If bitcoin has no value, and it is pure product of imagination, you should be able to change it at your will ... BUT as far as I know you cant change the hash, blockchain, the encryptions and on and on
So ...
Topic: Why Bitcoin cant be Money. (Read 3734 times)
1) Properties/ Requirements of Money
Money: intrinsic value (aka utility of the commodity), divisible, fungible, scarce.
Money: intrinsic value (aka utility of the commodity), divisible, fungible, scarce.
Stopped here. Money doesn't have to have any intrinsic value.
5 euros have no value if not the value that derives from its ability to purchase things. The same ability that also bitcoin has.
Best regards,
ilpirata79
If my guess is wrong, then why you kept silence all that time and all of a sudden came back arguing with and trolling everybody around here with that nonsense? Have you been walked out on or just fired?
No. I have recently but some thought into what bitcoin is and if I want to buy it. I shared my conclusions with this board. Apparently having anything but a bullish opinion on bitcoin is trolling. So be it.
You seem to have completely ignored my recent note (in another thread you created in this forum) that even if bitcoin didn't have value at all as you say, but nevertheless actually helped you earn some dollars through speculation (by "dumping it on the next guy"), would you consider it as having been useful to you?
Starting to see the value?
No. Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. you should tell this to that guy who bought a sport car in the lamborghini dealership last week
porc got stuck in the longs with gold and silver. And now he tries to persuade people from using bitcoins because they would attract dollars that otherwise might have flown into precious metals. So don't take his bursts of anger too serious..
If I would be convinced of the idea behind bitcoin, I would have transferred some of my wealth to it. The fact is, that I am not convinced. Now you can pretend like, the only reason I am not convinced, is because I am angry. Quite the opposite. I looked at it totally unemotionally with the question if I need to buy some, if it is a viable alternative. My conclusion is just different from yours. I dont feel threatend if you dont like my silver.
If my guess is wrong, then why you kept silence all that time and all of a sudden came back arguing with and trolling everybody around here with that nonsense? Have you been walked out on or just fired?
No. I have recently but some thought into what bitcoin is and if I want to buy it. I shared my conclusions with this board. Apparently having anything but a bullish opinion on bitcoin is trolling. So be it.
it's a very nice post and obviously a lot of thought went into it, but the bottom line is, bitcoin is money. People will call it money and use it as such, best thing to do is accept it.
Starting to see the value?
No. Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. you should tell this to that guy who bought a sport car in the lamborghini dealership last week
porc got stuck in the longs with gold and silver. And now he tries to persuade people from using bitcoins because they would attract dollars that otherwise might have flown into precious metals. So don't take his bursts of anger too serious..
If I would be convinced of the idea behind bitcoin, I would have transferred some of my wealth to it. The fact is, that I am not convinced. Now you can pretend like, the only reason I am not convinced, is because I am angry. Quite the opposite. I looked at it totally unemotionally with the question if I need to buy some, if it is a viable alternative. My conclusion is just different from yours. I dont feel threatend if you dont like my silver.
If my guess is wrong, then why you kept silence all that time and all of a sudden came back arguing with and trolling everybody around here with that nonsense? Have you been walked out on or just fired?
Starting to see the value?
No. Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. you should tell this to that guy who bought a sport car in the lamborghini dealership last week
porc got stuck in the longs with gold and silver. And now he tries to persuade people from using bitcoins because they would attract dollars that otherwise might have flown into precious metals. So don't take his bursts of anger too serious..
If I would be convinced of the idea behind bitcoin, I would have transferred some of my wealth to it. The fact is, that I am not convinced. Now you can pretend like, the only reason I am not convinced, is because I am angry. Quite the opposite. I looked at it totally unemotionally with the question if I need to buy some, if it is a viable alternative (after all I want to store my wealth in great assets, if bitcoin would fit I would have bought it.) My conclusion is just different from yours. I dont feel threatend if you dont like my silver.
Starting to see the value?
No. Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. you should tell this to that guy who bought a sport car in the lamborghini dealership last week
porc got stuck in the longs with gold and silver. And now he tries to persuade people from using bitcoins because they would attract dollars that otherwise might have flown into precious metals. So don't take his bursts of anger too serious...
Starting to see the value?
No. Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy.
you should tell this to that guy who bought a sport car in the lamborghini dealership last week
Starting to see the value?
No. Even if you transfer nothing from peer to peer, anonymously (not possible with bitcoin), at a (low) cost and instantly, its still nothing. I cant do ANYTHING with Bitcoin except dumping it on the next guy. Again, I can only refer to the post above yours: Money has intrinsic value, its essential for its functions.
However I do find it interesting, that you you try SO HARD rationalizing the fact that you are transferring NOTHING. You yourself know deep down, that accepting NOTHING for SOMETHING is unacceptable and that NOTHING cant be money. I dont want to repeat myself so I will refer to the post above yours I made.
Why is Bitcoin valuable?
This is perhaps the most important topic to address, as nothing else matters if Bitcoin has no value. What makes Bitcoin worth anything? Isn't it just "fake"? Isn't it just a made-up pretend virtual currency? Many say, "I can't hold it, I can't see it, and thus it's artificial and not worth my time." Let's challenge this understandable initial reaction. Let's demonstrate why Bitcoin is valuable, and very much worth one's time.
Financial privacy has long been symbolized by the notorious "Swiss bank account." Yet, anyone with a Swiss bank account has to trust that bank, and as we've seen in the last couple years, "bank privacy" even in Switzerland is a myth - banks there have been bending over for the US government and divulging customer information. So imagine having a private, numbered Swiss bank account, but without having to bother with the Swiss bank itself. That is Bitcoin. Instead of placing your trust in a regulated bank governed by fallible humans, Bitcoin enables you to place your trust in an unregulated cryptographic environment governed by infallible mathematics. 2+2 will always equal 4, no matter how many guns the government points at the equation.
Bitcoin is thus the only currency and money system in the world which has no counter-party risk to hold and to transfer. This is absolutely revolutionary and you should read the preceding sentence again. Gold advocates will point out that physical gold bullion has no counter-party risk, but that is only true for storage in your own home. Store it in a vault or bank and you have counter-party risk. And sending gold? You have to trust all sorts of people if you wish to transfer your gold somewhere else or spend it across distance.
Bitcoin means complete ownership of money both in storage and transfer. Nobody can prevent you from having it. Nobody can prevent you from spending it. Even if one's home is broken into, or even if the government issues a "confiscation order" (as they did with gold in 1933), one's Bitcoins are perfectly safe. Try fleeing a country with $1,000,000 in bullion without the government knowing about it. Easier said than done. With Bitcoin, it's almost easier done than said - you could put $1,000,000 of Bitcoin on a USB drive, or even write the private key on a piece of paper, or just email the wallet file to yourself to be retrieved outside the country.
Starting to see the value? Never in the history of the world has an individual had this ability. It is unprecedented.
No really, WHY is Bitcoin valuable???
At this point, skeptics should say, "okay fine, you can store and spend Bitcoins without interference, but what gives them initial value? Why do they have a price?" It's a very good question, and even expert economists have struggled with the answer.
But really, the answer is simple. Bitcoins have value because A) they are useful and B) they are scarce. Combine those two attributes in any asset and you will discover it has a price. The moment the first Bitcoin was traded to someone in exchange for something else, an exchange rate (market price) was established. Subsequent exchangers agreed or disagreed with that rate, and made further trades accordingly. Bitcoin thus spontaneously developed a price, as do all things in an open market if they are sufficiently useful and sufficiently scarce.
