Topic: Re: Bye bye bitcoin (Split: Morality of Bitcoin vs. Fiat Discussion) (Read 5277 times)

I can't believe someone actually made the morality argument for a currency, if you're going to go their I'd argue that paper money has to be one of the evil and dishonest methods ever created by man to steal another persons wealth. Not only are people threatened with jail if they don't pay their taxes if you know anything about economics you know we could never afford such large scale infrastructure and military, so in order to even come close to affording this anyone who supports this system is passively putting their children and grandchildren into debt. The irony is that because of this no matter how parents might think they're doing their kids a favour by building all these shiny schools it won't matter in the long run because their children and grandchildren will have to pay so much that they will be forced to drop their living standards dramatically making the whole plan pointless.

What's worse for me is that if I didn't have Bitcoin I would end up paying stupid amounts just so that these scumbags can have pensions and live easier earlier in life rather than retire in what most would call the normal way because they're living longer. People rant on about how the gap between the rich and the poor are always affected but it's much worse than that because everybody is dumping the problem on children and I am utterly convinced that this is precisely why the politicians in power wouldn't dare let them vote even at the age of 16 because they know they'd vote for someone who would actually fix the problem at their expense as it should be.

In short, fuck anyone who disagrees with me, I'm keeping my wealth and you're not stealing it, if you're going to steal from me do it honestly and don't hide behind corrupt politicians and paper money because you're too scared to admit you are.

I've always wondered why that is considered to be such a huge problem. In fact, in a European court, you will also be "forced" to accept Euros as compensation for a loan or damage or whatever. The Euro is just the fallback medium of exchange when the original good that was lent or damaged is no longer available. There just has to be some fallback. You are allowed to agree on another compensation in a court case, though (at least here in Germany), and I wonder if that's not also the case in the U.S.?

Good ol' Gresham lived in a time where classical "currency money", i.e. money that takes its value from the material value of its coins was the only "good money", whereas government issued money was considered "bad". That's why, in its original form, Gresham's law is effectively not applicable to the situation of e.g. the U.S. Dollar versus bitcoin. That's also why said law is usually quoted in its more general meaning "bad money drives out good". It is applicable for any pair of currencies, be they legal tender or not and will lead to the depreciation of the less attractive one against the more attractive up to the point where an equilibrium is reached. From then on, the bad money will be in higher circulation because it is riskier to hold on to it, making it practically more useful than the good money. In fact, the principle does not only apply to currencies, but can even be seen on job markets or elsewhere.
So, yes, you're right, Gresham's law is often misquoted, and not even applicable to today's situation.

With the exception that bitcoins become more rare with time and currency less rare by printing.

An extension of this is that damages in a court of law are awarded in legal tender.

So someone borrows 100 BTC fails to repay and you sue them.  Assumming the court agrees that the debt is valid they will enter a judgement in legal tender so if the current exchange rate is $200 USD per BTC the court might award a judgement of $20,000.   You may collect the value of your damages but you have no guarantee it will be paid in anything other than legal tender.

The former. I must (in the US or when lending to a US citizen) accept $1000 from someone owing me 10BTC when BTC is worth $100. That is retarded and any lender who exercises that right won't ever lend from me again (you can ask me whether I would accept it though).

"The cause is because of legal tender laws that require fiat to be accepted by those giving out loans."

What exactly does this mean? That legal tender must be accepted (i.e, if I lent you 10 BTC, when they were worth $10 apiece, and now they're $100 apiece, so I must accept $1000 USD as my payment) or that loans must be denominated in legal tender? If its the latter, how does shorting work?

This.  The often misquoted Gresham's if often misquoted to mean "bad money displaces good money" but this important caveat is UNDER GOVERNMENTAL FORCE.  As for spenders it makes sense.  I have this dollar I don't trust and I have this lump of gold I do trust.  I will save the gold and spend the dollar.   However if one thinks a little deeper if logically one wants to keep gold and get rid of dollars why would a merchant accept dollars.  Maybe they would in a limited fashion to quickly exchange the dollar for gold and pawn the risk on some other sucker but if everyone is doing that then essentially there is no market for the bad money.  However Gresham's law is pointing out that if the government makes the bad money legal tender and thus obligating its acceptance is certain scenarios then the better money is displaced.   Without the government using force people would simply demand the better money (gold) or at a minimum charge a higher price for payment in the bad money.

