Bitcoin Forum

Hello everyone.

There is much discussion around the price of bitcoins. Some seem to believe it could fly to a million, while some believe its just a big speculation bubble ready to burst.

My personal theory is that cryptocurrency is not the bubble, but rather the needle that will burst the fiat money bubble. Trough history we have always had an easy way to attribute value to things without it. Those who believe that fiat money is the only true way often attribute their opinion to the fact that fiat money is substainsable because of its centralized nature and its history of being used as a represantation of value.

The fact that bitcoin was created in the aftermath of the 2008 financial crises clearly shows it's intent. I believe Satoshi saw how a centralized regulated market can't be substainable thanks to the egotistical and evil sides we humans all posses.

Decentralized currencies will IMO be the future. I can't peg bitcoin to a certain price it will reach in the future as i usually don't speculate that way, but rather i just develop a bias on a subject and try to indentify the crowds bias as this is what acctualy IS the trend.
The trend for decentralized currencies is bullish overall, with some currencies being more exciting then others. Invest in the cryptocurrency you believe in and do your homework, lets bring the fiat-money world down once and for all!!  8)

Please share your opinion on the subject, this is my first post and just wanted to share my thoughts, thank you =)

LazyTurtle

Right now it is (for the most part, at least)

Bitcoin and other cryptocurrencies fit well into the definition of a financial bubble. I could even claim that Bitcoin is a sort of tulipomania. Just like tulips, bitcoins are useful for some purpose, namely, for transferring value around the world while completely bypassing centralized (read controlled) entities like banks, but Bitcoin current price is by no means determined by this utility. Most of Bitcoin value today comes from sheer speculation. Whether Bitcoin bubble is going to pop eventually or its real use as a currency will finally match its use as a speculative vehicle is not clear as of yet

No one can predict what exactly will happen in the future. In the event of a nuclear war, they can turn off electricity and the Internet, no currency will have value.

Good answer, always fun to hear others opinion. =)
I agree with you, bitcoin does fit well in the definition of a bubble as it is completly speculative. But what about fiat money? We have seen again and again trough history how fiat money has just blew up in a bubble, happend with the german mark after world war 2 and then the zimbabwean dollar. Does this not show that fiat moneys value also comes trough speculation? the only diffrence being that it can much more easily be controlled, manipulated and abused to hurt individuals, while cryptocurrencies also are speculative in there value, it does have the security fiat-money does not against corruption and protecting the individual.

Perhaps you could call fiat and crypto money for bubbles, with the crypto having one extra layer of soap as it is decentralized.

You did change my opinion a bit tough, i do agree with you that cryptocurrency  is in a bubble, as you said the definition fits perfetcly, so thanks for contributting to my wisdom , i did write a bit blatantly that cryptos arent bubbles but that was a misrepresantion of my opinion haha, thanks:)

I believe the speculation that money needs a centralized controlling force IS part of the bubble and that is what is ready to burst, as peoples confidence in government is steadily declining(i believe).

That is so true, and thats why i own a safe at home stocked with gold, silver and canned food haha! ;) Diversify, never believe in just one thing as nobody can ever now :)

I think that no, the fiat money value doesn't come about via speculation

But I'm still curious how you can even imagine that. It is more or less clear how people speculate with bitcoins (basically, "buy low, sell high"). It is possible as long as Bitcoin price is rising, i.e. new users constantly bringing their hard-earned dollars, euro, or whatever to the market and buy bitcoins in the hope of selling them at a higher price. I suspect there cannot be bubbles of that kind with fiat currencies. The examples you give refer to severe currency devaluations. Obviously, the latter have nothing to do with speculative bubbles, though the end result is essentially the same (i.e. dramatic loss of value)

Just don't let anyone know. Study shows that most preppers wouldn't survive with all their stacked food and gadgets because in case of a collapse scenario they'd quickly get raided and robbed, maybe also killed in the process.
Bitcoin can be called a bubble, because its price will depend on acceptance. It's now worth more than it should be because people believe in it, but it all could change within weeks.

Diversity is needed, but as for me all of their savings to keep in the safe is also dangerous. It is necessary to lay out on different cells.

A bubble in economics is when the price of an asset differs dramatically from its intrinsic value.  In theory, Bitcoin's intrinsic value as a currency is defined by how much of its value is for people who are buying it and selling it in order to use it as a currency.  Bitcoin's price, in that sense, is in a giant bubble because most of its price is a speculative investment.

However, gold's price for example is also not currently defined by anything - it's just based on its use as an asset.  I could give someone a gold ingot in exchange for a resource, but it would be expensive to take it from one place to another, and the same applies to Bitcoin.  Gold's intrinsic value is also actually lower than its price, but that's because it is something that people would reasonably put money into to protect themselves from the risk of fiat currency.  This is what means that neither Bitcoin nor gold are in a bubble.

However, fiat currency is also not in a bubble for practical purposes because it's also the case that people might want to spend it but they also hold it, and wait for things to happen to it in the future, and sometimes trade it.  So basically, neither is necessarily in a bubble, and it's very difficult to tell if a large price rise is a bubble or just an increase in confidence.  The only case when any of these things could be in a bubble is when there's a very dramatic price rise with little reasonable explanation, such as Bitcoin at the end of 2013.

If you look globally, then any currency can be called a bubble. People just decided that these pieces of paper have value. And everyone agrees with this. This of course is meaningless when there is a war

That is a really interesting point of view I think, I have never thought about this that way, that actually bitcoin and other cryptocurrencies may become that "needle" that will pop-up the "fiat bubble".
It would mean that bitcoin will be used in the future as a main payment method, and also as a main currency. It may also happen to some altcoin, there is also a possibility in which the most known and trusted cryptocurrency will be some particular alt ( let's say, not yet designed ) that will cover behind some really powerful technology.

But I wouldn't even expect that to happen in 20 years, that is just too short period of time to see fiat money dissapearing, in favour of cryptocurrencies.

I don't quite see your point

You say that gold price is not defined by anything, but then is there anything which price is defined by something else? And with what the price of the latter is defined then? If we follow this logic, we should necessarily conclude that there cannot be bubbles at all. But in this case the whole notion becomes meaningless. If we, nevertheless, proceed from the fact that bubbles do really happen (since otherwise this notion wouldn't come about), we should define or find out a criterion which would allow us to tell between bubbles and non-bubbles

I think Bitcoin and fiat can exist together very well, there isn't necessity to kill fiat to rise Bitcoin. It's not good to have only one main currency on the world, that can feed evil forces which can control the currency, and this way, they will control the world. When we have many currencies being used by different people it's harder to be controlled by others.