Let's look at value a little further, because it's a contentious issue with Bitcoin. There are many (including Paul Krugman) who believe Bitcoin isn't worth anything and is no more than a speculative bubble fad.
I wouldn't expect Krugman to "get it," but wiser/real economists need only observe metals to start understanding why Bitcoins have value. After all, any strong advocate of gold or silver as money should hopefully understand why these metals should be money. The answer is that these metals tend to be chosen in an open marketplace as money, because their specific properties make them useful as a means of exchange. It is the properties of gold and silver—unique to these metals—which make them excellent money. They are scarce, fungible, uniform, transportable, have a high value-to-weight ratio, are easily identifiable, are highly durable, and their supplies are relatively steady and predictable. Contrast other goods like chickens, or seashells, or sand, and you discover that none of them are as good on the above attributes as precious metals. Chickens can't well be cut in half or recombined, seashells are not uniform, and sand is too plentiful to be used as money. Why not other metals... why don't we use iron as money? It's not scarce enough - you'd need carts of it at the store to go shopping.
As any Austrian economist can tell you, money is merely that commodity in an open market which best satisfies the properties necessary for useful exchange. Gold and silver take the cake every time a violent government doesn't get in the way... or at least, this is true historically. But, this doesn't mean that gold and silver are "perfect, infallible money." Indeed, there are practical problems. One can't easily divide and combine silver coins to make change. One can't easily send large values of gold across distance without hiring security and waiting for transport. One must pay storage fees, or risk theft at home. And, while difficult, it is possible to make fake gold and silver ingots and pass them off in trade as real.
So then it follows that if gold and silver are not perfect money (though admittedly the best we've had), perhaps mankind could discover or invent something that was even better. This is the Bitcoin experiment - the question of whether Bitcoin, with its specific attributes, is an even better form of money than what the marketplace currently enjoys (or in the case of state fiat, is forced to use). If the Austrians are right, and a marketplace tends to chose the medium of exchange which best works as money, and Bitcoin's specific attributes make it excellent money, then perhaps the marketplace will, over time, increasingly use it for such.
The answer so far, is yes. Bitcoin is finding more and more niches for early adoption, which further supports its market price, providing confidence to holders that it will retain value, and this further lends Bitcoin to be used for still more purposes. It's an organic and messy process, full of trial and error, potholes, brilliant innovations and terrible failures. But that's what an open marketplace is, no? Every day a more resilient economy is being built, and not at the point of a gun, but voluntarily - not by decree of Bernanke, but by spontaneous, self-interested private order.
Many have made the argument that "nothing backs Bitcoin." And this is true. Bitcoin cannot be redeemed for any fixed value, nor is it tied to any existing currency or commodity. But, neither is gold. Gold is not backed by anything - it is valuable because it's useful and scarce. Cars are not backed by anything, they are merely useful as cars and thus have value. Food is not backed, nor are computers. All these goods have value in proportion to their usefulness and scarcity, and one merely needs to see the usefulness of Bitcoin to understand why, without backing from any government nor corporation, without being tied to any fiat currency or existing commodity, it commands a price on the market and rightly so.
http://evoorhees.blogspot.com/2012/04/bitcoin-libertarian-introduction.html
This is perhaps the most important topic to address, as nothing else matters if Bitcoin has no value. What makes Bitcoin worth anything? Isn't it just "fake"? Isn't it just a made-up pretend virtual currency? Many say, "I can't hold it, I can't see it, and thus it's artificial and not worth my time." Let's challenge this understandable initial reaction. Let's demonstrate why Bitcoin is valuable, and very much worth one's time.
Financial privacy has long been symbolized by the notorious "Swiss bank account." Yet, anyone with a Swiss bank account has to trust that bank, and as we've seen in the last couple years, "bank privacy" even in Switzerland is a myth - banks there have been bending over for the US government and divulging customer information. So imagine having a private, numbered Swiss bank account, but without having to bother with the Swiss bank itself. That is Bitcoin. Instead of placing your trust in a regulated bank governed by fallible humans, Bitcoin enables you to place your trust in an unregulated cryptographic environment governed by infallible mathematics. 2+2 will always equal 4, no matter how many guns the government points at the equation.
Bitcoin is thus the only currency and money system in the world which has no counter-party risk to hold and to transfer. This is absolutely revolutionary and you should read the preceding sentence again. Gold advocates will point out that physical gold bullion has no counter-party risk, but that is only true for storage in your own home. Store it in a vault or bank and you have counter-party risk. And sending gold? You have to trust all sorts of people if you wish to transfer your gold somewhere else or spend it across distance.
Bitcoin means complete ownership of money both in storage and transfer. Nobody can prevent you from having it. Nobody can prevent you from spending it. Even if one's home is broken into, or even if the government issues a "confiscation order" (as they did with gold in 1933), one's Bitcoins are perfectly safe. Try fleeing a country with $1,000,000 in bullion without the government knowing about it. Easier said than done. With Bitcoin, it's almost easier done than said - you could put $1,000,000 of Bitcoin on a USB drive, or even write the private key on a piece of paper, or just email the wallet file to yourself to be retrieved outside the country.
Starting to see the value? Never in the history of the world has an individual had this ability. It is unprecedented.
No really, WHY is Bitcoin valuable???
At this point, skeptics should say, "okay fine, you can store and spend Bitcoins without interference, but what gives them initial value? Why do they have a price?" It's a very good question, and even expert economists have struggled with the answer.
But really, the answer is simple. Bitcoins have value because A) they are useful and B) they are scarce. Combine those two attributes in any asset and you will discover it has a price. The moment the first Bitcoin was traded to someone in exchange for something else, an exchange rate (market price) was established. Subsequent exchangers agreed or disagreed with that rate, and made further trades accordingly. Bitcoin thus spontaneously developed a price, as do all things in an open market if they are sufficiently useful and sufficiently scarce.
Let's look at value a little further, because it's a contentious issue with Bitcoin. There are many (including Paul Krugman) who believe Bitcoin isn't worth anything and is no more than a speculative bubble fad.
I wouldn't expect Krugman to "get it," but wiser/real economists need only observe metals to start understanding why Bitcoins have value. After all, any strong advocate of gold or silver as money should hopefully understand why these metals should be money. The answer is that these metals tend to be chosen in an open marketplace as money, because their specific properties make them useful as a means of exchange. It is the properties of gold and silver—unique to these metals—which make them excellent money. They are scarce, fungible, uniform, transportable, have a high value-to-weight ratio, are easily identifiable, are highly durable, and their supplies are relatively steady and predictable. Contrast other goods like chickens, or seashells, or sand, and you discover that none of them are as good on the above attributes as precious metals. Chickens can't well be cut in half or recombined, seashells are not uniform, and sand is too plentiful to be used as money. Why not other metals... why don't we use iron as money? It's not scarce enough - you'd need carts of it at the store to go shopping.
As any Austrian economist can tell you, money is merely that commodity in an open market which best satisfies the properties necessary for useful exchange. Gold and silver take the cake every time a violent government doesn't get in the way... or at least, this is true historically. But, this doesn't mean that gold and silver are "perfect, infallible money." Indeed, there are practical problems. One can't easily divide and combine silver coins to make change. One can't easily send large values of gold across distance without hiring security and waiting for transport. One must pay storage fees, or risk theft at home. And, while difficult, it is possible to make fake gold and silver ingots and pass them off in trade as real.
