur. Calling this a waste is silly and shows yo udo not understand the concepts that have created bitcoin and made it a success to whatever extent it is.

 

What's more, because with every new transaction, every previous transaction must also be verified, the amount of resources needed to verify each subsequent transaction increase (again, as I understand it, I could be wrong here as with all things related to bitcoin's specifics, as I'm not an expert on bitcoin, I'm an expert on monetary theory).

 

This is just plain wrong so I will not justify this with a response.

Thirdly, the bitcoin software can be copied in 10 minutes by anyone, and improved upon. In fact it already has. There are hundreds if not thousands of different copycats of bitcoin, all with their individual differences. And while they don't have the same network power since they don't have as many users, they have enough so that information can be transferred reliably.

 

This is true, and completely irrelevant. For instance, no computer has ever been released with the best specs. VHS when it cam out was not the ideal storage medium for movies. In fact, almost nothing is the best possible system. Rather, something is an innovation that emerges and is good enough and then that becomes the standard. At some point, something of a significant innovation will emerge and then people may move to that as a new standard as well. People never choose the best as it is almost always not the best because of cost or because it is not the standard that everone else uses.

 

I can almost guarantee that railroad track widths are not ideal. I can also almost guarantee that they will not change them anytime soon to the ideal.

The other stuff I had read before. I really do wish that if you are going to criticize bitcoin you at least somewhat understand what it is and why it is important. Criticizing things because they do not fit abstractions when you don't even know how it works to know what extent it fits it or not is at best a silly exercise of mental masturbation.

 

Your basic argument is that bitcoin is not physical and therefore cannot be sound money (as evidenced by the silver analogy you posted). If you define something as needing to be physical, then bitcoin will not fit that definition. I do not think this is the essence of what makes a good money or the point of the monetary theorists of the past.

 

What I do think is that they were attempting to discover what made a money and what did not without claiming a moralistic argument (like money being forced to be used by leaders). When money is forced to be used, then it obviously is not at its true value to some extent and a market-chosen money (which classically tended to be commodities) was superior in a variety of ways as it had some low-end to the value that it couldn't drop below and checks for inflation, but mainly that it was market-chosen and arose out of people's actual choices in money as opposed to forced ones.

 

These were also linked to paper money certificates that were chosen as it was common for less-than-honest bankers to print a few extra dollars in order to pocket the profits or provide a deal for their customers on storage costs (or even pay them for storing their money at their bank).

 

What I also know is the idea of a money that could not be replicated or increased and had a fixed supply could not be imagined by the theorists of a few years ago, let alone several decades. The idea that money can be an idea and still not require trust in a bank or corporation was a seemingly impossible feat.

 

Also, if you understood what bitcoin was you would understand that it is an amazing attempt to achieving this dream and may require small updates and modifications to the theories of old.

 

For the first time, it may be possible that an idea cannot be increased in supply, printed or created at whim, or require trust in the solvency of a bank or country. It is a very interesting proposition and at least deserves enough attention to understand the implications and how bitcoin fits into theories that were invented before the internet. Maybe it will not work and bitcoin still has some issues, (in fact I think there are some issues with bitcion that need to be addressed in order to improve it's use as money) but I would like them to come from someone who at least knows what bitcoin is, what its goals were, and what innovations it is bringing to the table.

[st434u]

@st434u what do you use for investment/savings?  Setting aside the intrinsic value argument, Bitcoin still seems like best option.  The only other thing I can think of is gold and silver.  But, governments may confiscate gold from banks and it would be hard crossing a border with gold on you.

 

http://board.freedomainradio.com/topic/39445-401k-dillema/

[Josh F]

Alright, then you're arguing that bitcoin is an information storage and transfer service, and that the coins in some way represent services provided or granted. But this is not the case. First, because each individual coin can be broken intro a quadrillion coins, and as I understand it, the same amount of secret, valuable (outside of bitcoin) information can be carried by a quadrillionth of a coin as can be by a whole coin.

 

No this is not my argument, my argument was the really clear and coherent thing that I wrote.

 

Secondly, as I understand it, the vast majority of the resources invested to run the network have nothing to do with transferring or storing personal information that the users added to coins or whatever. It's about solving mathematical algorithms that simply serve to grant the miner with a coin block. So you have a ton of waste here. What's more, because with every new transaction, every previous transaction must also be verified, the amount of resources needed to verify each subsequent transaction increase (again, as I understand it, I could be wrong here as with all things related to bitcoin's specifics, as I'm not an expert on bitcoin, I'm an expert on monetary theory).

