Topic: Why Bitcoin Is Not Gold - page 3. (Read 5212 times)
Have you seen this? http://mndrix.blogspot.com/2011/11/bitcoin-gold-of-future.html
Excellent post. Though I wouldn't say bitcoin is incompatible with fractional reserve banking. I would instead say that people will view a bitcoin deposit more as a debt obligation rather than as a perfect substitute for actual bitcoins. For that reason, we may never see fractional reserve banking applied to bitcoin in any kind of broad sense (people might instead hold some of their savings in shares of a loan business).
The reason people like gold and liken it to Bitcoin is that there is only so much gold. People can't make more of it. They can mine more of it, but all of the easily mined gold has been mined already. The supply limits itself as time goes on. I think that's why people say Bitcoin is similar. However, I enjoyed your description of the differences in the technical transactions.
Have you ever wondered why gold have been and ceased to be money so many times in history? Many talk about returning to gold, but if gold was that much better than fiat money, then why has fiat money recurrently replaced it? The supporters of Bitcoin would say centralization is to blame, since it allows the manipulation of the monetary system in favor of the wealthy. However, since most gold monetary systems were also centralized, how could centralization explain fiat monetary systems, especially debt-based ones? Clearly, centralization is not enough to explain our current monetary system.
Here I will present an alternative explanation that, despite recognizing the role of centralization, does not rely on it as a primary source of understanding.
Let us begin with money itself.
If a commodity has the same value of whatever has the same price, then these two values are neither of those objects for being the same, just like two numbers three are the same. And because this value common to both commodities is neither of them, it cannot have any of their utilities or material qualities, which derive from their material beings: their common value is the social abstraction of their utilities or material qualities for the sake of their common monetary value. This is money itself: an actual equivalent of all possible equivalents.
But commodity money--like gold--is also a merchandise, with its own economic value. This is clearly seen just by choosing another commodity to represent money, making money as concrete as gold, with all its utilities or material qualities.
Therefore, money has two dimensions: an abstract one, which is money itself, and a concrete one, which is its representation.
A representation can itself be represented: we already have replaced gold by many representations of it, like paper notes. However, most of these representations have one thing in common: just like gold, they make no inherent distinction between money itself and its representation--hence the following problem.
Lately, monetary representations have become ever cheaper to produce. Our last such representation is the cheapest so far: magnetic records readable by computers. Yet still, any confusion between money itself and its representation requires its value--the actual equivalence to all possible equivalents--to be the same as that of its representation, then decreasing with it. So preserving that value--hence money--requires delaying its most valuable representation, while keeping it also present as debt.
This is the origin of debt money: the confusion between money itself and its representation, which continuously depreciates money, forcing its original (more valuable) representation into the future as debt.
And here is the originality of Bitcoin: it is a form of money that, for the first time in history, inherently distinguishes between money itself (a private key) and its representation (the corresponding public key), eliminating the root of debt money.
Which is also why Bitcoin is incompatible with fractional reserve banking: in order to loan a fraction of any deposit, banks must confuse the identity of deposit money with its different representations in different bank accounts. This is what money creation in a debt monetary system actually means: cloning money identity by mistaking its different representations for it.
So, despite inspired by gold, Bitcoin is a fundamental departure from it: this cryptocurrency not only restores a valuable representation of money, but further enforces a permanent distinction between that representation and money itself--which neither gold nor bank accounts can do.
Here I will present an alternative explanation that, despite recognizing the role of centralization, does not rely on it as a primary source of understanding.
Let us begin with money itself.
If a commodity has the same value of whatever has the same price, then these two values are neither of those objects for being the same, just like two numbers three are the same. And because this value common to both commodities is neither of them, it cannot have any of their utilities or material qualities, which derive from their material beings: their common value is the social abstraction of their utilities or material qualities for the sake of their common monetary value. This is money itself: an actual equivalent of all possible equivalents.
But commodity money--like gold--is also a merchandise, with its own economic value. This is clearly seen just by choosing another commodity to represent money, making money as concrete as gold, with all its utilities or material qualities.
Therefore, money has two dimensions: an abstract one, which is money itself, and a concrete one, which is its representation.
A representation can itself be represented: we already have replaced gold by many representations of it, like paper notes. However, most of these representations have one thing in common: just like gold, they make no inherent distinction between money itself and its representation--hence the following problem.
Lately, monetary representations have become ever cheaper to produce. Our last such representation is the cheapest so far: magnetic records readable by computers. Yet still, any confusion between money itself and its representation requires its value--the actual equivalence to all possible equivalents--to be the same as that of its representation, then decreasing with it. So preserving that value--hence money--requires delaying its most valuable representation, while keeping it also present as debt.
This is the origin of debt money: the confusion between money itself and its representation, which continuously depreciates money, forcing its original (more valuable) representation into the future as debt.
And here is the originality of Bitcoin: it is a form of money that, for the first time in history, inherently distinguishes between money itself (a private key) and its representation (the corresponding public key), eliminating the root of debt money.
Which is also why Bitcoin is incompatible with fractional reserve banking: in order to loan a fraction of any deposit, banks must confuse the identity of deposit money with its different representations in different bank accounts. This is what money creation in a debt monetary system actually means: cloning money identity by mistaking its different representations for it.
So, despite inspired by gold, Bitcoin is a fundamental departure from it: this cryptocurrency not only restores a valuable representation of money, but further enforces a permanent distinction between that representation and money itself--which neither gold nor bank accounts can do.
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