So then it follows that if gold and silver are not perfect money (though admittedly the best we've had), perhaps mankind could discover or invent something that was even better. This is the Bitcoin experiment - the question of whether Bitcoin, with its specific attributes, is an even better form of money than what the marketplace currently enjoys (or in the case of state fiat, is forced to use). If the Austrians are right, and a marketplace tends to chose the medium of exchange which best works as money, and Bitcoin's specific attributes make it excellent money, then perhaps the marketplace will, over time, increasingly use it for such.
The answer so far, is yes. Bitcoin is finding more and more niches for early adoption, which further supports its market price, providing confidence to holders that it will retain value, and this further lends Bitcoin to be used for still more purposes. It's an organic and messy process, full of trial and error, potholes, brilliant innovations and terrible failures. But that's what an open marketplace is, no? Every day a more resilient economy is being built, and not at the point of a gun, but voluntarily - not by decree of Bernanke, but by spontaneous, self-interested private order.
Many have made the argument that "nothing backs Bitcoin." And this is true. Bitcoin cannot be redeemed for any fixed value, nor is it tied to any existing currency or commodity. But, neither is gold. Gold is not backed by anything - it is valuable because it's useful and scarce. Cars are not backed by anything, they are merely useful as cars and thus have value. Food is not backed, nor are computers. All these goods have value in proportion to their usefulness and scarcity, and one merely needs to see the usefulness of Bitcoin to understand why, without backing from any government nor corporation, without being tied to any fiat currency or existing commodity, it commands a price on the market and rightly so.
http://evoorhees.blogspot.com/2012/04/bitcoin-libertarian-introduction.html
A shorter explanation, for anybody still having difficulties understanding my position. (argument between me and bitcoiner).
As I said, as I understand it, the regression theorem requires any potential thing to have value to people outside of being money for it to become valued as money in the future. This would be a great argument, pre-bitcoin adoption, as to why bitcoin would never grow to function as money. Now that bitcoin exists and has grown to be used as money at least in some limited capacity, we have some empirical evidence that contradicts the deductions made by Mises to create this theorem.
So let's step back the discussion and hear anything you have that explains why money must have be valued for traits outside of being money to have value as money. The best I've heard you come up with so far is that you trust the longevity of physical traits more than you do virtual ones, but that sounds like more your problem than a problem with bitcoin itself. Others with your line of thinking have and will likely continue to slow Bitcoin's rate of adoption and growth (by not adopting it due this dogmatic belief), but I don't see it invalidating all the value placed on it by others.
It appears to come down to you feeling more comfortable with a money that possesses a long-standing physical trait that is valued that you believe should give your money a psuedo floor price in case of speculative value collapse. You are free to value an oz of Gold that has a fraction of it's price very unlikely to go away due to a "utility" value trait more than an amount of bitcoin with equal exchange price, but that doesn't mean they are fundamentally different actors as money to those that use them.
Isn't the assertion that, bitcoin has no value because money must have value outside of being money to have value and bitcoin doesn't have value outside of being money, circular reasoning?
No its not circular reasoning. Remember: Intrinsic value is one of the essential properties of money, that allows it to fulfill its functions. Without intrinsic value, gold could not fulfill its monetary role. You want to seperate golds intrinsic value from its monetary value, however that is impossible, as without intrinsic value gold has NO monetary value. The reason you insist on seperating these two aspects of gold, is because you want to believe that bitcoin can function as money despite its lack of intrinsic value.
Now lets look at the functions of money, in order to appreciate, why it HAS to have intrinsic value.
1) Store of value.
To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved.
Now what would happen, if in future nobody would accept my gold as payment for goods and services. Well, I could make jewelry out of it and wear that jewelry or I could decorate my house with it.
What happens when nobody accepts my BTCs? Well, I could do ABSOLUTELY NOTHING with my BTCs in this case. So already we see, that bitcoin actually has enormous counterparty risk, as it is only worth what somebody is willing to pay for it. If nobody wants my BTCs I am left with ABSOLUTELY NOTHING (i.e. bitcoin).
Now obviously I want to have a high degree of certainty, that somebody will want to exchange my store of value with other valuable things, as otherwise I would have an excess of one resource, that I would be stuck with.
What is golds guarantee in this regard? Well, it says: I am beautiful, people have loved my look since dawn of man, and have thus always been willing to accept me as payment for other valuable goods and services. Thats REAL backing.
What is BTC guarantee in this regard? Well it says: I am worth nothing, but people have agreed to exchange me for something, because they want to save transaction costs, and because they like exchanging me peer to peer (no third party or bank). Now without reading futher how convincing does that sound to you (pretend like you have never heard of BTC, or that BTC has collapsed in price)? Lets continue: In future people might not accept nothing for something. In future they might switch to a different coin, that is technologically superior (thus my wealth is stored in myspace and suddenly facebook comes along). In future the transaction costs might explode due to prohibitive regulation, so that the artificial agreement to exchange something for nothing collapses. In future, maybe people will prefer real backing over backed by nothing, especially if real backing can be transferred electronically (digital gold). In future people might think that it was crazy to accept nothing as payment, just to safe on transaction costs. In future there might be reputable trustees, and people might regain trust with third parties. In future maybe people decide that instant payment is not that important to them, as money is fungible. In future people might realize that its bitcoin is not anonymous and that it is not internet or gold 2.0. Bitcoin might stay highly volatile as the believe in an artificial agreement (with huge counterpary risk) is extremly volatile.
Now from my perspective the situation is even worse: Right now people are ONLY accepting nothing for something, because they strongly believe that nothing will go up in price (after all it has been going up in price in the past, so it must be true for the future
). Eventually some early adopter will want to cash out, and if there is nobody there to take his position, the price will fall through the floor.
So I believe, that bitcoin because it has no intrinsic value, cant be relied upon as a store of value. It is entirely dependent on the counterparty honoring an pseudo agreement. So bitcoin actually has enormous counterparty risk. Gold is a great store of value, as people will always accept it because it is beautiful. It is burnt into our brain. It has no counterparty risk, because the counterparty cant help but love and accept it (like with food and water).
Thus intrinsic value is ESSENTIAL for one of moneys core functions: store of value. Money value cant be seperated from intrinsic value, as it is DEPENDENT on it.
2) Medium of exchange
Same arguments apply. Right now people exchange something for nothing, due to an artificial pseudo agreement (transaction costs, peer to peer if you ask bitcoiners). I believe its even worse: Right now people ONLY accept it because it is going up in price. As soon as it crashes, people will stop accepting it, as it is irrational to agree to exchange something of no utility for something of utility in order to save transaction costs.
Be safe and take care.
1) You already assume that the person holding something will accept nothing in return and thus say that nothing is something because it can be exchanged for something...
No I reject your premise that bitcoin is "nothing". The problem I have with your argument is that you begin it with the assumption that for money to be something (have "value") it must have useful, valued traits outside of being money. It's this assumption I'd like to debate, not all the conclusions you arrive at after that assumption is made.As I said, as I understand it, the regression theorem requires any potential thing to have value to people outside of being money for it to become valued as money in the future. This would be a great argument, pre-bitcoin adoption, as to why bitcoin would never grow to function as money. Now that bitcoin exists and has grown to be used as money at least in some limited capacity, we have some empirical evidence that contradicts the deductions made by Mises to create this theorem.
So let's step back the discussion and hear anything you have that explains why money must have be valued for traits outside of being money to have value as money. The best I've heard you come up with so far is that you trust the longevity of physical traits more than you do virtual ones, but that sounds like more your problem than a problem with bitcoin itself. Others with your line of thinking have and will likely continue to slow Bitcoin's rate of adoption and growth (by not adopting it due this dogmatic belief), but I don't see it invalidating all the value placed on it by others.