 

You're not addressing my argument: which is that Bitcoin is one type of cryptographic currency, and encryption in general has market value outside of its use as money, satisfying Mises's argument.

 

Without getting into the argument of roman coins: No, you can melt down a silver coin and get the silver. You can't melt down a bitcoin and get the encryption, or the computing power, or any of that. 

Let me repeat the argument again so you can understand it clearly:  Roman Coin is to silver as Bitcoin is to Encryption.  Roman Coins are made of silver and originally relied on the value of silver.  Bitcoin is comprised of encyrption, and originally relied on encryption for the value of its coin.  I can not show you Bitcoin being used as something other than a currency, nor can I show you Roman Coins which were not currency

 

I didn't say it's not money, I said it's not sound money. US Dollars are money too, and they will still be confetti in 50 years. And so will bitcoin. (well, electronic confetti anyway)

You've made the argument that, according to someone else, sound money is comprised of things which have a market value outside of their use as currency.  Bitcoin satisfied that criteria as I explained above.

Look, I know bitcoin is confusing and computers are confusing for a lot of people, but you really need to do your homework because how little you understand about it, is reflected in these arguments.  Take Wesley's points to heart, he is right that you don't understand bitcoin. 

[st434u]

Having a second or third or ... source of demand for an economic good can keep the price more level if the demand for one use drops, but so to can changes in those alternate demands influence the price.

You're still failing to see the point. Long-term monetary demand depends on there being a source of C/P demand. Long-term jewelry demand does not depend on there being a source of cellphone making demand; etc. 

It's not a pure benefit here. And from evidence with modern fiat currency it takes huge shocks in demand to effect a collapse like you describe,

Every fiat currency in history has collapsed. Although, by definition, when it collapses it's because there's been a significant drop in demand, until there is no demand left. 

and mises associates it with inflationary policies, and not to the lack of industrial uses for the monetary unit.

The Bretton Woods agreement was only totally broken up in 1971, when the US dollar (and with it all other fiat currencies world-wide) broke their link to gold. Mises died in 1973. Also, even when the convertibility into gold was stopped by Nixon, they called it a "temporary suspension" of the redeemability.Of course during Mises's time, the main issue was the inflation of the supply of credit, since the redeemability into gold was always supposedly still in existence, so the problem in Mises's eyes was that the supply of credit would at one point have to get crunched down to the supply of gold bullion. 

Second why should assume the buyer of money already has a cash reserve as high as he'd like it? Additionally these demands are not static. Some people can be looking for an increase or decrease.

Yes, but we're talking about a situation where all things are equal except that one person chooses to sell their cash and get something else for it. This is basic supply and demand. 

And you weren't responsive to my question here. Why doesn't the exchange value of money, gold or otherwise, give adequate explanation as to why a person comes to demand a cash reserve?

What? Why doesn't the price of a piece of land give adequate explanation as to why a person wants it? It just doesn't. They could want it for a thousand different reasons. Also, you never made that question before. 

Lets take an example with gold. An city is introduced the the idea of gold as currency and a few people start to use it but it's still kinda spotty because nobody is really sure how well the idea is going to work for them. A few other people are pretty sure it's going to take off so they start buying up gold in anticipation of a later greater demand creating a subsequently greater price. Yes this is a different sort of activity as a demand for cash reserves, but it's not prohibitive of gold coming to be money in that city.

There's a lot of errors in your analogy, but ultimately, yes, that's how I'm saying bitcoin got started. With people buying it as a speculation because they anticipated greater demand in the future (from other speculators, who expected greater demand coming from other speculators, on and on and on); this is strictly different from how gold came to become money (not currency, a currency is a receipt for money stored somewhere, which can be redeemed by the bearer of the receipt, i.e. the currency unit). 

One of the reason reason you wanted a valuable unit before is so you didn't have to carry around a lot of it rather then being a categorical requirement for a thing to be money. With a ledger system though it's just as easy to transfer 1,000 units and 1/1000th of a unit. It makes it feasible to drive initial demand simply by curiosity, novelty, or ideology.

I don't know what you're talking about, if the money unit has no value then it can't be used as a medium of exchange. You always want a valuable money unit. 

The basis for the price of Gold when it was money was the composite it's demand for industrial and monetary uses.