Decentralization can lead us to centralization anyway... The most powerful man in the world is the one who conquered the centralization by the decentralized way.

Well you are assuming two things here and i will try to give you my opinion. Let me try and explain why i can imagine fiat money being a speculative bubble, english is second language so give me a break on the spelling. =)

Your first assumption that fiat money value is not a result of market speculation, could you elaborate what you believe are the true factors for a currencies value? You seem like you now your economics and i am always eager to hear everyone opinion.

My assumption here is that fiat-money with floating exchanges truly get their value determined from speculation. I aslo believe fixed exchanges have a element of speculation in them, as the government has to speculate to set a fixed value. This can be seen in the case with England 1967 when Harold Wilson devalued the pound. England basically speculated then that the devaluation was needed to stimulate the economy, but no substainsable evidence is to be found to show that the devaluation improved the growth. Acctually it was quite slow in the UK after the devaluation, witch was the opposite to what England was trying to do, thus we can see that even governments speculate the value when they set it, and can never truly know what effect it will have.

I recently read a report from Riksbanken (the central bank of sweden) in witch the report explored what truly drives the value of floating exchanges. They tried to explain the value as an effect of growth using diffrent stats (gdp,cpi etc...) but in all cases the random walk model prevailed (the market moves randomly).

They also explored the inflation theory, that inflation is what determines the value, but this also was hard to prove to be totaly excluded from speculation as inflation is a pretty abstract value. Sure CPI and diffrent stats can give us a general feeling of the inflation, but this still is speculative (IMO).

The report did not ofcourse try every possibility that could effect a currencies value, so ofcourse there could be unexplored topics that could explain what drives the price, but their conclusion was that when a currency get a floating exchange, big actors and small actors will speculate on the price. The price moves by liqidity in the market, witch comes from actors speculating in what they believe the currency is worth relative to another.

There is no physical relation that a healthy country automaticaly should have a currency that is worth more then a country that is unhealthy witch often is the standard explanation of why a country has a stronger currency. This according to basic economics should be determined by demand and supply, and when you have a centralized force governing the supply of money (by being able to print it), we as smaller actors really have to speculate as we can never know when our government might drastically increase supply (as Germany did) and dilute the value to the point that we are standing there with paper money that does not hold any real physical value then the one we attribute to it.

The german case was not a case of devaluation. Devaluation is when a country change their fixed exchange rate to another value then the current (like england 1967).

What Germany exeperienced is called hyperinflation, witch basically is when money supply increases extremly with no growth in the country to sustain or explain it. This IMO shows speculative elements in the fiat money value. As i said earlier, we constantly speculate on currencies value because we do not truly now what factors drive the exchange, and we can never know if the supply drastically increases, witch would render the money useless as it has no true physical use other then the value we give it.

Your second assumption is that the speculation in crypto currencies more or less only comes from buy low, sell high mentality while fiat money does not.

I dont really agree with that that is the only driving factor, but i understand your point. I think that you basically mean that fiat-currencies have something substanaible that aids traders to make speculative descisions on the value, while crypto currencies dont really have that and people are just buying and selling coins randomly because they think it will be worth more or less tomorow on the chart.

I personally know alot of people (including myself) who basically just keeps buying bitcoins at what ever price because we believe in the idea the our government cant control a economy fairly and intelligently, and see bitcoin as a hedge against the government. I started buying bitcoins in 2012 and i am just holding and holding and holding witch is quite common in the bitcoin community IMO (might be wrong here).

The daytrading speculative elements of buying low and selling high is extremly clear in stocks, currencies and commodities. Some of the biggest actors (hedge fund, banks) speculating in currencies use algo trading. A preprogrammed robot making descisions of a value according to mathematical points of interest, that IMO is extremly speculative and really has no ground to what the real value should be (this exists very much in currency hedge funds, atleast the once i have visited).
I assume you mention the "buy low, sell high" mentality because you believe it exists in crypto currencies but not fiat money, is just wanted to explain why i think this might be so.

I could only find the report from Riksbanken in Swedish, but i will try to find a translated version so i can share it with you if it would be of interest, quite exciting research report =)

LazyTurtle

I think you make a really good point here, and i totally agree. A coexistence is always best, it kinda refers back to the whole "diversify to minimize risk". The more diffrent factors, the less the impact if one goes corrupt. =)

I personally set the criterion for a bubble to assets who have a value without a tangible usage. For exemple, if you reset the whole world and put one man in a forest, he probaly wont start to seek out fiat money, but more probaly he would search for food, shelter etc...

Things that come in scarcity can be victims of over speculation, but not truly be bubbles IMO. As the nature of scarciscity attributes true value to assets as they one day will be used up.
Fiat money doesnt really have that scarcity, or that tangible need, it truly just is a speculative value for paper that can be exchanged for goods. IMO hyperinflation bascially is a fiat money bubble popping!

Gold have some diffrences and similarties with fiat money. It is a asset that dont really do anything but sit there and look pretty and get a attributed value (like fiat money). Sure it can be used for electronics but other more easily obtained minerals exist for those usages.

I would say price is defined by supply and demand, witch comes from scarcity. Without scarcity we have a neverending supply (more or less) as we do with fiat money.

Gold is scarce and therefore i would rather own that then paper money, but i would rather own a farm then gold haha =)

Yea thats true, gotta keep it to myself.=) I wouldnt call myself a prepper i actually try to have a positive outlook on the world but it just feels best having some food and such for emergencies, but theres food for like a month so not super serious about that, haha!

Yes cryptocurrency value at the moment really is speculative. What is your opinion on fiat money?  Do you believe it could exist in a bubble, or do you believe it can only be the victim of over speculation, and not a "true bubble"? I find discussing the diffrences between fiat and crypto really exciting and love to hear everybodys opinion.

Yes.  Stocks, investment trusts and pretty much everything else is based on the value of a company or something else which either has an idea or amount of business.  These things usually have intrinsic value from that idea or business, and if they didn't, the price would be in a bubble.

