George Selgin discusses privatization of the money supply based on Bitcoin

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Quote from: cypherdoc on February 10, 2012, 09:42:18 AM

I was referring to what I remember him saying in the video

I only watched the video briefly so he might have said something else there but I still think that's a misunderstanding of some sort, based on other Selgin's writings.

Quote from: Phinnaeus Gage on February 10, 2012, 07:53:37 AM

I happened to look that phrase up the other day and noticed that it's not a new term: http://books.google.com/books?id=pIg5AAAAMAAJ&q=%22Quasi-Commodity%22&dq=%22Quasi-Commodity%22&hl=en&sa=X&ei=jBI1T5qTKoP40gGd6KHcAg&ved=0CDsQ6AEwAQ

Well the idea that "strange things" can be money is certainly not new. For example, there's an article Fiat Money as an Administrative Good.

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Quote from: Phinnaeus Gage on February 10, 2012, 07:53:37 AM

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I read the paper and I believe George Selgin is incorrect in his analysis. He invents a new term called "quasi-commodities" and claims that bitcoin is a quasi-commodity.

I happened to look that phrase up the other day and noticed that it's not a new term: http://books.google.com/books?id=pIg5AAAAMAAJ&q=%22Quasi-Commodity%22&dq=%22Quasi-Commodity%22&hl=en&sa=X&ei=jBI1T5qTKoP40gGd6KHcAg&ved=0CDsQ6AEwAQ

For Bitcoin, I prefer the term "commodency"

cypherdoc

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Quote from: lonelyminer (Peter Šurda) on February 10, 2012, 07:40:21 AM

Quote from: cypherdoc on February 05, 2012, 11:15:22 AM

he also misunderstands the part where he says that alt cryptocurrencies can appear alongside the "original" Bitcoin which will "always survive". if an alt chain rises up that is better than Bitcoin, it will take over and eliminate Bitcoin.

I think that's a misrepresentation. In the paper, he does not say that, rather emphasises and supports the competition this creates:

I was referring to what I remember him saying in the video

Phinnaeus Gage

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Bitcoin: An Idea Worth Spending

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I read the paper and I believe George Selgin is incorrect in his analysis. He invents a new term called "quasi-commodities" and claims that bitcoin is a quasi-commodity.

I happened to look that phrase up the other day and noticed that it's not a new term: http://books.google.com/books?id=pIg5AAAAMAAJ&q=%22Quasi-Commodity%22&dq=%22Quasi-Commodity%22&hl=en&sa=X&ei=jBI1T5qTKoP40gGd6KHcAg&ved=0CDsQ6AEwAQ

lonelyminer (Peter Šurda)

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Quote from: cypherdoc on February 05, 2012, 11:15:22 AM

he also misunderstands the part where he says that alt cryptocurrencies can appear alongside the "original" Bitcoin which will "always survive". if an alt chain rises up that is better than Bitcoin, it will take over and eliminate Bitcoin.

I think that's a misrepresentation. In the paper, he does not say that, rather emphasises and supports the competition this creates:

Quote from: George Selgin

But such misgivings appear misplaced: they treat as a fault of Bitcoin what is in fact a virtue of currency competition, to wit, the possibility that a new currency may shove aside an established one, despite network externalities favoring the latter, provided that the new alternative seems sufficiently advantageous in other respects.

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Quote from: cypherdoc on February 05, 2012, 11:15:22 AM

he advocates a hard target for 5% spending which i don't see meshing well with Bitcoin's set supply. whats wrong with a fixed supply of money? prices will just decrease over time as the economy grows. there is nothing wrong with this.

Nothing wrong for savers but many people are notorious debtors. Especially those who can force others to spend (governments with deficits) so deflation is dreaded as it makes servicing debt much harder in real terms.

Quote from: cypherdoc on February 05, 2012, 11:15:22 AM

the main bullish argument for a fixed supply of money is that businesses and savers can count on their money retaining its value. i, being an inherent saver, would be more than willing to lend out my savings for additional return or even for investing in risk assets such as stock. with the exchange value of my money whipping all over the place under the current regime, i am LESS willing to speculate with my money b/c now i have to worry about exchange value along with speculative risk.

You are managing your assets in a sound way; you have savings. Unfortunately, majority of people aren't capable of such thing and most of their possessions are debt based. So politicians make propaganda that "inflation is essential". Sad

Quote from: cypherdoc on February 05, 2012, 11:15:22 AM

the Bitcoin pessimists here will say that gov'ts will fight Bitcoin and establish their own server farms to destroy it. i say that the collective will of humanity will not reject a good idea like Bitcoin but will in fact over time embrace it.