No, the basis is the intrinsic value (or "industrial demand" if you prefer, which is a wrong term to use and I've explained why); and the monetary demand only adds value on top of the original value, i.e. the basis. 

The same stock might be subject to both sorts of investment by different people. Some people are buying bitcoin because they are saying "look at the price.. up, up, and up". And other people are saying, look there's a huge potential demand for a monetary instrument with the particular qualities bitcoin has.

In this case they are the same thing, and I've already explained why. 

When you invest on fundamentals you can certainly be wrong and end up with nothing also. That bitcoiners could end up with nothing doesn't prove there are no good reasons to believe that are sound fundamentals.

But that's not what I said. I didn't say bitcoiners *could* end up with nothing, I said they *must* end up with nothing.

[st434u]

Is this a serious claim? My pizza can be broken into a quadrillion parts as gold can be and many other things.

If it wasn't a serious claim, why would I make it?Maybe if you took the time to actually read what I'm saying before you reply. I didn't say the problem was that it could be split into a quadrillion pieces, but that *if* the claim is that bitcoin is just an information storage and transfer service, and *if* the amount of information that can be carried or stored by one quadrillionth of a coin is the same as that which can be carried or stored by a whole coin, then there is a problem with this claim. A pizza can be broken into a quadrillion parts but one quadrillionth of a pizza will only be enough to feed a couple of quadrillionths of a person. Same goes for gold. 

I am also assuming that you claim there is no information present in a large number in an account of having more or less money or pricing. This bit is a bit absurd.

I don't know what you're talking about. 

This shows how you do not understand bitcoin and the innovation that exists.

If you're gonna claim that I don't understand bitcoin (which is certainly a possibility), then it would be a good idea to actually respond to what I'm saying, instead to talking a bunch of garbage about how bitcoin works, stuff that I'm perfectly aware of and which has nothing to do with what I said except that it confirms some of it. 

Your basic argument is that bitcoin is not physical and therefore cannot be sound money (as evidenced by the silver analogy you posted). If you define something as needing to be physical, then bitcoin will not fit that definition.

I never said anything regarding a money having to be "physical".Also, everything is physical. If it's not, it's supernatural.

[WorBlux]

You're still failing to see the point. Long-term monetary demand depends on there being a source of C/P demand. Long-term jewelry demand does not depend on there being a source of cellphone making demand; etc.

No, long term jewelry demand depends on people waking up in the morning and wanting to guy buy jewelry. Long term monetary demand is driven by people waking up and saying "hey I'm going to go get some money today". Even when the same material base might be used they are really different sorts of demand.

Every fiat currency in history has collapsed. Although, by definition, when it collapses it's because there's been a significant drop in demand, until there is no demand left.

 Almost always set off by either an inflationary shock, or the coase cost of use.

The Bretton Woods agreement was only totally broken up in 1971, when the US dollar (and with it all other fiat currencies world-wide) broke their link to gold. Mises died in 1973. Also, even when the convertibility into gold was stopped by Nixon, they called it a "temporary suspension" of the redeemability.

So congress lied, what else is new? From what I can tell Bretton-Woods was first an agreement to peg currencies against the dollar, and then the dollar against gold.Anyways was still speaking generally and theoretically at that chapter of human action. Credit expansion is problematic on other fronts, not merely because it is also inflationary.Show me an fiat currency that failed simply because people stopped wanting it. That is a government currency or a currency used on the same sort of scale that fell from use without some inflationary shock or politically controlled phase out.

Of course during Mises's time, the main issue was the inflation of the supply of credit, since the redeemability into gold was always supposedly still in existence, so the problem in Mises's eyes was that the supply of credit would at one point have to get crunched down to the supply of gold bullion.

Yes if you wan't to do a gold standard correctly that's what must happen. However see above, politicians lie and we have no reason to believe they would actually ever implement a gold standard correctly.

Yes, but we're talking about a situation where all things are equal except that one person chooses to sell their cash and get something else for it. This is basic supply and demand.

But if all things were equal you wouldn't have made the sale in the first place. Your argument only works if you assume everybody already has as much cash as they would like to keep in reserve and never comes back around with a renewed demand to replenish thier reserves once some are spent. The truth is that at any moment some will have surpluses and others deficits. The total supply of cash in reserves does not change with a transaction.

What? Why doesn't the price of a piece of land give adequate explanation as to why a person wants it? It just doesn't. They could want it for a thousand different reasons. Also, you never made that question before.