Stop using words that you think are clever in the wrong context.  You use "namely" in about 90% of your posts wrongly, I've seen you on all the sig spam threads.  Anyway, if you're talking about "anything which price is defined by something else" the answer is "anything with intrinsic value".

No, I'm saying that the reason Bitcoin isn't a bubble is because it can reasonably be considered an asset as well as a currency and that's part of its value.  The reason that it's an asset is because of scarcity - the same reason that gold has its value.

Glad you found it interesting =)

Yea the time until this would happend really is impossible to predict, but fiat wont exactly disappear any time soon. Perhaps we will see both fiat and crypto go hand in hand in the future, neither popping the other but working in symbios.

Or perhaps the fiat will merge with the crypto. Perhaps the future will give us BitDollars, BitEuros and BitSeks... The possibilities really are endless, thats why its one of the most fascinating topics to discuss in my opinion:)

This is exactly my point so i completly agree.=)
 Fiat money doesnt have a tangible value and a twisted supply/demand process. Cryptocurrencies might not have a tangible value, but atleast the supply/demand process is more stable as the supply is pre-set. This ofcourse has it's own challenges, but still is better then governments being able to offer neverending supply at will.

Sorry, I didn't read the rest of your post

And I hope that someone did that (instead of me) so your efforts haven't been spent in vain (though I may still read it later). Regarding this question, specifically, I already answered it before, and I think that the answer can be reduced to how value of a currency is determined as such. In fact, it is determined arbitrarily when the currency is first bootstrapped. To make it handy and usable, its basic units as well as the number of these units in total are chosen in such a way that the lowest possible denomination (say, halfpenny or cent) would be enough to buy an item which has the lowest possible value. A box of matches is often used as such an item. After bootstrapping the currency, the long term value of its unit (i.e. how much you can buy with, say, 1 dollar) basically depends on the relationship between total amount of that currency in circulation and the quantity of goods produced as well as the amount of services provided

I guess you should first consult the dictionary, but since you obviously won't, I will do that for  (https://www.collinsdictionary.com/dictionary/english/namely)you:


Now read my post(s) again where you think I used the word incorrectly and think again (better twice). Regarding "intrinsic value", there is no such, all value is subjective, and what is more important here, it is marginally subjective (if you understand what I refer to, of course). In any case, gold has more "right" to possess intrinsic value than anything "which either has an idea or amount of business" (though I don't really know what you actually meant by that). Further, there is no abstract scarcity either, scarcity is always related to a number of, say, holders of what you consider as scarce (or abundant). In other words, you can't say that the scarcity of Bitcoin is 21M coins and draw conclusions from that alone. You should always relate it to, for example, a number of people which hold all these bitcoins. Without specifying that, it is a meaningless concept as such

Well it's to bad you didn't read it you could have learned someting, it isnt that long :) like Germany and Zimbawe never had a devaluation, but hyperinflation, kind of important fact you got wrong and you can always learn something!

Could you please give me your sources that show that goods and money circulation have been the deciding factor for currency value? I have to say that i am almost daily discussing currency moves with banks and hedge funds, and i have never acctually talked to someone that believes these factors truly determine currency value in the practical world, perhaps it works in theory but i am speaking of what ACCTUALLY happends with the value, not what should happend.
I have tough read quite a few that prove them wrong, i would recommend Engels research work, ill return with the exact papers and provide you my sources that i base my opinion on, mostly swedish unfortuntly but for now i'll just show the english one's..:)

If currency value truly is free of speculative impact, this correlation you describe should be relatively easy to prove with a econometric model as goods, services and money supply are pretty easily followed(GDP etc). If this were the case, predicting the forex market would be quite easy.

I am always open to learning and can easily accept when i am wrong, but i need more proof then you just saying it like a fact and not a opinion as i have read very much on the disappoving of currency value being solely effected by goods, services and money supply.

I also recommend you read what i wrote earlier, no point discussing if you wont even read the discussion, and please dont forget to supply your sources, thanks m8! =)

My sources i recommend you check out. I have more i just plucked the most recent ones i read that speak against your theory of money supply, goods and services.

Jean-Philippe Cayen, Donald Coletti, René Lalonde, Philipp Maier What Drives Exchange Rates? New Evidence from a Panel of U.S. Dollar Bilateral Exchange Rates, June 9, 2009

Jeannine Bailliu,Michael R. King What Drives Movements in Exchange Rates?, 2005

David Hauner, Jaewoo Lee, and Hajime Takizawa, IMF Working Paper: In Which Exchange Rate Models Do Forecasters Trust?, 2011

Neroli Austin and Geordie Reid, RBNZ: NZSIM, A model of the New Zealand economyfor forecasting and policy analysis, 2017

I wouldn't say no currency would have value in this situation, but at one point their will be something that rises above all the be worth something, the gold companies will say its gold, silver companies will say its silver, and so on and so forth.

But yes, at some point all fiat-currencies are going to have to crash and we just have to wait for this to occur. I think that by the time this happens we're not going to even be able to use Bitcoin as we've entered a time where the internet and infrastructure has been destroyed (this is if fiat dies too)

Good point.

Such a situation would be extreme and call for extreme measures. Value probably in such a situation would return to the basics, food, shelter etc...

Exciting to see tough witch currency will hold the most value the longest, IMO fiat money is pretty weak in that regard if you compare to other resources that currently hold value the same way fiat does.

As I know it, currencies in these countries were deliberately devalued by excessive printing of money that led to hyperinflation. I'm not much interested in what happened in Zimbabwe (I mean specific details, but it looks like they had incompetent and corrupt government). Germany was obliged to pay out heavy reparations after it had lost in WWI, which it simply couldn't physically pay out (and which it didn't pay out in the end), so hyperinflation caused by massive devaluations of the German mark was an expected outcome. You may want to read The Economic Consequences of the Peace (1919) by John Keynes where Keynes predicts the economic chaos in Germany which was going to follow the Versailles peace treaty of 1919


Basically all monetary theories claim that

They agree in general that the increases in the quantity of money lead to higher prices. But you may look specifically into the quantity theory of money (so-called the Chicago school of economics also known as monetarism) which uses the Irving Fischer Model. Apart from that, it directly follows from the concept of money, i.e. the input of excessive amount of money into the system will cause the prices to rebalance at a new, higher level. Competing theories (e.g. monetarism vs keynesianism) differ in how the new money propagates through the economy and in what degree it affects the economic activity and unemployment (see the so-called "Treasury view" to get an idea)

No body know the future. But not so sure about bringing down over 2000 years old system. LOL. 2000 y/olds system  vs 9 y/olds system  :-\. Yes, the trend bullish for now, but in trading something fly too high will see below the bottom. Many theory prove this, Fibonacci, Ganns. Once this cryptocurrency reach it saturation stage, i can't image what will happen with all coins. Too expensive, in this realty world supply and demand most important thing for business. If no body can afford, then get ready to close your shop.