The same could be said of all current, future and past currencies the only difference is the size of the "flock of enthusiasts".

I'm forced to convert my physical property into a convertible "they" possess, whenever I need to take a leak at a highway restroom. Yet, I somehow don't feel "robbed". I'm unsure if something like this exists in the U.S., but it is absolutely common here in Germany:
http://www.sanifair.de/sanifair/index_en.php
Now, joking aside, let's agree to disagree here, because I see no point in continuing the debate about that particular point.


Okay, let me see if I got that right: the government provides welfare in the form of Dollars. My customers are on welfare (at least some of them). If the government gave them gold, I would not be forced to accept Dollars. But I would have to accept gold, right? (Which btw would be much more inconvenient for me, I have no direct use for gold, but I do have a direct use for Dollars). In the end, the government crumbles, and Dollars are worthless, but gold is still valuable. Sorry if this sounds like ridiculing your argument, that's really not my intention, but in the end, that's what it looks like. It just doesn't make any sense to me from a practical point of view. I don't use gold on an everyday basis. I do use cash on an everyday basis. As a store of value, I personally prefer other things over gold, and if it comes to "Endgame", i'd rather have booze and cigarettes than gold.


Yes, for practical purposes, the same applies here.
But that doesn't stop you from making a contract where you trade goods against other goods. AFAIK, that's not illegal in the U.S. as well. Only in the case where the original fulfillment of the contract is no longer possible, you are required to accept a settlement in your respective currency. But that's actually no more than a practical necessity. How would you settle a contract if the normal delivery versus payment cycle becomes impossible for lack of the promised good? There has to be a fallback, and that's legal tender. BTW, you may define other fallbacks in a contract.
What was the original loan about? Dollars? Then why wouldn't it be paid back in Dollars? You're claiming an opportunity value for the debtor here. That's unethical. I lend somebody an apple, I want an apple back. I lend somebody a Dollar, I want a Dollar back. I lend him a Dollar and he buys gold with it and wants me to accept his gold as a settlement, but he will pocket the difference because the value of gold went up? No, thanks.
I will have to accept a repayment in Dollars if he no longer has the apple, though. That's uncomfortable, but there just has to be a fallback. We could have agreed on one-and-a-half pears instead, no need for the Dollar then. But what if he also doesn't have pears?

"And pocket the little remaining gold". Bankers are not Leprechauns who want to sit on a stash of gold
Just because you think fiat currency is worthless does not mean the same applies for the rest of the world.
Most banks, governments, wealthy individuals(citation needed), are actively trying to reduce their stash of gold.
They don't want it. Why? Because it holds very little opportunity value.


In reality, Gresham's law is not applicable in its traditional form when it comes to the choice between gold and fiat money.
Fiat won't drive out gold. Or, more generally speaking, bad money won't drive out good money in a free market, it will just adjust in price until the bad money is valued low enough to be competitive with good money. Because of its utility value, though, the bad money will still be preferred.
When you follow that argument to its end, you will find that the Dollar/gold exchange rate already has all the risks that come with fiat priced in. In other words, you don't lose much more than a little "friction" when you convert your Dollars into gold and vice versa.
Now, let's come back to the main point of the argument, is that little friction really theft?

Any entity that has a monopoly on force that requires you to convert your physical property into a convertible that they possess the supply of is extortion, a form of theft.


The government provides welfare in the form of their fiat currency, meaning that your customers possess no wealth of their own, but rather than the government choosing to do welfare in the form of hard physical assets, like gold and silver, they instead give these potential customers representations of debt. If the ultimate end game is that all governments fail, said debt is, ultimately worthless, even if today it possesses a value to those who choose to transact in it.