Land isn't transportable, fungible, or easily divisible. Consequently it's impracticable to use in indirect exchange and there is no demand for such use.

There's a lot of errors in your analogy, but ultimately, yes, that's how I'm saying bitcoin got started. With people buying it as a speculation because they anticipated greater demand in the future (from other speculators, who expected greater demand coming from other speculators, on and on and on); this is strictly different from how gold came to become money (not currency, a currency is a receipt for money stored somewhere, which can be redeemed by the bearer of the receipt, i.e. the currency unit).

Currency can be a general term and nowhere in this conversation have I limited it's meaning merely to banknotes. Errors like... ?I'm not saying this is the way it happened, just simply as a way it could have happened. Gold became money simply when people started using it as such.

I don't know what you're talking about, if the money unit has no value then it can't be used as a medium of exchange. You always want a valuable money unit.

You want the value to start with so you don't have to carry around of mess with a lot of it. However when carrying around 1000 units or potential money is just as easy as one unit or 1/1000 of a unit, it's reasonable to believe this requirement will be relaxed. You still can't rely on zero price, but you can rely on fairly small price.

No, the basis is the intrinsic value (or "industrial demand" if you prefer, which is a wrong term to use and I've explained why); and the monetary demand only adds value on top of the original value, i.e. the basis.

Here you confuse basis (reason or explanation) with base (first, original or majority).

In this case they are the same thing, and I've already explained why. But that's not what I said. I didn't say bitcoiners *could* end up with nothing, I said they *must* end up with nothing.

Well the human species must go extinct as well. That doesn't mean it's not worth having kids. It's potential stability is greater than any system now existing or likely to come to exist in the next half century.

[Kevin Beal]

The bitcoin network has value for it's application and people demand it for that purpose, but if bitcoins themselves have no value, then the network becomes worthless as I understand it.

How is this not just another way of saying "if something doesn't have value to people, then it has no value"?

 

Value is subjectively determined by conscious agents. We could just say that gold's divisibility, durability, scarcity, etc are antithetical to how we value goods. "Intrinsic value" means nothing without agents subjectively making this determination. 

[st434u]

How is this not just another way of saying "if something doesn't have value to people, then it has no value"?

As I've explained, there is a difference between a payment service having value, and a form of money that the payment service processes having value. The Mastercard payment service has value coming from the demand of consumers and producers. Assume for now that the Mastercard payment service could only operate in US Dollars. If US dollars suddenly stopped having value, then the Mastercard payment service would stop having any demand from consumers or producers, and it would become worthless. This is the situation that the bitcoin payment/transfer service is in. This would not be a problem if the bitcoin units could be relied upon to continue having value in the future, but because they have no intrinsic value, they can't be. In fact, as I've repeatedly stated and argued, the reasonable expectation is that they won't. 

Value is subjectively determined by conscious agents. We could just say that gold's divisibility, durability, scarcity, etc are antithetical to how we value goods. "Intrinsic value" means nothing without agents subjectively making this determination.

Value to an individual is one thing, here we were discussing market value, which is not determined by any one individual, but by the price mechanism whereby some individuals demand the item for purchase, and others supply (offer) it for sale.

 

I don't know what you were trying to say about gold, but as I've explained, gold does not fundamentally have market value because of those qualities. Those qualities simply make it better than other things that have market value to be used as a medium of exchange and store of value (both market value and individual value, in this case; although market value is the main one).

 

As I've defined it several times, intrinsic value simply means market value that is derived either from consumption demand coming from consumers, and/or production demand coming from producers. I've also termed this C/P demand.And perhaps I should add that in the case of money, you want things that not only have C/P demand at the moment, but perhaps more importantly, that can be reasonably expected to have it in the future. One could say that something that doesn't have C/P demand in the moment, but that can reasonably be expected to have it in the future, does have intrinsic value in the present, and I'd concede that point, but that would make my explanation of what I mean by intrinsic value more complex, and it seems I'm already having a lot of trouble getting people to understand it in the simple form. Not that this makes any difference in the case of bitcoin (and here, as any other time where I mention bitcoin or bitcoins and don't specify, I mean the bitcoin unit itself, not the network or payment/transfer service), because as I understand it, it never did (or almost never did), does not, and never will have C/P demand, at least to any remotely significant degree (e.g. people saying that they like to collect bitcoins).