I think cryptocurrency good for short term investment 1-3 years. Please do some research before making any decision to invest your money.

Now that you mentioned about the 2008 crisis and the creation of bitcoin i have some questions for myself.
Is it really conincidence or Satoshi seems to make a use of that incident while everyone is defenseless and just thinking about their losses.
Perhaps, he used that opportunity to bring in bitcoin then suddenly the price went up. Isnt that a little fishy.

No one can accurately predict the existence of any currency, it all depends on the user. If people stop actively using some currency, then it will simply disappear. To disappear bitcoin enough to create a global war or create some kind of digital currency that will be much better than him.

Well 2000 years of existence yes, but fiat money certainly have had its crashes during this time, so to speak of this 2000 year old time as a stable period is wrong. I dont really have the time to go into details, but since the beginning fiat money have lost their value and failed again and again. Just because we continue to use a failing system it does not mean that it makes it a good system.

• The denarius, the roman currency, one of the earliest fiat money ever in usage basically lost all value.
• When china first adopted paper money in the 11th century, where the chinese government emitted so large quanties the value just went away.
• France adopted paper money, locking them to coins at the time. They emitted to much paper money that was not backed up by coins, and so the money went useless. They acctually did this more then one time, the second time the paper money was called assignats. The end effect was the same, inflation to high rendering the fiat money useless as it has no true substansiable backup.

So if cryptocurrencies would take over and render fiat money value useless, it would certainly not be the first time fiat money loses its value, but perhaps the one with the biggest impact. Ill advise you to do some research on the 2000 years of "working fiat money".

I dont really see time as a factor here to be honest. Who cares if one system is 2000 years old, and one is 9 years old? you want to use the one thats best for you not the age of it. I mean torture is 2000 years old, but lie-detectors are only a few years old, the world adapts and old systems disaappear. Its the nature of the world

I think cryptocurrency is a really good long term investment, but time will tell. Thanks for your response m8. =)

In this discussion, many interlocutors have already given many proofs that previously in the past, money used by some countries has become worthless, because some different and better currency have taken its place.

In my opinion we will see exactly the same thing about fiat money now, i think that the cryptocurrencies will have a really big chance to replace such a strong fiats as USD or GBP, with support from a big part of society.

We already have seen incoming creation of ticincoin, which is going to be used in the specific region of Switzerland.

Thank you for your response. Some of the sources i already knew off, but i actually can't remember reading about the quantity theory of money (shame on me). So thanks for that one, and thanks for giving serious responses, i really feel like i am learning something from you.

But do you think after a few discussions that you atleast understand me more in my view of fiat money as containing elements of speculation? Even if you don't agree it would be fun if i atleast made it possible for you to see my point of view.

Do you think that the quantity theory of money can be used to practically predict changes in the currency market, or do you just see the theory as a general means of explaining what should move currencies?

Hello!
Learned a new word now, interlocutors haha had to google that one ;)

Yes history truly shows that fiat money is unstable imo. We as a society always have had a hard time learning from our history. We do have a tendency to repeat the same stupid mistakes over and over again...

Didn't now about ticincoin, gotta check that out! Perhaps a adoption between the current fiat money and the crypto money could be possible. Ticincoin seems to be somethings similiar, a "regional cryptocurrency" if im not mistaken?

As i said in a earlier post, Bitdollars and Biteuros are perhaps in our future. Every country with their own local crypto currency, avaiable for exchange to other cryptocurrencies (like today's fiat money) but no bank or government controlling demand/supply etc.. Is this basically what ticincoin aims to be?

Could you please give me some good links that gives info on ticincoin? Having trouble finding info on english just found some websites writen in swiss haha :D

I dont agree with the statement that there is a fiat bubble and that bitcoin is the needle that will pop it. This will not be the case and bitcoin along with other cryptocurrency will not going to go against the fiat currency but rather they will complement with it. Bitcoin will complement fiat currency and will carry its value to the digital realms that fiat currency has never been before.

Hello thanks for your opinion!
How would you see this compilation? Would it be a coexistance between physical paper money and crypto currencies? Not really having anything to do with each other but can still live in peace with another perhaps? Or do you believe more in a sort of merge were they kind of become the same thing?

If it is a sort of merge you believe in, would that not basically mean that fiat money becomes crypto currency, effectively dubbing crypto currencies as the true winner, so in a sense bursting the fiat money bubble? In that sense cryptos would be the needle that burst the bubble as fiat money as we now it would stopped being produced and the value of the paper would decrease.

Perhaps calling it a bubble is a bit dramatic, but my definition of a bubble is short and sweet that something gets a value without a real correlated physical value (speculation). Fiat money fits into this (IMO), so does tulips, internet services etc...

But please elaborate your view on how you think crypto and fiat will work together or against one another, really interesting! =)

And sorry for spelling, just took a wake & bake, a bit fuzzy in the brain....

As a matter of fact, as time goes by all fiat money worth less due to inflation. So, we can print more money, the wages rise, and we still can buy the same things. Who doesn't remember a time, not so far away, that you could buy something (a candle bar) much "cheaper" than today?

It largely depends on the specific currencies

We all very well know how George Soros had shorted the British pound in the early 1990's and earned something like 1B dollars on the deal. So to say that currencies are not prone to speculation would be flat-out contradicting reality, obviously. And it is still more so in respect to weak currencies like the Russian ruble, for example, which can in fact be first heavily inflated ("bubbled") by foreign investors (like what seems to be happening to it right now) and then suddenly crashed (what is known as "carry-trade"). But ultimately, the final destiny of a currency is still determined by the financial policies of the government in respect to its currency (see Zimbabwe)

Regarding practical importance of monetary theories, I don't really think that they have any such importance. As I said in my previous post, they all agree that more money means higher prices, and that's pretty much all you need to know about money at this level if you are looking for speculation and trading with currencies. You should be interested in other factors which determine the currency value (e.g. FED interest rates, reserve requirements, monetary aggregates and similar gory details). Monetary theories are for purely academic interest, not for application in trading. In other words, you could be a very successful currency trader and have never heard such names as Milton Friedman or Friedrich Hayek

Yes well that was my orginial point. But i must have misinterperted your earlier post when you wrote "I think that no, the fiat money value doesn't come about via speculation. But I'm still curious how you can even imagine that."