Collective will of humanity, eh?

If there is a common "will" shared by all homo sapiens that is that of animals: to eat (preserve itself), to kill (reduce competition) and to copulate (propagate the specie). Popular culture reflects that very well indeed...

We yet have to do a herculean work first, to be able to claim that we have something resembling "the collective (intelligent) will".

lonelyminer (Peter Šurda)

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Quote from: jimbobway on February 10, 2012, 02:01:53 AM

I read the paper and I believe George Selgin is incorrect in his analysis. He invents a new term called "quasi-commodities" and claims that bitcoin is a quasi-commodity.

I would not call it incorrect, but incomplete. It is possible to view Bitcoin as a quasi-commodity and from this perspective, I agree with most of the paper. In particular, Selgin gets what many economists don't, that Bitcoin is less prone to counterfeiting and supply side shocks than the alternatives, and this is a comparative advantage as a potential money. He also correctly argues that the advantages of a new currency can under certain circumstances outweigh the network effect accompanying the old one (he's not the first one making this argument, but many economists appear to neglect this).

However, Selgin, similarly as most of the other economists I was in contact with, neglects that it's also possible to view Bitcoin as a service, and this is a source of additional value, as well as additional features unmentioned in his paper.

Bitcoin is something which has never existed before, and people attempt to interpret it from the perspectives they are accustomed to, which they used to analyse historical phenomena in the past. To fully grasp the multifaceted properties of Bitcoin is a difficult task.

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I read the paper and I believe George Selgin is incorrect in his analysis. He invents a new term called "quasi-commodities" and claims that bitcoin is a quasi-commodity. According to him quasi-commodities have no non-monetary uses, and his entire argument for his paper is based on this fact. Bitcoin is a commodity, not a quasi-commodity.

Bitcoin in its current state has time-stamping capabilities, which allows documents to be time-stamped. This allows voting systems to be developed with bitcoin as shown by researchers. http://www.newscientist.com/article/mg21328476.500-bitcoin-online-currency-gets-new-job-in-web-security.html. Software developers are just beginning to discover how to utilize this property.

In addition, Bitcoin is on the cusp of allowing multisignature transactions. This will unleash the full potential of bitcoin which will allow contract systems never before seen. See here for some contract possibilities: https://en.bitcoin.it/wiki/Contracts

Mr. Selgin also failed to mention Namecoin, which does have a non-monetary use in registering domain names.

Bitcoin has properties other than monetary value, and thus it is a commodity, not a quasi-commodity.

ffe

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His paper for those that are interested.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2000118

cypherdoc

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Quote from: Piper67 on February 06, 2012, 01:00:05 PM

The problem is that it's pretty hard to find people who know enough about all the different aspects of Bitcoin. The cryptographers don't know about economics, the economists don't know about networks, the networks guys don't know about cryptography. So each of them will essentially say the same thing "Bitcoin seems OK in my particular field, but it is surely flawed in one of the other fields".

It will take a while, but eventually enough experts will come through that will either have a working knowledge of all aspects of Bitcoin, or will associate with those who are knowledgeable in the areas they aren't. When that happens, slowly but surely, they will start to agree that Bitcoin is a good idea.

one of the things i do periodically is spend considerable time on the different subforums here. this has helped me gain a much better understanding of all the component parts of the community.

recently i even started up some of my own rigs for the educational experience. i'm amazed at the commitment and intelligence of the mining community. the constant evolution and fine tuning that goes into mining is extraordinary and widespread. i can now appreciate a whole new level of devotion to what is happening here.

Bitcoin is not going away. in fact, its building.

edit: there is no investment i am aware that is as transparent as Bitcoin. EVERYTHING you need to evaluate it is here. contrast that with the stock, pm, UST, or bond market opacity. i actually feel safer here.

Piper67

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The problem is that it's pretty hard to find people who know enough about all the different aspects of Bitcoin. The cryptographers don't know about economics, the economists don't know about networks, the networks guys don't know about cryptography. So each of them will essentially say the same thing "Bitcoin seems OK in my particular field, but it is surely flawed in one of the other fields".