 

Back to gold, the fact that it is demanded as a medium of exchange and store of value (monetary demand) does increase it's market value from what it would be if there was only C/P demand, but it does not create it in the first place, and it can never be the basis of the market value. If gold suddenly lost all C/P demand, and it was clear that it would never regain it in the future, and only monetary demand was left, it would sooner or later lose all market value as well. Bitcoins did not suddenly become valuable out of the blue due to monetary demand, but rather due to empty speculative demand. That is, speculative demand that is based on the expectation that there will be further speculative demand down the line, which would again be based on the expectation of future speculative demand down the line, and so on and so forth. As I've said before, this is exactly how a pyramid scheme functions.

[Kevin Beal]

Assume for now that the Mastercard payment service could only operate in US Dollars. If US dollars suddenly stopped having value, then the Mastercard payment service would stop having any demand from consumers or producers, and it would become worthless. This is the situation that the bitcoin payment/transfer service is in. This would not be a problem if the bitcoin units could be relied upon to continue having value in the future, but because they have no intrinsic value, they can't be. In fact, as I've repeatedly stated and argued, the reasonable expectation is that they will have none.

Well it should comfort you to know that any kind of "meta" coin can be built on top of this protocol, including ones tied to gold. The bitcoin unit is a representation of the store of value. This can be entirely subjective (in an ontological sense) or tied to any good or whatever you want.

 

I don't even care that much for bitcoin the units. They are wicked cool in a lot of respects, but there are better ways of doing everyday purchases, and I'm sure some meta coin will gain traction at some point that utilizes the protocol but prevents double spends in a much quicker way.

 

Bitcoin as a currency unit has other problems too we can get into. The same way that implementations of email had problems and abstractions on these protocols were developed to create cool things like gmail that can handle multiple accounts or be a kind of agency management tool.

 

The point is programmable money. I'll elaborate below.

 

 

 

Back to gold, the fact that it is demanded as a medium of exchange and store of value (monetary demand) does increase it's market value from what it would be if there was only C/P demand, but it does not create it in the first place. If gold suddenly lost all C/P demand, and it was clear that it would never regain it in the future, and only monetary demand was left, it would sooner or later lose all market value as well.

 

So, if I have this right, intrinsic value is C/P demand, (which is to say for reasons other than being used as a medium of exchange) and because, ostensibly, bitcoin units lack this, this is makes it unsuitable as a currency? And this is true because Mises' regression theorem, which matters because "values are traced to the ultimate subjective use values of the marginal consumers who value such goods and services for their objective-use values which they expect to consume".

 

And because bitcoin units ostensibly have no objective-use value, they will fail as a currency in a way that gold will not. The lack of an "objective-use value" is supposed to result in a circular argument where this money has purchasing power because it has purchasing power.

 

Something like that?

 

I am not an expert on Mises or praxeology or catallactics or any of that, but this does not make sense to me. Or if I have understood correctly, then I believe it's irrational.

 

What money is, is an ontological (claims about existence) issue (by definition, obviously) and the value it stores, transfers, etc is always subjective, regardless of the physical traits of that money. The very fact that cryptocurrencies could exist in the first place for however long is proof of this. Bitcoin is not not money, obviously.

 

The best way that value was exchanged by people has historically been with things like gold which remain valuable to people even if they aren't used as a currency. But I'm sure you wouldn't say that because it's how things have had to be in the past, it must be so in the future. So, what of this issue of circular reasoning?

 

A money has purchasing power because it has purchasing power is not logical, but that's not how I would describe bitcoin at all. And it may shock you, but it's not because the utility of the bitcoin protocol that I know it has value. Bitcoin the currency has value and is money because people agree that it is.

 

It's the exact same ontological basis for you having a job or that you own the car you do. There is not seal of ownership etched in the aether around your car, and you are not made out of accountant atoms or racecar driver atoms or whatever it is you do for a living. These things are determined because of the institutional reality we all operate in.

 

There is no definition that I could find online for "objective-use value", but I'm assuming that all of this refers to what Peter Schiff was talking about in his debate with Stef about bitcoin: that gold has value as jewelry, in engineering because of it's physical properties, but as soon as you use the word "value" you are talking again about something that is ontologically subjective. That is to say that I don't see how gold escapes this regression theorem problem any more than bitcoin does.

 

The value we put in money is according to epistemic (claims about knowledge) standards. Whether that standard includes ontological concerns just depends. What kind of money do you want? Do you want a money that has the overhead involved in transferring the ownership of gold (or other physical goods)? Maybe. It depends on what you are using it for.