But as you mention, the famous George Soros did manipulate the exchange with speculation, having a practical effect on the value of the currency. Thus showing that fiat money's value is heavily influenced by speculation, i am confused to where you stand on the issue now? I see contradictions in your original posts with what you write now, so please clarify if there's something i missed.
As you said earlier you had trouble even imagine how i could believe speculation being a factor, but now saying its obvious that it is?

You also wrote " I suspect there cannot be bubbles of that kind with fiat currencies. The examples you give refer to severe currency devaluations. Obviously, the latter have nothing to do with speculative bubbles, though the end result is essentially the same (i.e. dramatic loss of value)"


Well first of all, as i said earlier this was a case of hyperinflation. Hyperinflation is very connected to bubbles witch would dissprove that statement(IMO). You also mentioned earlier that Germany's case with hyperinflation was caused by them devaluing the currency. The sources i can refer to all say that Germanys hyperinflation was caused by Germany printing absurd ammounts of paper money to pay of the debt they had after WW2. Thats not really a devaluing (devaluing refers to when the government delibratly changes the price of a currency) but rather a deappreciation in my book.

You do mention the printing of money from Germany, but suggest that the money printing was a deliberate act from the government to devalue the mark. I dont't really agree with that.
How would you then define a deapreaction in respect to a devaluation? In my opinion the Germany case was a deappreaction of the mark, the England case i mentioned earlier IMO is a devaluation of the pound.
   

Fiat money has only been around for 46 years, if you use the technical definition of 'fiat.'  State-issued money has been around for almost 500 years in the West.  Before state-issued money became fiat, it was pegged to gold or silver.

My belief is that, while the narrowly-defined fiat money might die any time, state-issued money is unfortunately going to be around for a while, until and unless the majority of the population wake up.

All the problems and evils of fiat money are really a problem with state-issued money, so if state-issued money becomes pegged to Bitcoin or gold after some financial crisis, in the long run, the same problems, i.e. a system designed to benefit top politicians and bankers, will still be here.

But, if state-issued money is pegged to Bitcoin (in one way or another,) it will make a large profit for its owners.

Not entirely true... People will resort to commodity trading like it was done 1000's of years ago. A packet of cigarettes or a slab of chocolates will

be the new currency. You have to remember, most people have generators and backup power and alternative methods like solar power to

generate electricity... and the Blockchain is saved on harddrives globally. My company have extensive redundancy built into their IT infrastructure,

so they will survive, if something like this happens. The question is.... will be still be here to worry about this?

There's a major difference between tulips and Bitcoin.  Tulips were not a very good money.  Bitcoin is designed to be a money, with anonymity and security built into an electronic architecture, in addition to the usual monetary properties like durability, divisibility, etc.

Anyone can claim anything is a bubble, really.  (Except for items that you can use directly and are priced only for that value -- these will never fulfill the vital role of money.)  Any claim to wealth (that is transferable) must rely on the confidence of the crowd -- a network effect that says, since other people think it has value, I think it has value.  When that network effect collapses, the claim's value is gone.

The main problem with state-issued money is that, while it enjoys powerful support by the state-bank alliance, all individual members of the elites have the incentives to destabilize their own money, by issuing too much money, by borrowing too much, by using deception to prop up their system temporarily, etc. -- all the history we know.  So, fiat money, almost by definition, must collapse.  The very strongest ones in history retain a small fraction of their purchasing power.

So, after 2000, with all the problems suffered by the state-bank system, it's not surprising to see investors looking to non-state monies, gold and Bitcoin, to store part of their wealth.

You can call it speculation, but under the modern system, everything is a gamble (because that is the way the elites like it.)  It's just that most speculations are gambles in favor of the state-bank system, at least implicitly.  (If you buy bonds, you're implicitly betting that the dollars your bond will pay at maturity will be good.)  These speculations have a bad reputation, since there are so many of them, they are often promoted deceptively, and their collapses are all over history.  Gold and Bitcoin are two of the few ways you can gamble against the state-bank system -- they are a different beast altogether.  They do have problems, but not the ones usually associated with most speculative bubbles.

Yea i agree, everything without any "practical value" as food, shelter etc has a risk of becoming a bubble. People do love to speculate.

Really any value into anything without "real" value, is as you say, based upon the crowds perception of what SHOULD be the price of a particular object (paper,rocks whatever). Kind of like a mutual agreement to get the society up and running, trading resources constantly wouldn't be very practical as we know.

I dont think the fiat money is evil in itself, but people are just to prone for corruption for a fully centralized currency to really work. I personally see the confidence level for bank and government here in Sweden drop more and more and how anybody could have confidence in the USA banks/government i would never be able to understand. Kind of been declining here in Sweden (the confidence) since the USA and Island economic crises (witch really shows how stupid and corrupt government can be).

I totally agree with you in everything you say like that fiat money, in itself, will eventually fail. If bitcoin would be implemented as a easy-to-use currency everywhere, why would you even use a bank? IMO cryptocurrencies basically have most of the pros that fiat has, but not the biggest cons (like corruption).

Using state-issued money or bitcoins, in my world this choice boils down to "do i trust myself to manage my funds, or do i trust a corporation with a history littered of corruption?"

Personally i rather manage my personal wealth without a overhanging shadow seeing every financial move i make, my confidence lies in myself, not banks!

George Soros shorted the pound, just in case

But that's irrelevant since when I talked about the fiat value I referred to value, not price. Basically, price is what you pay, value is what you get. In this way, by value I mean the amount of goods which the unit of a certain currency can buy. If you consider the value of money (what you can buy with it), it will be hard to imagine how you can inflate it without expanding the real economy while keeping the amount of money in circulation the same. That would mean price deflation, and it is even more dangerous than inflation, but this is another question. To better understand what I mean think of the money value in terms of goods that you can buy with it. How are you going inflate this value by pure speculation?