The government also affects most suppliers as well, via legal tender laws. You are required (at least in the US) to accept fiat currency as legal tender for a loan, regardless of whatever it was originally transacted in. Because of this, suppose a supplier wanted a loan to acquire a large number of raw materials to assemble the trinkets you sell. Normally they'd just acquire debt payable in physical commodities, give you your trinkets, and then pay off those bank notes with the gold, silver, Bitcoins that you paid for their goods in and pocket whatever difference there was. But not so if the banker that made them the loan is forced to abide by legal tender laws and accept the fiat the government creates. In that case, they will actually encourage you to acquire the aforementioned worthless fiat currency that your customers have plenty of, so they can use that, and pocket the little remaining gold.


It's not because of Gresham's law, though. Gresham's law only describes the symptoms, but not the cause. The cause is because of legal tender laws that require fiat to be accepted by those giving out loans. Of course bad money drives out good. But the money is still bad and being propped up as equal to the good money. Once it's no longer propped up in such a fashion, the reverse happens, and typically quickly.

Nice straw man you're setting up there.
I explicitly detailed how a banknote might be preferred over a bank deposit earlier on. At the same time, there are situations where the opposite is true. For most practical uses, though, both are equivalent.
I buy a Big Mac, I pay cash, I pay by credit card, no questions asked.
I buy a car, I pay cash, I pay by credit card, no questions asked.
I buy a house, I pay cash - well, no.
I buy crack, I pay by credit card - well, no.

If you personally don't accept payments by bitcoin IOUs is just not the point.
At this very moment, a lot of people do, and they contribute a large portion of the Bitcoin economy, just think of all the coins sitting in exchanges or at bitfunder or in mining contracts.

You probably want Bitcoin to be "money". Unfortunately I'll have to tell you there's no such thing as a free lunch.
Bitcoin being money means Bitcoin functions as money, and that includes the process of money creation through lending.

The statement "there will never be more than 21 Million bitcoins" is false.
The statement "there will never be a monetary base M0 for the bitcoin currency larger than 21 Million" is true.

Let's ignore the nitpicking about "theft", "coercion", "robbery", and just use the word "theft" for the moment. I still have to point out that there's a huge difference between being required to use e.g. the Dollar to pay for taxes as opposed to being forced to hold onto the Dollar for your life savings. It's an inconvenience which I earlier on compared to the inconvenience of buying stamps to use postal service. Also, if during the exchange process into stamps you lose money (by exchange rates + fees, or lost opportunity value), this definitely is more than a little inconvenience, no doubt about that. But as long as the government does not profit from your loss, that's not theft, either.


You're not required to pay your employees in Dollars, are you? At least here in Germany I pay a few of my employees at least partially in goods and services (even I'm payed in the form of a car and some other benefits, partially). I do have to value those in EUR, though, and tax them accordingly.


As far as I can see, it only steals the opportunity value of holding another currency while you're exchanging and paying taxes etc. And I don't even see the government profiting from this.
I don't really understand what you mean by "the government also controls the mechanisms through which the supplier and customer must deal with their benefactors by law" and what implications that might have for our little discussion.
Also, I tend to regard "the government gives you the option to accept goods and services in fiat" as true.


Gold/silver make terrible currencies, but that's a completely different issue. There's a reason why the free market chose to practically abandon gold and silver. This did not have to be enforced by the government but was a direct result of Gresham's law. Gold is still untaxed in many parts of the world, yet practically nowhere is it in use as a currency.
Allowing people to pay taxes in gold would lead to people paying taxes in Dollars, as a direct result of said Gresham's law.

If this could be considered a step towards a freer society, well, I don't know. It would probably lead to a higher bureaucratic burden, more government employees, higher taxes, and I fail to see where this could be considered progress towards freedom.

No it's not.  When I accept bitcoin payments, I do not accept bitcoin IOUs.

How about this practical purpose:
I have a USD banknote and a USD deposit, both equal in value to 1 gram of marijuana.  I wish to purchase 1 gram of marijuana and when I go to make the trade, I ask if I can pay by check.  The guy with the weed tells me to get the fuck out and never come back.

Also, in times of stress, banks limit withdrawals.  Your deposit becomes inaccessible.  This can not happen to a banknote in your possession.

So, tell me again, how USD banknotes and USD deposits are equivalent for any practical purpose.