 

In whatever way you want to transfer or store value, the bitcoin protocol can cover it. I personally don't care about a commodities based currency, and that will come with certain costs and advantages. One of those costs may be that it doesn't last as long as a currency that is based on commodities, but so what? Programmable money can cover almost any use case, and the thousands of alternative cryptocurrencies, side chains, meta coins, etc will be developed to fit the needs that people have, including tying cryptographic and distributed representations to physical property.

 

This is much bigger than you seem to realize...

[Kevin Beal]

Jeffrey Tucker looks at the Regression theorem and it's relation to bitcoin.

[st434u]

I don't know what you mean by "ontological sense" or "ontologically" or "epistemic", so I will simply ignore these terms, as to me they seem to obscure rather than illuminate. 

Well it should comfort you to know that any kind of "meta" coin can be built on top of this protocol, including ones tied to gold. The bitcoin unit is a representation of the store of value. This can be entirely subjective (in an ontological sense) or tied to any good or whatever you want.

I don't know what you mean by meta coins, and searchs for the term came up with many different things that don't seem to be related to each other. In any case, I watched Stef's video on backing up bitcoins with gold, and as I said elsewhere (in either this thread or the regression theorem one, I don't remember), at that point those bitcoins just become a gold certificate. But why would you use bitcoins as the certificate instead of using just a certificate? In any case, if that did happen, then this whole argument is pointless, as bitcoins (or at least those bitcoins which were used as gold certificates) would no longer be the same things we're discussing here, they would be an entirely different thing, and if you want to discuss gold certificates that's a whole other story. Also, if only some bitcoins are used as gold certificates, and others are not, that doesn't give the bitcoins not being used as gold certificates any more value, at least not in any significant way.I mean, this is like saying that US Dollars are not so bad because the Federal Reserve could decide to convert them into gold certificates again (or convert some of them into gold certificates and not all). Well, yeah, they might, but then we'd be talking about a completely different type of legal tender currency. Any arguments against the US Dollar in it's modern form, from a monetary theory perspective, are based on the fact that they are not a gold certificate, or a certificate for anything else other than more US dollars. 

I don't even care that much for bitcoin the units. They are wicked cool in a lot of respects, but there are better ways of doing everyday purchases, and I'm sure some meta coin will gain traction at some point that utilizes the protocol but prevents double spends in a much quicker way.

Well then what are you arguing here? I said bitcoins the units in their current form will collapse and they will lose all their market value, you seemed to be saying I was wrong. Now you say you don't care about bitcoins the units. You can't have it both ways. 

Bitcoin as a currency unit has other problems too we can get into. The same way that implementations of email had problems and abstractions on these protocols were developed to create cool things like gmail that can handle multiple accounts or be a kind of agency management tool.

I'm not interested in discussing other problems here. I'm sure they exist and I'm sure some of them might be patched, and others won't. If you see things my way, at the end of the day, when you are talking about the fate of bitcoins, none of that matters.  

So, if I have this right, intrinsic value is C/P demand, (which is to say for reasons other than being used as a medium of exchange) and because, ostensibly, bitcoin units lack this, this is makes it unsuitable as a currency? And this is true because Mises' regression theorem, which matters because "values are traced to the ultimate subjective use values of the marginal consumers who value such goods and services for their objective-use values which they expect to consume". And because bitcoin units ostensibly have no objective-use value, they will fail as a currency in a way that gold will not. The lack of an "objective-use value" is supposed to result in a circular argument where this money has purchasing power because it has purchasing power. Something like that?

You can phrase things like that and still be entirely correct, which is what Mises did. But the terms you used are vague and can be easily misinterpreted, that's why I was very careful in the way I phrased things. If you are trying to build a strawman by getting me to accept your terms, and then attack those, that won't work. 

What money is, is an ontological (claims about existence) issue (by definition, obviously) and the value it stores, transfers, etc is always subjective, regardless of the physical traits of that money. The very fact that cryptocurrencies could exist in the first place for however long is proof of this. Bitcoin is not not money, obviously.

You can say that the price of a barrel of oil is subjective, or you can say it's objective, and be right in both instances depending on how you define your terms. If you want a barrel of oil, and you don't happen to own an oil well, you will have to pay what the market is asking for it. Trying to talk your oil supplier into selling you a barrel of oil for $1 "because price is subjective anyway" would be pointless.I don't see what point you are trying to make when you say that the existence of cryptocurrencies is a proof of this.I never said that bitcoin was not money. In fact just a few posts above (#41), I said it is money. I said it's not sound money and it will collapse. 

