afterzir Posted February 21, 2015 Posted February 21, 2015 Question: If copying doesn't violate UPB (universally preferable behavior), then what stops counterfeiting? Since digital theft is way more common than real life theft, solutions other than Bitcoin are preferred. Thanks
Pepin Posted February 21, 2015 Posted February 21, 2015 Firstly, stopping counterfeiting is subject to market preferences. Consumers do not want that currency to be inflated by counterfeiters, so currency issuers have a large incentive to prevent counterfeiting. There is two main methods of decreasing/stopping counterfeiting. The first is making it difficult. The second is by increasing the risk. Making it difficult might involve the various security implementations we see on modern money. If the currency is non-digital, requiring a very very huge investment to counterfeit properly will create a high barrier of entry. Allowing for easy and accurate verifiability would also increase the detection of counterfeit bills. As far as I'm aware, this has been pretty successful in the modern day as new bills are very very hard to copy. Increasing the risk also helps. If the cost of being found out involves a large amount of economic austracism, then it might not be worth the risk. The risk is also spending all that money on the printing press, just to have the currency issuer release a new version of their money which makes it impossible to copy the money with the previous setup. For digital assets, bitcoin and blockchain technologies are the answer. I know that isn't the answer you wanted, but trustless protocols are the only way to go.
J. D. Stembal Posted February 21, 2015 Posted February 21, 2015 Currency is a way to express the value of everyone's labor. It has no inherent value in itself, unless backed by a commodity that has value for which it can be exchanged. Since people no longer buy and sell things in precious metals, we assign an assumed value to paper money because it has the utility to buy the products and services we desire. This is the same for credit, debt, and digital monies. Counterfeiting the money has the effect of stealing the value of the labor people provide. In order to stop all counterfeiting, people must use a currency that cannot be counterfeited, barter, or go back to using commodities as currency. Of course, with regard to precious metals, you can fake a gold bar or coin, but there are very practical ways to tell if the content of a metal is adulterated.
luxfelix Posted February 21, 2015 Posted February 21, 2015 As far as I understand it, we've always ultimately been operating under an "honor system" whereby any security system, no matter how fail-safe, can be overcome eventually by dedicated perpetrators. So then, if you want to stop the cycle of stronger armor vs. stronger weapon ad infinitum, deal with the source of the crime. In the case of counterfeiting, though crypto-currencies and public ledgers can certainly help to ameliorate, a focus on principles, particularly with emphasis on empathy and long-term economics, will negate any incentives for the short-term gain through fiduciary fraud.
WasatchMan Posted February 22, 2015 Posted February 22, 2015 If it were a free market and I accepted a certain "currency" to store my value, I would make sure I understood how the value of the currency is maintained. I personally would not put my savings in a system that could be stolen from through counterfeiting. If there were enough people that were not savvy enough to not put their savings in a currency system that allowed counterfeiting, than I guess counterfeiting would exist, however its scope would be limited to people voluntarily choosing this system.
Pepin Posted February 22, 2015 Posted February 22, 2015 If it were a free market and I accepted a certain "currency" to store my value, I would make sure I understood how the value of the currency is maintained. I personally would not put my savings in a system that could be stolen from through counterfeiting. If there were enough people that were not savvy enough to not put their savings in a currency system that allowed counterfeiting, than I guess counterfeiting would exist, however its scope would be limited to people voluntarily choosing this system. I don't think this is the best way to think about it. Rather I would put it into the context of pros and cons. Bitcoin for instance has little risk in regard to counterfeiting due to the protocol. It is possible, just almost impossible to pull off. The con is that it takes a lot of computer power to ensure this. Centralized fiat money has the benefit of being able to respond quickly to changes in the market. It has the con of the money being less secure. Commodity based money has the benefit of being tangible and difficult to copy. The con is that it is more difficult to secure and transport, as well as the problem of divisibility. A solution to that problem is to have a bank secure your commodity, and you can be given a card which can trade the commodity in any amount, but negates a lot of the benefits of commodity based money as it becomes difficult to verify the tangibility of the assets. I am simplifying a lot here, but my basic message is that you might choose your currency based on your needs and goals. You may want 50% savings in a highly secure place that would gain value, like bitcoin. You may want 20% to be in a hard asset like gold, just incase you lose power due to solar event. You might want 15% in some form of promissory note like cash for convenience. The other 15% you may want in an assortment of random currencies which are used for particular services.
RestoringGuy Posted February 23, 2015 Posted February 23, 2015 I think the problem of counterfeiting is the same as the problem of less-than-expected goods. If I am sold a television that fails to show a picture after some period of time all the while the same showroom model continues to work, then in my perception the unit I received was counterfeit relative to the store model (just as you may receive a counterfeit bill/coin/commodity meant to be seen as fully functional, but when you go to use it the effect is undesired).Product manufacturers on the other hand have co-opted the concept of counterfeiting, replacing the idea of function with authenticity of mere place-of-origin. If a handbag is counterfeit it usually means the maker is not who you expect, regardless how well the product performs. Even if it functionally superior, it's counterfeit. On the other hand, I would not think of a gold coin as counterfeit if it were made of 100% real gold but merely the designer was fake. I think there is a concept of counterfeit-brand and counterfeit-function. The function idea is like the faulty television. When it comes to currency there is mainly a need to care if currency received works without future objections, not who makes it or how or why.You could take anything, consider its atoms and ask "at exactly which atom (from 1 to 10^26 or whatever) is this counterfeit item considered to exist?" Through a chain of institutional design, don't look at this, don't listen to that, it's not your job, ignorance is maintained and that's why I think product defects and counterfeiting are quite the same. Maybe just a matter of degree. Stopping counterfeiting seems qualitatively the same as stopping bad goods.
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