It appears to come down to you feeling more comfortable with a money that possesses a long-standing physical trait that is valued that you believe should give your money a psuedo floor price in case of speculative value collapse. You are free to value an oz of Gold that has a fraction of it's price very unlikely to go away due to a "utility" value trait more than an amount of bitcoin with equal exchange price, but that doesn't mean they are fundamentally different actors as money to those that use them.
Isn't the assertion that, bitcoin has no value because money must have value outside of being money to have value and bitcoin doesn't have value outside of being money, circular reasoning?
No its not circular reasoning. Remember: Intrinsic value is one of the essential properties of money, that allows it to fulfill its functions. Without intrinsic value, gold could not fulfill its monetary role. You want to seperate golds intrinsic value from its monetary value, however that is impossible, as without intrinsic value gold has NO monetary value. The reason you insist on seperating these two aspects of gold, is because you want to believe that bitcoin can function as money despite its lack of intrinsic value.
Now lets look at the functions of money, in order to appreciate, why it HAS to have intrinsic value.
1) Store of value.
To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved.
Now what would happen, if in future nobody would accept my gold as payment for goods and services. Well, I could make jewelry out of it and wear that jewelry or I could decorate my house with it.
What happens when nobody accepts my BTCs? Well, I could do ABSOLUTELY NOTHING with my BTCs in this case. So already we see, that bitcoin actually has enormous counterparty risk, as it is only worth what somebody is willing to pay for it. If nobody wants my BTCs I am left with ABSOLUTELY NOTHING (i.e. bitcoin).
Now obviously I want to have a high degree of certainty, that somebody will want to exchange my store of value with other valuable things, as otherwise I would have an excess of one resource, that I would be stuck with.
What is golds guarantee in this regard? Well, it says: I am beautiful, people have loved my look since dawn of man, and have thus always been willing to accept me as payment for other valuable goods and services. Thats REAL backing.
What is BTC guarantee in this regard? Well it says: I am worth nothing, but people have agreed to exchange me for something, because they want to save transaction costs, and because they like exchanging me peer to peer (no third party or bank). Now without reading futher how convincing does that sound to you (pretend like you have never heard of BTC, or that BTC has collapsed in price)? Lets continue: In future people might not accept nothing for something. In future they might switch to a different coin, that is technologically superior (thus my wealth is stored in myspace and suddenly facebook comes along). In future the transaction costs might explode due to prohibitive regulation, so that the artificial agreement to exchange something for nothing collapses. In future, maybe people will prefer real backing over backed by nothing, especially if real backing can be transferred electronically (digital gold). In future people might think that it was crazy to accept nothing as payment, just to safe on transaction costs. In future there might be reputable trustees, and people might regain trust with third parties. In future maybe people decide that instant payment is not that important to them, as money is fungible. In future people might realize that its bitcoin is not anonymous and that it is not internet or gold 2.0. Bitcoin might stay highly volatile as the believe in an artificial agreement (with huge counterpary risk) is extremly volatile.
Now from my perspective the situation is even worse: Right now people are ONLY accepting nothing for something, because they strongly believe that nothing will go up in price (after all it has been going up in price in the past, so it must be true for the future
). Eventually some early adopter will want to cash out, and if there is nobody there to take his position, the price will fall through the floor. So I believe, that bitcoin because it has no intrinsic value, cant be relied upon as a store of value. It is entirely dependent on the counterparty honoring an pseudo agreement. So bitcoin actually has enormous counterparty risk. Gold is a great store of value, as people will always accept it because it is beautiful. It is burnt into our brain. It has no counterparty risk, because the counterparty cant help but love and accept it (like with food and water).
Thus intrinsic value is ESSENTIAL for one of moneys core functions: store of value. Money value cant be seperated from intrinsic value, as it is DEPENDENT on it.
2) Medium of exchange
Same arguments apply. Right now people exchange something for nothing, due to an artificial pseudo agreement (transaction costs, peer to peer if you ask bitcoiners). I believe its even worse: Right now people ONLY accept it because it is going up in price. As soon as it crashes, people will stop accepting it, as it is irrational to agree to exchange something of no utility for something of utility in order to save transaction costs.
Be safe and take care.
porc you started a similar thread yesterday. you are a very tiresome troll. If you hate bitcoin then please go back to fiatland and live there. You are like someone going to a party, standing there and saying "this party is crap". GTFO
Hi porc,
let me switch to this thread since your ideas are much more clearly explained here.
Your arguments maybe valid (sorry I don't have time to argue the details), but that is with the premise that everybody sticks with your textbook requirements of money.
I guess the main difference between bitcoiners and you is that bitcoiners (including me) think that this definition of money is arbitrary, false or outdated.
I would replace "intrinsic value" by "intrinsic value or service". After all, a service also has utility.
I think money does not require any intrinsic value whatsoever.
In the case of USD, intrinsic value is replaced by at least two things: intrinsic service and government-enforced.
In the case of BTC, intrinsic value is replaced by at least two things: intrinsic service and network effect-backed.
The two main reasons why I advocate bitcoin is:
1. it has much more potential than fiat in terms of intrinsic service.
2. Of course both government and network effect can fail (completely or partially), but History shows that failure of a network effect is less probable than failure of a government.
When I say failure, that can be complete failure (100%) or partial failuree (1% inflation rate annually).
As for most of the people on this thread, stfu and gtfo are not very convincing arguments. And I don't think porc is a troll, since he is carefully reading our points and counter-arguing, albeit with some essential but debatable flaws.
let me switch to this thread since your ideas are much more clearly explained here.
Your arguments maybe valid (sorry I don't have time to argue the details), but that is with the premise that everybody sticks with your textbook requirements of money.
Quote
1) Properties/ Requirements of Money
Money: intrinsic value (aka utility of the commodity), divisible, fungible, scarce.
Money: intrinsic value (aka utility of the commodity), divisible, fungible, scarce.
I guess the main difference between bitcoiners and you is that bitcoiners (including me) think that this definition of money is arbitrary, false or outdated.
I would replace "intrinsic value" by "intrinsic value or service". After all, a service also has utility.
I think money does not require any intrinsic value whatsoever.
In the case of USD, intrinsic value is replaced by at least two things: intrinsic service and government-enforced.
In the case of BTC, intrinsic value is replaced by at least two things: intrinsic service and network effect-backed.
The two main reasons why I advocate bitcoin is:
1. it has much more potential than fiat in terms of intrinsic service.
2. Of course both government and network effect can fail (completely or partially), but History shows that failure of a network effect is less probable than failure of a government.
When I say failure, that can be complete failure (100%) or partial failuree (1% inflation rate annually).
As for most of the people on this thread, stfu and gtfo are not very convincing arguments. And I don't think porc is a troll, since he is carefully reading our points and counter-arguing, albeit with some essential but debatable flaws.
Utility Theory dose not demand that every individual experience the exact SAME utility from a commodity, not even over time. Again this is MARGINAL UTILITY THEORY. You people are revealing that you know absolutely NOTHING about the basics of utility theory when you make these posts.
Guys who oppose OP say right things about marginal utility which represents subjective value, though in layman's terms. Their naive understanding is correct nevertheless. If you want to discuss the theory of marginal utility in particular or subjective theory of value in general, you can do it with me...
Oh, wait... We already had a debate recently where you failed to show real understanding what these theories are about
MARGINAL UNITY THEORY it's 200 years old, learn some Econ 101 before you post such drivel.
We didn't go over "MARGINAL UNITY THEORY" in my classes. What is it an acronym for?