Hyperinflation basically means that the value of money itself collapses, but since bubbles in currencies rarely change the purchasing power of money, they are inconsequential to hyperinflation. Essentially, they are just short-term speculations when the price of money (in terms of other currencies) gets divorced from its value (in terms of goods it can buy). When the currency bubble bursts the price of money goes back to its real value (so called "fair price"), which is determined in the way I explained in one of my previous posts (namely, by the amount of money over the quantity of goods)

Fiat can not be a bubble. After all, thanks to the fiat, the economy of all countries functions. The national currency will always be supported by the government.

I mixed together the terms value and price, thats why i was confused. Thanks for clearing that up, it was interesting to discuss with you!  ;D

It's hard to say when the "fiat-money" bubble will burst, though we are probably not far away from a major economic collapse soon, and my guess is it happens some time this year.

Markets like $SPX, $DJIA starting to show signs of weakness after an over-extended bull rally. We're already in our 9th year, over-extended considering the typical 8-year market cycles, not surprising considering each new cycle expands and happens over a longer timeframe compared to the one before.

Let's see. The drumroll has already begun.

Who know by that time internet developer had discovered some means of connecting people other than internet, and or Internet is transmitted thru signal directly from the satelites(and mobiles and computers are capable of receiving this signal) that is far from being destroyed when world war started .  And electricity won't be a problem because probably by that time, solar powered cell are well developed and widely used by every person on earth. I am just riding on what you are saying about the unpredictable future . 

---

I do agree that cryptocurrency are still in a stage of a financial bubble until the market is saturated where the true value of cryptocurrency is visible.

There is not such bad thing when it comes to believing and dreaming of a thing specially bitcoins price rocketing to a million dollars.It may really happen though it will take a seriously long time to achieved or it may not happen.No one can see future

Fiat money is definitely a bubble.

Its value is heavily manipulated by the financial regulators, the federal reserve bank and many other central banks around the world. It's a disaster if you look at how much countries sell their currency to drive their currency value down, so that they can export more.

The result is of course, an inflated dollar.

But the US can't go into debt forever, nor can China manipulate their Yuan forever. The bubble is bursting anytime.

You are welcome

This may in fact sound like an obscure and convoluted theory, but this regretfully is as real as shit. Many local fiats get "hyped up" (I'm using the terminology from the cryptoworld but it fits well even with real fiat currencies), i.e. their price against reference currencies (say, the US dollar) rises in nominal terms, but it counterintuitively doesn't lower inflation rates in these countries (which would mean real value of that currency rising). For example, the Russian ruble has been rising against the dollar for over a year till now already, so you might intuitively expect that the inflation in Russia should be at least on par with the inflation in the US, while in reality it is nowhere near the case since it has been times greater during this year (as it was years before). The chart below shows the exchange rate of the US dollar to the Russian ruble

http://s019.radikal.ru/i625/1704/8b/7a693b2b0e8c.png

I guess this is the best approximation to a currency "bubble" which we could come up with

The bubble will burst, but after a few years. Now it will still bring profit, because bitcoin has just started to develop. For the next 10 years I think it will definitely exist.

I learned alot from this post when you gave a example of a possible currency bubble in Russia. Really interesting and i see your point and agree.

Do you have any litterature you would recommend that explore these topics, or just any book that you would recommend for someone interested in economics (mostly currencies)? Or perhaps just a author you find wisdomful.

I have gone to a pretty basic course in economics and econometrics, so the book's doesnt need to be super "noob", i do have a fundamental understanding of the more basics concepts.

I would really appreciate if you would take the time to give a few tips, i like the way you think and would like to adopt a part of that in my economic thinking.

Thanks   :)

Nowadays, I've stopped reading anything except manuals and tech articles

I'm mostly writing myself these days. Nevertheless, the bulk of my knowledge comes from the real life observations and communicating with people who know more than me in a certain field of human activity. For example, right now I'm interested in the specifics of carry-trade (I mentioned it before) since it is of practical interest to me. When I have time I will certainly look into what real currency traders have to say on the matter (I'm not so much interested in theory as in its application in practice). If you are still interested which books had most influence on my understanding of economics in general (or just left a trace in my memory), I could name a couple. This is the Principles of Economics by Carl Menger, the farther of Austrian school of economics (though this doesn't necessarily mean that I agree with everything they teach) and Economics in One Lesson by Henry Hazlitt. The latter just makes an interesting read on its own and thus should be read by anyone (it is an easy reading but still rather informative)

Several news has come regarding the price rocketing. Recently too one among the large scale bitcoin firm operator and an enthusiast put forth the statement that bitcoin goes half a million in value in a short or too without any time scale.

Thank you for taking time to make a few mentions and for explaining your view on learning! <3

Thank you for you detailed response.

The more I study the world system, the more I realize that it's *never* about what system is best.  It is *always* about what system gives the most power to the elites, while still being (passively) accepted by the public.

Take just a small recent example.  In the US someone just published evidence that the government knew since at least the 90s that marijuana is harmless.  It has always been a superior pain killer than pharmaceutical products, i.e. without the problems of side effects, addictions etc.  Yet, only recently did the US start to legalize marijuana in general.  Why?  Because there's  no money or power to be made from a natural product in a free market.  With chemical medications, there is money and power to be gained from research,  manufacture, safety tests, regulation, etc. etc.  The more dangerous the product, the more power to be gained by politicians from regulations and dealing with 'friends' in the industry!

They can't afford to have a superior, natural product take away customers from these artificial products.

The same can be said of money.  Gold, silver, and now Bitcoin, are perfectly good money -- but they give no power to the elites.

Eh... You'd be pushing economic reality if you think there's a bubble made up of hard currency that's going to pop at some-point soon. There may be boom/bust cycles and there may be other bubbles that occur, but for a lot of currencies they're not looking to go anywhere soon, and I doubt they will.
A lot of markets in the world are in a bubble, that doesn't mean currency is in a bubble. If you were in China, you'd probably say that your currency is going down the shitter since they have a hard-on for winning the currency war.