It will take a while, but eventually enough experts will come through that will either have a working knowledge of all aspects of Bitcoin, or will associate with those who are knowledgeable in the areas they aren't. When that happens, slowly but surely, they will start to agree that Bitcoin is a good idea.

matonis

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Quote from: cbeast on February 05, 2012, 03:12:10 PM

With all these professional papers and lectures I've noticed a commonality. None of them promote Bitcoin itself, they promote the idea of Bitcoin. It suggests they they don't really understand the real world evolution of the network of developers, miners, enthusiasts, and what they have been through. This is a revolution. It's like saying, "Hey Arab Spring, you have a good idea, but I think you should do it this way." They can bite me.

cbeast, you are exactly right. They (Selgin, White, Horwitz, Wenzel, Murphy, etc.) promote a nonpolitical monetary unit of value but they lack an understanding of the cryptographic primitives that went into achieving bitcoin. Therefore, they lack an understanding of its staying power or of its potential. The leaders are the ones on the front line --- building the bitcoin exchanges, the networks, the miners, and hopefully soon the futures/options market makers.

foggyb

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Quote from: cypherdoc on February 05, 2012, 04:23:04 PM

Quote from: cbeast on February 05, 2012, 03:12:10 PM

With all these professional papers and lectures I've noticed a commonality. None of them promote Bitcoin itself, they promote the idea of Bitcoin. It suggests they they don't really understand the real world evolution of the network of developers, miners, enthusiasts, and what they have been through. This is a revolution. It's like saying, "Hey Arab Spring, you have a good idea, but I think you should do it this way." They can bite me.

this is how these things start off; they are grudgingly giving way, step by step. pretty soon they will understand that Bitcoin satisfies all that they recommend.

I think they do understand already. They're just miffed they didn't come up with it first.

cypherdoc

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Quote from: cbeast on February 05, 2012, 03:12:10 PM

With all these professional papers and lectures I've noticed a commonality. None of them promote Bitcoin itself, they promote the idea of Bitcoin. It suggests they they don't really understand the real world evolution of the network of developers, miners, enthusiasts, and what they have been through. This is a revolution. It's like saying, "Hey Arab Spring, you have a good idea, but I think you should do it this way." They can bite me.

this is how these things start off; they are grudgingly giving way, step by step. pretty soon they will understand that Bitcoin satisfies all that they recommend.

cbeast

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Let's talk governance, lipstick, and pigs.

With all these professional papers and lectures I've noticed a commonality. None of them promote Bitcoin itself, they promote the idea of Bitcoin. It suggests they they don't really understand the real world evolution of the network of developers, miners, enthusiasts, and what they have been through. This is a revolution. It's like saying, "Hey Arab Spring, you have a good idea, but I think you should do it this way." They can bite me.

lonelyminer (Peter Šurda)

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I emailed with George Selgin about Bitcoin last summer for my Bitcoin research. He knew about it, we exchanged some arguments and he said he's working on a new proposal motivated by Bitcoin's predictable supply growth, together with some other guy. Maybe this video is about it (I have not seen the video yet).

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Quote from: cbeast on February 05, 2012, 11:32:29 AM

A 5% inflation would allow the largest computer networks (owned by governments and large corporations) to eventually decrease the value of anyone's savings. It would make mining unprofitable and more costly to maintain the network than just printing fiat money.

he didn't really say 5% "inflation", he said 5% "spending" whatever the heck that means.

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Quote from: cbeast on February 05, 2012, 11:32:29 AM

A 5% inflation would allow the largest computer networks (owned by governments and large corporations) to eventually decrease the value of anyone's savings. It would make mining unprofitable and more costly to maintain the network than just printing fiat money.

but u would have to assume that the Bitcoin price would go up a corresponding 5% keeping mining profitably constant.

FreeMoney

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Strength in numbers

Quote from: cbeast on February 05, 2012, 11:32:29 AM

A 5% inflation would allow the largest computer networks (owned by governments and large corporations) to eventually decrease the value of anyone's savings. It would make mining unprofitable and more costly to maintain the network than just printing fiat money.

I'm pretty sure people own a lot more computing power than govs and corps, even if they don't they certainly have more disposable computing power. And thinking they'll just buy more is silly if the premise is that it won't be profitable to mine.

I guess a agree that 5% inflation would make mining unprofitable, but only in a roundabout way. A 5% subsidy is way more then the current schedule starting about 12 years in, more subsidy might seem to make mining more profitable. I mean they'd get 5% of all wealth forever, you'd expect 5% of world resources to be dedicated to mining. But that's absurd, but it removes the reason to that gaping value hole will make sure people don't demand coins.

cbeast

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Let's talk governance, lipstick, and pigs.

A 5% inflation would allow the largest computer networks (owned by governments and large corporations) to eventually decrease the value of anyone's savings. It would make mining unprofitable and more costly to maintain the network than just printing fiat money.

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