He talks about the theory of marginal utility, which is not a theory by itself strictly speaking. The notion of marginal utility is one of the cornerstones of the subjective theory of value, which was independently developed by an Austrian economist, Carl Menger (hence the Austrian school of economics), and other guys in the second half of the 19th century. Though the roots of this theory can be traced back to the Middle Ages...
porc, you spend an awful lot of time hanging around a bitcoin discussion forum when you've already admitted to having nothing good to say about bitcoin. How many more of these threads do you plan on making per day?
bankers who control the modern system cant get their heads around it
they wont be in control forever ,i watched a program on "financial experts"
talking about why bitcoin cant be money and none of them were able to understand it
maybe someone will post the link cause i forgot the name of it but there was a guy
who was trying to buy a coin but couldnt figure out how to do so and an older gentleman
in a bow tie and a suit from the 1960s and he was shaking his head saying no ,never ever
but the younger generation will embrace buying stuff with their android phones and transacting
for free and doing all the cool stuff thats just now becoming possible
BTC is new tech and the adoption curve will be slow ,teenagers have no problem undertanding it
because they grew up in the digital age as well as people in the 20,30s 40s etc
try explaining it to someone who is an old aged pensioner and its a differnt world ,they get lost at the mining stage
because anyone with a computer can create money ??
its funny to watch their disbelief because btc is such a revolutionary invention they simply cannt comprehend it
they wont be in control forever ,i watched a program on "financial experts"
talking about why bitcoin cant be money and none of them were able to understand it
maybe someone will post the link cause i forgot the name of it but there was a guy
who was trying to buy a coin but couldnt figure out how to do so and an older gentleman
in a bow tie and a suit from the 1960s and he was shaking his head saying no ,never ever
but the younger generation will embrace buying stuff with their android phones and transacting
for free and doing all the cool stuff thats just now becoming possible
BTC is new tech and the adoption curve will be slow ,teenagers have no problem undertanding it
because they grew up in the digital age as well as people in the 20,30s 40s etc
try explaining it to someone who is an old aged pensioner and its a differnt world ,they get lost at the mining stage
because anyone with a computer can create money ??
its funny to watch their disbelief because btc is such a revolutionary invention they simply cannt comprehend it
Beauty is entirely subjective. There is no way to agree on the beauty of something, and there is no way to agree on the value of that beauty. It cannot be used as a basis for intrinsic value.
Personally, I see no beauty in gold. It's just a rock. If the beauty of gold is the basis of its intrinsic value, then gold has no intrinsic value.
Personally, I see no beauty in gold. It's just a rock. If the beauty of gold is the basis of its intrinsic value, then gold has no intrinsic value.
Utility Theory dose not demand that every individual experience the exact SAME utility from a commodity, not even over time. Again this is MARGINAL UTILITY THEORY. You people are revealing that you know absolutely NOTHING about the basics of utility theory when you make these posts.
Guys talks about how intrinsic value is related directly to utility.
Does he realize how much utility water has over gold? If his ideas were true, a bottle of water should be worth $100m each because you need water to survive and provides you with such epic utility whereas diamonds aren't as useful utility-wise in comparison.
Does he realize how much utility water has over gold? If his ideas were true, a bottle of water should be worth $100m each because you need water to survive and provides you with such epic utility whereas diamonds aren't as useful utility-wise in comparison.
MARGINAL UNITY THEORY it's 200 years old, learn some Econ 101 before you post such drivel.
Okay, I changed my mind about him making intelligent argument.
Stop talking about intrinsic value. Bitcoin has value because people put money into it, and can get money out of it. That's it.
Gold (jewelry, beauty that not everybody can have, nowadays industry), silver (jewelry, beauty, industry)
Based on your arguments, do Gold/Silver coins only have value as money if I own a smelter in my backyard (to create jewelry) or if I have a computer parts factory which needs the metal? Would you agree these coins have value (according to your argument) because other people see them as having value (presumably those with a smelter / factory)?
If that stretch can be made, then it doesn't take long to see why bitcoins have value: trust.
With a tally stick, a bar of gold (tungstun?), a shell, a stone with a whole in it, the paper in my wallet, etc... the challenge is trust. How can I trust you gave me the real thing this community agrees upon as a store of value? What if you gave me a bogus tally stick (I'd have to check with the king)? What if you gave me a different (more common) shell which isn't used on this island as money at all? What if the government is debasing the paper you just gave me so hyperinflation is around the corner (with no option of recovery... see Argentina)?
Via cryptography and the ability to prove (via the Bitcoin network) ownership and authenticity, bitcoins solve the issue of trust. That, to me, is a really big deal. Not only an amazing and useful form of money, but a way to take control away from central banking controls and give it back to individuals.
If governments and financial institutions were trust worthy, the value of Bitcoin wouldn't be so obvious. As it is today, those paying attention understand how corrupt the current systems are.
Is Bitcoin the best there ever will be? Probably not, but I do think it's a huge step in the right direction.
I don't know why people are attacking the OP this has actually been one of the more fairly intelligent arguments against Bitcoin I've seen so I'll respond. People are right in saying that it has no intrinsic value, but to say that the code and programming itself doesn't have value is wrong because particularly in this day and age with surveillance 1) the ability to conduct business without being tracked is tremendously valuable which is why everybody had flooded into it whether they are willing to openly admit it or not. 2) Unlike Gold and Silver you can also transmit Bitcoins and conduct international trade at extremely low cost, you also have no restrictions on who you can trade with and that decision is entirely up to you.
I actually agree that the current Bitcoin paper price is a bubble but that's if you look at it only in terms of how much paper money you can exchange for it, the paper hyperinflation is the problem here so as far as I'm concerned I'm only going to start worrying until I can't buy Gold/Silver with Bitcoins anymore. What is also interesting to note is that the price of Bitcoins and Gold/Silver has remained relatively stable and steady when you compare it to the crazy volatility of paper money.
I actually agree that the current Bitcoin paper price is a bubble but that's if you look at it only in terms of how much paper money you can exchange for it, the paper hyperinflation is the problem here so as far as I'm concerned I'm only going to start worrying until I can't buy Gold/Silver with Bitcoins anymore. What is also interesting to note is that the price of Bitcoins and Gold/Silver has remained relatively stable and steady when you compare it to the crazy volatility of paper money.
1) Bitcoin is NOT anonymous.
2) Digital Gold reduces costs of transactions dramatically. Yes it will probably cost more, but would you rather pay a transaction cost and receive something that is not dependent on an artificial agreement or would you like to skimp on transaction costs and receive NOTHING!
I don't know why people are attacking the OP this has actually been one of the more fairly intelligent arguments against Bitcoin I've seen so I'll respond. People are right in saying that it has no intrinsic value, but to say that the code and programming itself doesn't have value is wrong because particularly in this day and age with surveillance the ability to conduct business without being tracked is tremendously valuable which is why everybody had flooded into it whether they are willing to openly admit it or not. Unlike Gold and Silver you can also transmit Bitcoins and conduct international trade at extremely low cost, you also have no restrictions on who you can trade with and that decision is entirely up to you.
I actually agree that the current Bitcoin paper price is a bubble but that's if you look at it only in terms of how much paper money you can exchange for it, the paper hyperinflation is the problem here so as far as I'm concerned I'm only going to start worrying until I can't buy Gold/Silver with Bitcoins anymore. What is also interesting to note is that the price of Bitcoins and Gold/Silver has remained relatively stable and steady when you compare it to the crazy volatility of paper money.