It should be pretty obvious by now that all these features don't suffice

For something to become money it should be used as money, i.e. to be accepted as a universal means of payment or account. Therefore, until Bitcoin starts being used as money (in any meaningful degree), it cannot be considered as money even if it has all the required qualities and prerequisites money should possess. So there is not a big difference between tulips and Bitcoin primarily because its monetary qualities have been mostly neglected so far

Yes, the demands of the times. But, bitcoin and altcoin include sub currency, not as a single currency, I think cryptocurrency is an alternative to transactions for now, because people use fiat money to buy something in real life.

I agree "cryptocurrency is not the bubble, but rather the needle that will burst the fiat money bubble."
http://www.aljazeera.com/indepth/opinion/2012/05/20125309437931677.html
http://www.aljazeera.com/indepth/opinion/2012/04/20124395428374962.html
It's basically how I started learning about Bitcoin as well and a frame of view I have used.

The egotistical side is an interpretation but I lean towards the idea of debt and loans being the real fundamental issue that this resolves but greed is greed and it is a human attribute.

Where crypto is going and has gone since then to now I can really feel we are near mainstream usage and at the threshold I look forward to that trend continuing. Behead the fiat ^^. And Cheers

i think that is such a big big price to reach to that level but still i will like to say that still there is too much potential in the price of bitcoin, as we can see that the demand of bitcoin is continuously increasing which is making the price of bitcoin to increase more and more.

Saying that fiat money is some kind of a bubble is not a right thing, because in fact it is not. That bubble would have been popped years ago, and as we can see, it still holds for now.
The regular cash is something that too many people rely on, to think that there is any chance (for now) that we will have something different instead of paper money.

After all, what do you want to see as a replacement for fiat, do you have any suggestions? If you are wondering that bitcoin has any chance to overcome the fiat, then you are wrong. Blockchain network is not ready at all to maintain under such a massive traffic, and the another issue is that the fees currently are exceeding the reasonable amount of money spend for commison. You cannot buy some cheap things ( e.g matchsticks or cans with drinks ) because the price would increase dramatically, because of a insanely high fee payed on every transaction.

Yes, demand is growing every day.
But this does not make fiat useless and cheap. This indicates that the government artificially supports Fiat. Hence the fiat-bubble will never disappear and will not burst

many new people come around into bitcoin world so this is why bitcoin have big potential with the price like you said, although sometimes we can see the price is down, but i think the increase of price is significant and this will trigger to traders for selling their bitcoin to make profit. if its true that bitcoin goes into half a million, then i think there is many people will keep their bitcoin and waiting until they see that price and sell it right away.

Consider the fact that how many people who are using Fiat know and use bitcoins. So if all the people start using bitcoins too, we can see high demand of bitcoins and it will surely increase the price very high.

All people will never use bitcoins. Some do not do this from the prince. Therefore, Fiat will always exist. And it does not matter whether it's a bubble or not. It is used by all people in all countries of the world

This graphic is very significant:

https://pbs.twimg.com/media/CCBLEz4WAAEDw-4.png

If the life expectancy of fiat currencies in the past still translate to the dollar, then the dollars has its days numbered. The dollar is 97 years old, which is on the average of other fiat currencies of the past. Will it surpass 105 years? Right in 2025, the dollar will be 105 years old, so if that graph is correct, we should be seeing the fall of the dollar within the next decade, then I can see BTC skyrocketing to 6 to 7 figures a coin.

Things may change in the future

And they may change fast at that. The measures which would fix the scalability (as well as high fee) issues are already here, they just need to get implemented. Bitcoin is different from fiat, and it is a difference of kind, not of degree, and after these measures are taken, Bitcoin future adoption would only make it more fit and suitable for even wider adoption (since it is decentralized and supported by network itself). And this is where theory meets with practice, since money works better as money if it gets more universal acceptance. In this sense, Bitcoin is absolute money since its adoption facilitates further adoption in a chain reaction manner making its transactions faster and cheaper

The only problem with this view is that everything that is deemed 'money' is issued by the state.  And money that is issued by the state has the incentives built in to eventually self-destruct, since the elites get to receive unearned power and wealth by issuing too much of it.

This has pretty much been modern human history.  Among the strongest and longest lasting state issued currencies are the pound sterling and the dollar.  Both are worth a small fraction in purchasing power of what they were, say, 100 years ago.

Thanks for the response and the links :)

Debt and loans are extreme the last years... witch unfortunatly is a product of the banks often enticing people to borrow without taking risk to account. I think you make a really good point, greed certainly is connected to debt and debt almost always eventually lead to some form of bankruptcy. I agree that debt do, as you say, make out a big portion of the problem, thanks my view changed alittle from your post and got me thinking =)

Great point deisik. I always love to read your posts =)

Fiat is the lever through which the government manages people. Therefore, this lever will always exist. And the government specifically makes conditions under which it is very difficult to obtain money. So that people do not think about the revolution, but think about work

The reason for that was quite simple, though

But it is no longer applicable, anyway. Money was the state's privilege simply because they had the monopoly on the means of communications and could easily intercept anything you might send over, say, a phone line. With Internet reaching almost every hole out there and encryption all over the place, this is no longer the case, so this monopoly is essentially over too. Money as cash doesn't play a significant role in today's world, it is transferring value over long distances with minimal delays which is what counts nowadays

Bitcoin wont fail with all that kids that gamble with it..

The fiat will always be a lever for the government and i am not sure whether it manages and control people,the fiat bubbles used to pop once in a while and we have seen that in the past and i am sure that satoshi came up with the idea of bitcoin simply because we had a recession and that might have made him think about a revolutionary new platform.

You actually believe in that what you just said over here?
I hope not, and you were just joking, because saying something like that is simply dumb.

Take a look at the current bitcoin market capitalization.
In that moment it is equal to 20,372,515,937 US dollars.
Now can you please tell me, how big might be the amount of bitcoins used by people who are doing gambling, or even those "kids" that you are saying about.

Bitcoin is very strong option to make settlements between big projects, and regular people. It is mostly used for that purpose, same with investing. Gambling is only the part of it.

I wonder if we need a new definition for the word money, virtual commodities is my suggestion.

Bitcoin is the search to find a "true money". I don't believe that such an animal exist but its worth a try to find one. Bitcoin is for sure more pure form of money. Or less powerbased form of money or such.