The best way that value was exchanged by people has historically been with things like gold which remain valuable to people even if they aren't used as a currency. But I'm sure you wouldn't say that because it's how things have had to be in the past, it must be so in the future. So, what of this issue of circular reasoning?

I don't know why you are making an argument I never made, and then trying to say that I wouldn't make that argument. Yes, you're right, I wouldn't make that argument and I never made that argument. 

A money has purchasing power because it has purchasing power is not logical, but that's not how I would describe bitcoin at all. And it may shock you, but it's not because the utility of the bitcoin protocol that I know it has value. Bitcoin the currency has value and is money because people agree that it is.

I never said bitcoin doesn't have value. I said it will stop having value in the future. (again, talking about market value here, as whenever I don't specify)But no, it doesn't have value because it's money. As I've explained, nothing has value simply due to being money. Rather, something which has value can be used as money, as long as it continues having value. 

It's the exact same ontological basis for you having a job or that you own the car you do. There is not seal of ownership etched in the aether around your car, and you are not made out of accountant atoms or racecar driver atoms or whatever it is you do for a living. These things are determined because of the institutional reality we all operate in.

Computers and water and garbage are all made out of atoms.Computers don't have value because people agree that they have value, computers have value because actors in the market are willing to give other things of value in exchange for them, in order to either consume them, or exploit (utilize) them for the production of other goods or services that others in turn want to consume or exploit for the production of yet another good or service which again has C/P demand.

 

And I still have no idea what your point there was, but hopefully what I said answered it. 

There is no definition that I could find online for "objective-use value", but I'm assuming that all of this refers to what Peter Schiff was talking about in his debate with Stef about bitcoin: that gold has value as jewelry, in engineering because of it's physical properties, but as soon as you use the word "value" you are talking again about something that is ontologically subjective. That is to say that I don't see how gold escapes this regression theorem problem any more than bitcoin does.

I never used the term "objective-use value".Peter Schiff made good points in that debate, yes. But I'm not asking you to consider Peter Schiff's arguments, I'm asking you to consider mine.I am not arguing the regression theorem, because as I've said many times, Mises used terminology that was vague and easily misinterpreted. He was essentially saying the same thing I'm saying, and so was Peter Schiff, and Murray Rothbard. But again, I'm not asking you to consider Mises's arguments, I'm asking you to consider mine. 

What kind of money do you want? Do you want a money that has the overhead involved in transferring the ownership of gold (or other physical goods)? Maybe. It depends on what you are using it for.

I want money that will continue having value in the future. Bitcoin will not. 

------------------

Kevin Beal said:

 

"In whatever way you want to transfer or store value, the bitcoin protocol can cover it. I personally don't care about a commodities based currency, and that will come with certain costs and advantages. One of those costs may be that it doesn't last as long as a currency that is based on commodities, but so what? Programmable money can cover almost any use case, and the thousands of alternative cryptocurrencies, side chains, meta coins, etc will be developed to fit the needs that people have, including tying cryptographic and distributed representations to physical property.This is much bigger than you seem to realize..."

------------------

 

No, it isn't. It's just a bunch of fluff and fireworks. There's no core, and there will never be.

[Kevin Beal]

I can only address one thing at a time. And I chose the one below. If we can agree on that one, then I'd be more than happy to move onto another. I have something I could say about each one, but first things first.

 

Well then what are you arguing here? I said bitcoins the units in their current form will collapse and they will lose all their market value, you seemed to be saying I was wrong. Now you say you don't care about bitcoins the units. You can't have it both ways.

When I said that I don't care much about bitcoin the units, I mean that in the same sense that I don't really care about the tech that displays an email. I care a lot more about IMAP, POP3, SMTP and HTTP, the protocols which make email possible. If the actual composition of emails themselves changed it would not matter fundamentally. And Gmail is one example where this happened with the "conversation" representation of those emails. It's a useful abstraction.

 

In the same way, particular "coin" technologies could be developed to use the bitcoin blockchain as it's payment network and bitcoin units themselves as the underlying basis for its value, the same way gold or whatever else would be the basis for some commodities based currency.

 

If that point is sufficiently explained for you, I'm ready to move on to another point you made.

[st434u]

I can only address one thing at a time. And I chose the one below. If we can agree on that one, then I'd be more than happy to move onto another. I have something I could say about each one, but first things first.