I actually agree that the current Bitcoin paper price is a bubble but that's if you look at it only in terms of how much paper money you can exchange for it, the paper hyperinflation is the problem here so as far as I'm concerned I'm only going to start worrying until I can't buy Gold/Silver with Bitcoins anymore. What is also interesting to note is that the price of Bitcoins and Gold/Silver has remained relatively stable and steady when you compare it to the crazy volatility of paper money.
Why feed the troll?
It's on Forbes and CNET, with major players indicating it has a use and may explode. The CEO of Paypal came out discussing it, indicates he owns it and envisions a seamless shopping experience where shoppers pay in the aisles without ever having to line up to check out. That's serious shit. The world is changing.
If this or that person doesn't see it, fine, a lot of people when looking at a cutting edge technology can't envision the possibilities and therefore reject it. Some go further and denigrate those that do.
I couldn't care less, nor am I going to waste the effort justifying or educating an individual who is simply trolling or has decided against it and is getting a tingle out of trying to prove how smart he is, while everyone else is just dumb. That kind of "I'm smart, you're dumb" talk is cheap everywhere from the Amazon jungle to the halls of Washington DC.
It's on Forbes and CNET, with major players indicating it has a use and may explode. The CEO of Paypal came out discussing it, indicates he owns it and envisions a seamless shopping experience where shoppers pay in the aisles without ever having to line up to check out. That's serious shit. The world is changing.
If this or that person doesn't see it, fine, a lot of people when looking at a cutting edge technology can't envision the possibilities and therefore reject it. Some go further and denigrate those that do.
I couldn't care less, nor am I going to waste the effort justifying or educating an individual who is simply trolling or has decided against it and is getting a tingle out of trying to prove how smart he is, while everyone else is just dumb. That kind of "I'm smart, you're dumb" talk is cheap everywhere from the Amazon jungle to the halls of Washington DC.
The Bitcoin and money, both are just "conventions". As it was also when the salt began to replace barter.
Keep money is expensive and uncertain.
Money loses value each day (inflation).
The transfer of money is very expensive (to maintain an inefficient financial system) and extremely slow
Despite that, people take the money, because it accepts this convention.
The Bitcoin is not money.
It's better than money.
Bitcoin is worth because people are beginning to accept this convention
Bitcoin is not a problem .... Bitcoin is the solution
Pd: the train left the station recently ... board the train
Keep money is expensive and uncertain.
Money loses value each day (inflation).
The transfer of money is very expensive (to maintain an inefficient financial system) and extremely slow
Despite that, people take the money, because it accepts this convention.
The Bitcoin is not money.
It's better than money.
Bitcoin is worth because people are beginning to accept this convention
Bitcoin is not a problem .... Bitcoin is the solution
Pd: the train left the station recently ... board the train
In how many threads do you want to unload this BS?
Now lets look at BTC. BTC REALLY is NOTHING. I cant do anything with it.
Of course YOU cannot, because you missed the train and because you don't have the brain to do anything with it. But WE can: store it, barter, transfer, donate, create, divide, lose it etc. etc.; zero problem for us.
Now lets look at BTC. BTC REALLY is NOTHING. I cant do anything with it.
Of course YOU cannot, because you missed the train and because you don't have the brain to do anything with it. But WE can: store it, barter, transfer, donate, create, divide, lose it etc. etc.; zero problem for us.
Why Bitcoin is not Money.
Yet.
end thread.
Yet.
end thread.
Indeed, if you don't own any why care..because I make money with "010101" and most fait money these days is als "010101" my debetcard and creditcard are also nothing more then plastic and moey is also notes and metal 
You admitted that you hold no bitcoin to start with, so .. why do you care ?
1) Properties/ Requirements of Money
Money: intrinsic value (aka utility of the commodity), divisible, fungible, scarce.
def. of intrinsic value/ utility: anything that has its OWN use. Examples: Water (Thirst), Food (Hunger), Gold (jewelry, beauty that not everybody can have, nowadays industry), silver (jewelry, beauty, industry), house (shelter). Utility is not Price (what I have to give up to get something; differs through time). Thus saying I can trade something for it, does not give it value on its OWN.
When I say something I mean an commodity that has utility. When I say nothing, I mean a thing that has no utility.
Gold: divisible, fungible, scarce, intrinsic value/utility (jewelry)
BTC: divsible, fungible, scarce, BUT NO INTRINSIC VALUE. I can do ABSOLUTELY NOTHING with bitcoin itself. I can only dump it on the next guy.
Gold satisfies all requirements of money. BTC does not.
2) Functions of money
Lets look at why money has to have the properties listed above.
Well money functions as a medium of exchange and store of value.
a) Store of value
Definition of store of value: To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved.
Now if something is not useful (has intrinsic value) today, why should this change and it be worth something in the future ? If you want to predict future value, pick something that humans are dependent on or have always wanted (food, gold, property). These same needs and perception of beauty (gold) will most likely continue, especially if they have been present since the dawn of man:
In future humans will want shelter on planet earth. You categorize this statement as a belief, because nobody can be 100% certain of future events. Even though you are correct; you are being pedantic here. The same holds true for gold: Humans since the dawn of man have liked the look of gold. Most humans find it beautiful.
Now lets look at BTC. BTC REALLY is NOTHING. I cant do anything with it. Now bitcoiners want me to belief that NOTHING WILL IN FUTURE ALWAYS be accepted FOR SOMETHING. Now this has NEVER happened before in HISTORY over any prolonged period of time. Thus it is highly unlikely that it will happen in future with BTC. The fact that NOTHING can be transferred and kept on your computer does not change this.
There are huge differences. Calling everything a belief without highlighting those differences is highly misleading (something bitcoiners love to do).
Also how do I know that in future not a new crypto currency will replace bitcoin. I cant! (In this case useless) Technology is not predictable. But the store of value aspect relies on its great predictability!
To summarize bitcoiners believe, that a thing of no value (BTC) can store value, because no value will be exchanged for value in the future. Its comical.
b) Medium of exchange
From the above it is clear that bitcoin cant function as a medium of exchange. The reason is that nobody wants to exchange SOMETHING FOR NOTHING.
If this is difficult to comprehend for you think about this: If I offered you "01010110" for your house would you take it? Of course not, as "01010110" has no value. Now if I said that "01010110" is scarce would you accept "01010110" as payment? No, who cares that it is scarce, deadly insects are scare, does not mean you accept them as payment, does it? Now if I told you I can transfer "01010110" cheaply? Who cares!
So effectively giving BTC is the same as giving nothing. If you give an object with utility you want to receive something that has utility.
Again due to not fulfilling all the requirements of money it cant take over the function of money.
Now you can hate me for this, but dont shoot the messenger.
3) Counter- "Arguments" advanced by bitcoiners:
a) "The value of BTC is that I can transfer it cheaply", it is backed by the network.
1) He agrees with me that BTC has no value for itself (like for example water that quenches thirst, food to feed my children). This statement is obviously true, as I cant do anything with BTC.
2) He says the network of miners gives BTC value (how? the bitcoins are not a claim on the mining equipment. I cant sell the mining equipment or take it in my possession. Again dollar bills once where a claim on gold that I could take in my possession).
3) He says "the networks value is derived from its ability to send value instantly and dirt cheap".
Now when he refers to "sending value" he is talking about BTCs. Because after all you are sending bitcoins. However as he has established in the first part of his first sentence "Bitcoin has no (intrinsic) value". So he is contradicting himself.
To summarize the information he gives us: 1 Bitcoin has no value (=nothing) and this absence of value can be sent at a cost.
Now how exactly is this convincing?