That's why I referred to the bitcoin IOU as a "deposit" bitcoin. It's a bitcoin, nonetheless. It's not part of the blockchain, though, as long as it's not using colored coins, but that might just be a matter of time.
I also explicitly told you that they might be sold at a discount or a premium. They are not equivalent in the same way a USD banknote is not equivalent to a USD bank deposit. For any practical purpose, though, they are equivalent.

(Sorry if I go back to an earlier topic, I just wanted to make a point here)

Fiat is theft if the government requires you to pay your taxes only in fiat, which almost all presently do.

You can say the government doesn't force us to accept fiat for goods and services, but if they force your customers to take their pay in fiat and force your suppliers to pay for their service fees and use taxes in fiat, then it's pretty much a moot point. We use fiat because the government requires it, even if they don't *directly* require it from you.

"The government gives you the option to accept goods and services in fiat" would be the opposite form of the statement in question.

In this case, the word "option" would be a misnomer, however, because it really isn't an option if the government also controls the mechanisms through with the supplier and customer must deal with their benefactors by law. Requiring taxes in fiat only steals the opportunity for folks to choose what constitutes as money.

Ergo, issuing fiat money under the terms which governments presently do, is theft.

Even with this setup, however, gold and silver were still being used for years as currency by those folks that recognized fiat as theft. It wasn't until the government also started taxing gold and silver trades that it became difficult-to-impossible to use them as money. Thus, the theft-as-an-option became outright theft.

This is why Ron Paul wanted to remove these taxes, it was the first step toward a freer society. The next step would be allowing people to pay taxes in gold/silver/bitcoin.

bitcoin IOU != bitcoin

As you said yourself, bitcoin IOUs sell at a discount to bitcoin, so they can't possibly be equivalent.

If you talk about bitcoins as records of the Bitcoin blockchain, you're absolutely right.
But the same argument holds true for any other currency.
No banknotes are created by widening the money supply of the USD (well, there are in fact extra banknotes printed, but that's got almost nothing to do with the widening of M1 - M3).
Following your argument would mean that the purchasing power of Dollar banknotes would be greater than the purchasing power of deposit Dollars. Interestingly, there is indeed a disparity between the purchasing power of a banknote and deposits. For small amounts, the banknote is usually favored, for large transfers, you'd probably have to pay a premium if you wanted to pay cash. But I guess that's not your point

Who else is going to accept my IOU? Well, even Bitcoins history tells us that there is indeed a market for debts, I recall several occasions where debt has been resold right here at bitcointalk.org, e.g. in the pirateat40 scam and others. Sure, those IOUs are usually priced at a discount that's taking into consideration the risk-to-opportunity-ratio, but again, that's not different from other currencies.

To sum it up: you may not like it, but there are more bitcoins than there are units of currency in the blockchain (well, in fact, no, that might or might not be true, because we would also have to consider the amount of lost bitcoins, well, you get the idea), and there's no difference between bitcoins and other currencies regarding this aspect of money creation.

Trading cards derive their value from the "want-to-have-this-special-card"-factor.
For bitcoins, this is not true. It might be true for colored coins in the future, though.
It does not matter which bitcoin I send you, you'll be happy as long as it's part of the Bitcoin network.
In other words, a single bitcoin does not have a definite value that sets it apart from other bitcoins.
That makes bitcoins interchangeable and a perfect medium of exchange, because they have practically no other use or purpose whatsoever, whereas trading cards might be used as a currency (in fact, on school playgrounds, they sometimes are), but generally are not.

You probably are aware of the common definitions of currency and money, but just for reference:

I might add that one would have to make a little distinction here:
I try to use the word "Bitcoin" (capital B) when I refer to the Bitcoin system in its entirety, meaning the Satoshi whitepaper, the blockchain, the network and the miners, altogether building a payment system,
"bitcoin" (lowercase b) to describe the "currency", and
"bitcoins" to describe units of said currency.
(I'm not always very consequential about my usage, though)
("bit coins" being what my spell checker makes out of them )

No Bitcoin created indeed.  And if you aren't paid back, you don't get interest or principle.  This is how money is supposed to work, but with fiat we have centralized lending so we can socialize losses while fighting to maintain privatization of profits.