 

When I said that I don't care much about bitcoin the units, I mean that in the same sense that I don't really care about the tech that displays an email. I care a lot more about IMAP, POP3, SMTP and HTTP, the protocols which make email possible. If the actual composition of emails themselves changed it would not matter fundamentally. And Gmail is one example where this happened with the "conversation" representation of those emails. It's a useful abstraction.

 

In the same way, particular "coin" technologies could be developed to use the bitcoin blockchain as it's payment network and bitcoin units themselves as the underlying basis for its value, the same way gold or whatever else would be the basis for some commodities based currency.

 

If that point is sufficiently explained for you, I'm ready to move on to another point you made.

 

No, I don't really know what you're trying to say. If you like the idea of cryptocurrencies in the future in order to develop something entirely different than what already exists, fine, but that has nothing to do with the soundness of bitcoins as a money.

 

The reason gold is the basis for the value in gold-backed currencies, AKA gold certificates, is that those gold certificates can be redeemed for gold. If the basis for gold's value was in turn nothing but empty speculation, then gold certificates would not be a sound currency/money, because gold would not be a sound money. You can say that the basis for the value of your bitcoin certificates are bitcoins, but that doesn't really count for much once you've already established that bitcoins are not a sound money.

[Kevin Beal]

No, I don't really know what you're trying to say. If you like the idea of cryptocurrencies in the future in order to develop something entirely different than what already exists, fine, but then don't talk about bitcoin.

I'm talking about the early internet versus the internet of today. It's the same sets of protocols, but more abstractions and technologies have been developed on top of it. The right way of thinking about bitcoin is not as a money for the internet, but as the internet of money. I'm talking about the exact same technology you are, but I'm just trying to point out the implications that you don't appear to understand.

 

Can we agree on that much at least?

 

In having a discussion, in order to lead you to my conclusion, I need you to accept certain premises, and if we can't agree on anything, it will be impossible for me to have you understand what I'm saying.

 

Are you ready for the next item on your list, or do we need to keep working on this one?

[st434u]

I'm talking about the early internet versus the internet of today. It's the same sets of protocols, but more abstractions and technologies have been developed on top of it. The right way of thinking about bitcoin is not as a money for the internet, but as the internet of money. I'm talking about the exact same technology you are, but I'm just trying to point out the implications that you don't appear to understand.

 

Can we agree on that much at least?

 

In having a discussion, in order to lead you to my conclusion, I need you to accept certain premises, and if we can't agree on anything, it will be impossible for me to have you understand what I'm saying.

 

Are you ready for the next item on your list, or do we need to keep working on this one?

 

I don't see what implications I don't appear to understand. You're claiming that a crytocurrency can be so much more than bitcoin is. Maybe it can, and maybe it can't. I haven't seen any evidence that it can. All I've seen is a lot of "the entrepreneurs will figure it out", "things will be upgraded somehow", that sounds like a bunch of nothing to me. If something great can be made out of this, then do it, or at least propose how it's going to work. So far, the only remotely important feature that some people have came up with (and I had thought of this before hearing about it from anybody else; and it would really only make sense to apply this to an entirely new cryptocurrency, not to bitcoin itself), is using most of the hashing power as a means to produce a service that will have C/P demand. I've addressed this in the other thread (also linked here in post #10)

 

Whatever the case, it would still have nothing to do with the soundness of bitcoins as a money.

[Kevin Beal]

Whatever the case, it would still have nothing to do with the soundness of bitcoins as a money.

It's like you're doing everything you possibly can to shut down discussion.

 

It doesn't seem to matter how consistently it's shown that you misunderstand my position, nothing gives you pause. Bitcoin is not money and that's final!

[st434u]

It's like you're doing everything you possibly can to shut down discussion.

 

It doesn't seem to matter how consistently it's shown that you misunderstand my position, nothing gives you pause. Bitcoin is not money and that's final!

 

No, that is not the case at all. I explained everything I said in detail. You're just taking one sentence and pretending that it was not shown to be true in what came above it, what's more you seem to be pretending that I didn't put forth any arguments to substantiate it.

 

Also, you keep repeating lies about what I said. The first time I let it go as a misunderstanding, but this is the second time you claim that I said that bitcoin is not money, even after I replied to your post letting you know that not only I never said that, and that my position is that it is; in fact I showed you that I had stated this just a few posts above yours, and pointed to it with the post number and all. At this point I must assume that you are not trying to have an honest discussion.