Incurring costs (energy which is something) to send nothing does not make nothing valuable. It is a waste of energy.
What does Bitcoin (the network) do?: It transfers nothing (BTC) at a cost.
Note: Bitcoin has not solved in its current form the transfer of value costs issue, as it is not transferring value but BTC.
b) No such thing as intrinsic value, its all belief.
Addressed already
c) The dollar is also worth nothing, so BTC can work as well.
Yes the dollar has almost no inherent/intrinsic value (you could wipe your ass with it, or burn it to create heat). The reason why I am able to exchange nothing (paper) for something (goods) is that the government forces upon us its acceptance with the use of guns.
It does so via legal tender laws and regulation as well as outright prohibition (Liberty Gold) of any alternatives.
Without government force we would not be exchanging nothing (paper) for something.
d) I can get lots of real stuff for one BTC so BTC must be worth something!
Yes for now it commands a high Price because its in a mania. You once could get lots of stuff for tulips as well and they actually had SOME utility (beauty).
Saying: I can get something for nothing and nothing is valuable because I can get something does not solve the issue. The elephant in the room that bitcoiners ignore is: why should I exchange something for nothing.
Bitcoiners confuse Price (what you have to pay) with value (what you get). They say: BTC has a price thus it must have value. Well Enron also once had a price. That does not mean Enron had value.
Again being able to dump nothing on the next person, does not make nothing valuable.
This is why I call bitcoin a pyramid.
d) Bitcoin protocol is beautiful
Well but not rare. Everybody can look at it at no cost. Also Bitcoin being beautiful does not give the transferred BTC value.
e) The jewelry value of gold is only a small part of its market price which also takes into account its use as money.
Again this argument is not valid, as it gold is only money because it has intrinsic value. Nobody would accept it if it had no inherent value. You can not SEPERATE golds intrinsic value from its use as money, as its only used as money BECAUSE of its intrinsic value.
f) Best counter argument I have heard up till now:
The technology behind cryptocurrencies and it's value as a financial tool to society [...]
1) That is that they facilitate direct asset transfers between peers *without the need for a counterparty*.
2) The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function.
For example, I cannot just "email" you electronically $1000. I need to go to a bank and ask them to do it. 3) Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has. It has no intrinsic value of its own - if it was just a number I typed into a spreadsheet it would have no market value.
Gold on the other hand, has a market value whether it's sitting in a bank vault or buried in a mountain. It does not require counterparty endorsment - only market endorsement because it is a non-counterfeitible generic form of money.
4) Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty. It therefore performs a monetary function - the same one that gold does - and that is why it has market value, the same as gold did. Porc's nonsense about shiny metals and attractiveness are not the reason Gold can function as a store of value. The reason for that is that is has the right properties that enable it to perform a certain required function in a non-barter economy.
1) "facilitate asset transfers between peers without the need of counterparty"
BTC is not an asset as it has no utility. That I can transfer it does not make it money. Because money has to actually be valuable itself, otherwise no value can change hands.
2) "The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function."
The function he described in 1) is not fulfilled by the Bitcoin network, eventhough it transfers and even between individuals without use of a bank (which is risky), BUT the network transfers NOTHING. And that is the problem. BTC has no intrinsic value. The networks transfer (BTC) is not useful as nobody will accept it.
He basically is saying that money is anything that is scarce and can be transferred. That is totally incorrect. Money commodities themselves need to have value.
Also to function as a store of value, it needs to be predictable. BTC has no value and nobody knows if litecoin might be used tomorrow and something else the next day. All of the wealth people stored in bitcoin (for example your dad who worked hard his entire life) would vanish, once a new coin comes along.
3) "Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has."
No the bank transferred dollars. They have no intrinsic value but I can exchange them for something because government forces the shop owner into accepting nothing (dollar).
Counterparty endorsement of the bank does not give dollars "value".
4) "Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty."
Yes we can exchange nothing directly with bitcoin I get it (no third party). But what we exchanged only has a price, because we agree to exchange nothing for something. However this agreement is artificial as NOBODY WANTS BITCOIN FOR ITSELF. GET IT IN YOUR HEAD. NOBODY WANTS A BITCOIN. THAT WE CAN TRANSFER NOTHINGS NOBODY WANTS between each other in a clever way does not CHANGE that fact.
And we HUMANS always WANTED GOLD FOR ITSELF. THIS IS THE GUARANTEE GOLD HAS: IT SAYS I WILL ALWAYS BE BEAUTIFUL AND PEOPLE WILL ALWAYS WANT ME.
BITCOIN HAS NO SUCH GUARANTEE. Get it in your head. BITCOIN ONLY HAS A PRICE BECAUSE WE AGREE THAT NOTHING IS SOMETHING. Without this agreement BTC is useless and thus the network is useless. Because the entire value of bitcoin is dependent on an artificial agreement (that nothing BTCBTCBTC is worth something) we cant compare it to gold, as our brains always loved gold for ITSELF. There is no artificial agreement with gold.
You totally failed to see the real ENDORSEMENT that stands behind gold: REALITY! Reality that humans like shinny things thus will give you something they value for shinny things. Thus gold can be used as a store of value and medium of exchange. NO HUMAN wants A BITCOIN BTCBTCBTCBTCBTCBTCBTC
Money: intrinsic value (aka utility of the commodity), divisible, fungible, scarce.
def. of intrinsic value/ utility: anything that has its OWN use. Examples: Water (Thirst), Food (Hunger), Gold (jewelry, beauty that not everybody can have, nowadays industry), silver (jewelry, beauty, industry), house (shelter). Utility is not Price (what I have to give up to get something; differs through time). Thus saying I can trade something for it, does not give it value on its OWN.
When I say something I mean an commodity that has utility. When I say nothing, I mean a thing that has no utility.
Gold: divisible, fungible, scarce, intrinsic value/utility (jewelry)
BTC: divsible, fungible, scarce, BUT NO INTRINSIC VALUE. I can do ABSOLUTELY NOTHING with bitcoin itself. I can only dump it on the next guy.
Gold satisfies all requirements of money. BTC does not.
2) Functions of money
Lets look at why money has to have the properties listed above.
Well money functions as a medium of exchange and store of value.
a) Store of value
Definition of store of value: To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved.
Now if something is not useful (has intrinsic value) today, why should this change and it be worth something in the future ? If you want to predict future value, pick something that humans are dependent on or have always wanted (food, gold, property). These same needs and perception of beauty (gold) will most likely continue, especially if they have been present since the dawn of man:
In future humans will want shelter on planet earth. You categorize this statement as a belief, because nobody can be 100% certain of future events. Even though you are correct; you are being pedantic here. The same holds true for gold: Humans since the dawn of man have liked the look of gold. Most humans find it beautiful.
Now lets look at BTC. BTC REALLY is NOTHING. I cant do anything with it. Now bitcoiners want me to belief that NOTHING WILL IN FUTURE ALWAYS be accepted FOR SOMETHING. Now this has NEVER happened before in HISTORY over any prolonged period of time. Thus it is highly unlikely that it will happen in future with BTC. The fact that NOTHING can be transferred and kept on your computer does not change this.
There are huge differences. Calling everything a belief without highlighting those differences is highly misleading (something bitcoiners love to do).
Also how do I know that in future not a new crypto currency will replace bitcoin. I cant! (In this case useless) Technology is not predictable. But the store of value aspect relies on its great predictability!
To summarize bitcoiners believe, that a thing of no value (BTC) can store value, because no value will be exchanged for value in the future. Its comical
. b) Medium of exchange
From the above it is clear that bitcoin cant function as a medium of exchange. The reason is that nobody wants to exchange SOMETHING FOR NOTHING.
