Topic: Not a currency, not a commodity, but an accounting system - page 3. (Read 5371 times)

This couldn't be more inline as to how I view the world.

If the sheep are generally accepted as medium of exchange, then yes, sheep would be currency. It would be both a commodity and a currency. This is a similar situation to Germany after WW2 and in prisons where cigarettes were used as currency, but were also a commodity.


When Bitcoin started it was basically just an experiment. I don't really see any "novelty" use of Bitcoin. If I started a fork of Bitcoin, let's call it "Mageantcoin", how much would you give me for it? It's the same as if I printed pieces of paper with Mageant$ on them. There would be little to no use for them. The value of Bitcoin - at least now - it that it has some established value, currently around 5$.

If you were the only person in the world to have potash it would also be useless. You could turn it into something and sell it, at which point you'd cease to be the only person in the world who has it... same as with Bitcoin.

Edit: Ack, I should know better than to jump into a thread that Evorhees is already playing in... he's got it covered, as usual.

Hmmmm - if you were the only one in the world to have gold, would it not be similarly worthless? One can derive aesthetic value from gold, but a computer nerd can similarly derive tech-geek aesthetic value from Bitcoins. Indeed, before BTC had a market price, people traded them because they are cool - there is an aesthetic property to Bitcoin as a thing, just like a shiny stone or metal.

And further, it is not true that Bitcoin has "no" value other than money. There are a few weird uses people have mentioned - a timestamp, a means of anonymous proof of various info, a distributed record keeper, and certainly others we haven't considered.

So while bitcoin's value may be due 99.999% to its usefulness as money, it has some tiny fraction of value beyond that. Does that not then satisfy your commodity definition? Let's remember too that gold's value is vastly due to its use as money and a store of value (which derives in turn from its usefulness as money). If jewelry and industry were the only uses of gold, it's price would be vastly lower, probably in the single digits of what it is now.

So what then is the fundamental difference that makes gold a commodity money, but not bitcoin? Both are commodity monies in my opinion, the former a physical commodity and the later a digital commodity.

It’s not even a local currency. Bitcoin is currently no currency because it’s no unit of account, noone will actually accept Bitcoins as such for services and goods, but only as a function of its USD worth on exchanges.

Just because some people use it for barter doesn't mean it's a currency. Would you say sheep are currency just because people in Afghanistan use them for trade? At most it's a local currency because it lacks the typical "generally accepted" part of it's definition.


What about the use of Bitcoin as a novelty? When Bitcoin got started it had no other use but as novelty much like gold jewelry.


Completely irrelevant.

Bitcoin is *effectively* a currency because that is what it does and how people use it. Although, it does have some special properties that make it a very novel and unusual type of currency.

A commodity always has a use by itself. If gold were not used as medium of exchange or storage of value it would still be useful because you can make useful things with it, such as electronics and jewelry.

Bitcoin does not have that property. If I were the only person in the world to have Bitcoins it would be useless, just as with any other currency.

Bitcoins are an emergent phenomenon of the blockchain.
They are just as "real" as friction or temperature.

They exist just as much as inches or meters or megabytes exist -  they're all units of measurement. And the Bitcoin software certainly exists - so the Bitcoins themselves are measurement units within that software.

Bitcoin can also be described as a solution for the http://en.wikipedia.org/wiki/Byzantine_Generals%27_Problem using proof of work with the limitation that whoever rules over more than half or the processing power in the network can decide as a dictator within certain limits.

It is currently used for accounting of "Bitcoins" but also in different implementations for "Namecoins" + a distributed DNS-style system for example or just to track proofs of work in the P2Pool sharechain.

What makes the Bitcoin implementation different form a "standard" accounting system in my opinion, is the distributed generation of transactions "out of thin air" following a specific scheme and instruction set. There is no real use or equivalence to this in a regular accounting system (If you take gold from the earth, you have more gold + the earth has less, if you take money from someone, you have more money and this person has less...). This could have been done differently if for example Satoshi would have implemented a "golden pot" - a special address where 21 million BTC are stored in the first block and everyone has the private key - but only 50 BTC for the first ~4 years, 25 for the next ~4 years etc. are allowed to be included as transaction. This might in hindsight have made it more easy for people to understand the concept of money generation in Bitcoin... Maybe Bitcoin 2 or whatever comes in the future will do it like this?

How can I if I just did but you wont listen?:


There is nothing that says the Bitcoin system can only serve one purpose. Once people clearly understand what it is many different be figured out. But even just the use as a novelty as enough to fulfill the requirement of a commodity. And that's certainly what it was at the very beginning.

Well yes but also no. I mean aren't the numbers representing something? It's not like if I'm sending you a 1, I'm sending you 1 bitcoin. Even though in the system there is nothing else recorded but the number 1 in a transactions that 1 still represents something otherwise bitcoins wouldn't really be fungible because once I send you 1, 1 is yours and yours only, and no one else can send 1, no?

but its not like Alice and Bob are sitting there reading their own ledgers (client) and comparing it to the blockchain or even each others ledger (client).  their individual copies are connected to the blockchain and depending on the blockchain to feed them correct data.  in that sense there's just one trusted record; the blockchain.

Those are not uses for bitcoin, nor the bitcoin network at present, although it's possible that a parallel network (like namecoin) could serve such a purpose.  Tell me what the bitcoins themselves are useful for beyond a unit of exchange.

Honestly, I know it's an impossible task, as I have already mentioned, bitcoins don't really exist.

No, there are no tokens, not even in the transactions.  There are only the transactions, with entries on who is sending bitcoins to whom (via addresses) and how much.  That is all.

I disagree. I mean aren't there tokens within this accounting system? Does it matter that these tokens exist only as part of transactions?

Vote counting, clock, novelty and various other reasons one can use an openly shared digital record that no one can forge but where people can make entries pseudononymously.

There are lots of uses for Bitcoin other than a monetary one. Gold was primarily used a jewelry and one could easily argue "hey that's not a real use for something to just look pretty.."

I'm going to have to dissent here for technical reasons.  In reality, bitcoins are no more than a mental construct.  They don't even exist as a digital object.  Only transactions exist, and they are not, themselves, bitcoins.  There is only the accounting system.

Once again, the absurd part is that a commodity is something with a use other than as a monetary unit.  A currency is a unit of exchange by design.  Even commodity monies (gold silver) are currencies once minted into coins.  Until that happens, those monies are not actually monetary units.

Tell me what other use bitcoins serve and I'll agree that it's a commodity.

http://iang.org/papers/triple_entry.html

TL,DR version....

Triple entry accounting is wherein there are three ledgers that record a transaction that must agree.  In this case, one personally trusted by the buyer, another personally trusted by the seller, and a third party trusted by both.  This is the classic trusted third party problem.  In the case of bitcoin, the blockchain serves the role of all three ledgers.  Each of the two parties involved in the transaction have their own local copy, and the trusted third party is the rest of the bitcoin network.