If this is difficult to comprehend for you think about this: If I offered you "01010110" for your house would you take it? Of course not, as "01010110" has no value. Now if I said that "01010110" is scarce would you accept "01010110" as payment? No, who cares that it is scarce, deadly insects are scare, does not mean you accept them as payment, does it? Now if I told you I can transfer "01010110" cheaply? Who cares!
So effectively giving BTC is the same as giving nothing. If you give an object with utility you want to receive something that has utility.
Again due to not fulfilling all the requirements of money it cant take over the function of money.
Now you can hate me for this, but dont shoot the messenger.
3) Counter- "Arguments" advanced by bitcoiners:
a) "The value of BTC is that I can transfer it cheaply", it is backed by the network.
1) Bitcoin has no intrinsic value, 2) the network does. Thats what everyone is missing altogether and or misrepresenting.
3) The networks value is derived from it's ability to send value across political and geographic borders, nearly instantly and dirt cheap, with minimum effort. Additionaly it enables this without the risks commonly found in traditional financial instruments and value stores. Risks like hyper-inflation, manipulation, ceisure or other meddling by governments or institutions for whatever reason.
The ability to move value is enormously valuable.
3) The networks value is derived from it's ability to send value across political and geographic borders, nearly instantly and dirt cheap, with minimum effort. Additionaly it enables this without the risks commonly found in traditional financial instruments and value stores. Risks like hyper-inflation, manipulation, ceisure or other meddling by governments or institutions for whatever reason.
The ability to move value is enormously valuable.
1) He agrees with me that BTC has no value for itself (like for example water that quenches thirst, food to feed my children). This statement is obviously true, as I cant do anything with BTC.
2) He says the network of miners gives BTC value (how? the bitcoins are not a claim on the mining equipment. I cant sell the mining equipment or take it in my possession. Again dollar bills once where a claim on gold that I could take in my possession).
3) He says "the networks value is derived from its ability to send value instantly and dirt cheap".
Now when he refers to "sending value" he is talking about BTCs. Because after all you are sending bitcoins. However as he has established in the first part of his first sentence "Bitcoin has no (intrinsic) value". So he is contradicting himself.
To summarize the information he gives us: 1 Bitcoin has no value (=nothing) and this absence of value can be sent at a cost.
Now how exactly is this convincing?
Incurring costs (energy which is something) to send nothing does not make nothing valuable. It is a waste of energy.
What does Bitcoin (the network) do?: It transfers nothing (BTC) at a cost.
Note: Bitcoin has not solved in its current form the transfer of value costs issue, as it is not transferring value but BTC.
b) No such thing as intrinsic value, its all belief.
Addressed already
c) The dollar is also worth nothing, so BTC can work as well.
Yes the dollar has almost no inherent/intrinsic value (you could wipe your ass with it, or burn it to create heat). The reason why I am able to exchange nothing (paper) for something (goods) is that the government forces upon us its acceptance with the use of guns.
It does so via legal tender laws and regulation as well as outright prohibition (Liberty Gold) of any alternatives.
Without government force we would not be exchanging nothing (paper) for something.
d) I can get lots of real stuff for one BTC so BTC must be worth something!
Yes for now it commands a high Price because its in a mania. You once could get lots of stuff for tulips as well and they actually had SOME utility (beauty).
Saying: I can get something for nothing and nothing is valuable because I can get something does not solve the issue. The elephant in the room that bitcoiners ignore is: why should I exchange something for nothing.
Bitcoiners confuse Price (what you have to pay) with value (what you get). They say: BTC has a price thus it must have value. Well Enron also once had a price. That does not mean Enron had value.
Again being able to dump nothing on the next person, does not make nothing valuable.
This is why I call bitcoin a pyramid.
d) Bitcoin protocol is beautiful
Well but not rare. Everybody can look at it at no cost. Also Bitcoin being beautiful does not give the transferred BTC value.
e) The jewelry value of gold is only a small part of its market price which also takes into account its use as money.
Again this argument is not valid, as it gold is only money because it has intrinsic value. Nobody would accept it if it had no inherent value. You can not SEPERATE golds intrinsic value from its use as money, as its only used as money BECAUSE of its intrinsic value.
f) Best counter argument I have heard up till now:
The technology behind cryptocurrencies and it's value as a financial tool to society [...]
1) That is that they facilitate direct asset transfers between peers *without the need for a counterparty*.
2) The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function.
For example, I cannot just "email" you electronically $1000. I need to go to a bank and ask them to do it. 3) Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has. It has no intrinsic value of its own - if it was just a number I typed into a spreadsheet it would have no market value.
Gold on the other hand, has a market value whether it's sitting in a bank vault or buried in a mountain. It does not require counterparty endorsment - only market endorsement because it is a non-counterfeitible generic form of money.
4) Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty. It therefore performs a monetary function - the same one that gold does - and that is why it has market value, the same as gold did. Porc's nonsense about shiny metals and attractiveness are not the reason Gold can function as a store of value. The reason for that is that is has the right properties that enable it to perform a certain required function in a non-barter economy.
1) "facilitate asset transfers between peers without the need of counterparty"
BTC is not an asset as it has no utility. That I can transfer it does not make it money. Because money has to actually be valuable itself, otherwise no value can change hands.
2) "The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function."
The function he described in 1) is not fulfilled by the Bitcoin network, eventhough it transfers and even between individuals without use of a bank (which is risky), BUT the network transfers NOTHING. And that is the problem. BTC has no intrinsic value. The networks transfer (BTC) is not useful as nobody will accept it.
He basically is saying that money is anything that is scarce and can be transferred. That is totally incorrect. Money commodities themselves need to have value.
Also to function as a store of value, it needs to be predictable. BTC has no value and nobody knows if litecoin might be used tomorrow and something else the next day. All of the wealth people stored in bitcoin (for example your dad who worked hard his entire life) would vanish, once a new coin comes along.
3) "Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has."
No the bank transferred dollars. They have no intrinsic value but I can exchange them for something because government forces the shop owner into accepting nothing (dollar).
Counterparty endorsement of the bank does not give dollars "value".
4) "Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty."
Yes we can exchange nothing directly with bitcoin I get it (no third party). But what we exchanged only has a price, because we agree to exchange nothing for something. However this agreement is artificial as NOBODY WANTS BITCOIN FOR ITSELF. GET IT IN YOUR HEAD. NOBODY WANTS A BITCOIN. THAT WE CAN TRANSFER NOTHINGS NOBODY WANTS between each other in a clever way does not CHANGE that fact.
And we HUMANS always WANTED GOLD FOR ITSELF. THIS IS THE GUARANTEE GOLD HAS: IT SAYS I WILL ALWAYS BE BEAUTIFUL AND PEOPLE WILL ALWAYS WANT ME.
BITCOIN HAS NO SUCH GUARANTEE. Get it in your head. BITCOIN ONLY HAS A PRICE BECAUSE WE AGREE THAT NOTHING IS SOMETHING. Without this agreement BTC is useless and thus the network is useless. Because the entire value of bitcoin is dependent on an artificial agreement (that nothing BTCBTCBTC is worth something) we cant compare it to gold, as our brains always loved gold for ITSELF. There is no artificial agreement with gold.
You totally failed to see the real ENDORSEMENT that stands behind gold: REALITY! Reality that humans like shinny things thus will give you something they value for shinny things. Thus gold can be used as a store of value and medium of exchange. NO HUMAN wants A BITCOIN BTCBTCBTCBTCBTCBTCBTC
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