Thats why because such a thing as  "true money" doesn't exist bitcoin is full of paradoxes. People want to escape the fiat bubble by making bitcoin bubbling. That is because of the economic law of bad money driving out the good money. Hows fiat chasing out the bitcoin? Fiat makes the rules of it. Bitcoin worth is measured in fiat. Its accessibility is measured in fiat. And sadly its the fiat money that is the king and will be the king because its the ultimate worst money. The ultimate watered down and devalued form of money.

Unless there will be incentives to change the economic laws like some form of a  moral or legal code, I dont see the fiat not being a king and setting the rules of economical life forever.

As to me, it's dumb to refer to market cap as any meaningful measure

That is not to say that Bitcoin is only gambling (though in its earlier days it was not far from that), but taking Bitcoin market cap as an argument is as clueless. For example, if someone sells 1 satoshi for 1 dollar, would it mean that Bitcoin price would be equal to 100M dollars per coin and thus the Bitcoin market cap equal to over 2,000T dollars? Obviously, that would be outright bullshit. But it is basically the same with current market cap (though in a lesser degree, of course). Only a small share of all issued coins is traded, i.e. used to determine the price, while the market cap is calculated by taking this price and multiplying it by the number of all coins mined to date. So you guess how misleading is this estimate

There is no such thing as life expectancy of fiat currencies. In the past there were many factors which contributed to shifting power to create reserve currency from country to country.
I am talking about politics, war, colonial conquers - standard history flow, where I nation suddenly claimed better position. We don't see anything like that happening right now with the USA.
True, the debt of USA is overwhelming but it is not critical yet. US industry, brands are still strong and can handle it.

While strong. But there is no guarantee that this will continue for a long time. The economy of the whole world is not in the best condition. And maybe we are expecting a global crisis that will lead to the fact that the value of the national currency will fall

It is not possible that cryptocurrency will issue exiting fiat money because cryptocurrency is sub currency. Bitcoin and some altcoins will have inflated prices because $ intake, not only that, the exchange between bitcoin and altcoin affects fiat money inflate in some cryptocurrency.

I'm sorry, but this is wrong in many ways.

Are you saying communications technology was how the state used to monopolize money?  Compared to the gold standard, communications interception wasn't even a close second, in terms of being a tool of monopoly.

And in any case, with the gold standard secure, the state had no need to resort to 'low-brow' techniques to prop up their money.  (But maybe now the do.)

Also, can you seriously say the dollar, euro, etc. are not state-money monopolies today, with all the same incentives for the elites to destabilize their own system?

Is this the basis of your conclusion that state money will be stable, that they're 'no longer monopolies?'  If so, it is simply absurd.

If you have a short-term perspective, I can understand why this seems plausible.  But have you looked at a table of all the state-issued monies in modern history?  Among the tiny portion of long-term surviving ones (including the dollar, sterling, some currencies that became part of the euro, etc.) the loss of purchasing power over the decades is still staggering.

And these survivors just happen to be countries with a lot of power to make other countries help prop up their money.  Interesting, isn't it?

The problem with state-issued currency is that the politicians and bankers have the incentives to degrade and destabilize their own system by issuing or borrowing too much.


This is unfortunately true, but is due to the use of state power to maintain what is effectively a rigged capital market.  (See my post 'Dissecting the Parasitocracy'.)

That said, after the final failure of the gold standard in 1971, we can finally hope to gain by buying and holding gold for the long term.  Of course, the elites and their economists will want us to believe otherwise, by suppressing the price of gold (see books 'The Gold Cartel' and 'Gold Wars.')  But the dollar has lost 97% of its value against gold since gold was 'demonetized' in 1971.  Bitcoin is arguably in the same boat, as a store of value if not as trading money.


If you're asking what an ideal system would be, it would be money and debt that is totally free of state intervention.  Depending on the nature of growth in the economy, we can't say what form it will take.  The important thing is that the free market should decide.  With state money, all the problems of socialism will occur, even though most people don't understand them, since they're financial in nature and are hidden inside the 'capitalist' system.


Bitcoin, especially at today's cheap price compared to gold (when comparing similar proportions of total supply,) is an arguably superior investment, partly because the elites want to dilute the demand for gold by having investors go into Bitcoin.  There are other good reasons.

Fiat-money is one of the worst kind of wealth holding options nowadays.
It is highly manipulated by governments and it is just paper of government you know. can turn into bubble. what is its' original value? just state!
also paper money damages poor people in economic crisis.

You are as dishonest as always

At first you started talking about the money issued by the state (otherwise known as fiat) and then, all of a sudden, you switched to gold and gold standard. Gold as money is not issued by the state, period. Other than that, yes, the state monopolized fiat money (or soft currency if you are going to pick on the word fiat) since it had monopoly on the means of communication. Privately issued money (or publicly if it is beyond the state's control as Bitcoin) without the capacity of transferring value over distance is set to lose to any fiat currency which doesn't get abused too much

If so, I have good competition!

BTW, last time I checked, you have yet to answer my response to your charge that I was somehow dishonest (because I dealt with monetary issues you don't seem to understand,) and you have yet to provide the explanation I requested about key features of the gold standard, to prove you have a basic understanding of money.


The gold standard was never about gold.  It was about protecting the stability of state-issued paper money.  The system has been, and will always be, focused on protecting the power and wealth of the state-bank alliance among the elites.  That is, until the people wake up.

The gold standard was the chief protector of state-issued money.  When the British government publicly stood behind their pound by pledging to redeem it for a fixed amount of gold on request, you had faith in their pound.  Even more importantly, gold earned no interest, so you kept your savings in sterling.  (Of course, this gave the British elites all the incentives to keep issuing pounds until such redemption became completely hopeless, by 1931.  Oh, BTW, it just happened, what followed was the most economically painful period of recent Western history, but, of course, it had absolutely nothing to do with state money.  Nothing.)

So you're saying the chief enabler of the state monetary monopoly was communications?  So now state money is no longer a monopoly?  And you say *I'm* dishonest?  I might be guilty of missing the state takeover of Bell or AT&T, but would like to hear the whole story...

On the face of it, who is more likely to be dishonest?  Someone who argues in favor of elite-issued money, or someone who argues for state-free money?

Even though governments are manipulating these paper currencies, they got more value than any other crypto-currencies because fiat is the most accepted currency in the whole world. These crypto-currencies are very less value compared to fiat currency value world wide. At the same time, there is no guaranty that these crypto-currencies will never come down. If any bad news comes out then very fast, these prices will come down, but that will not happen with any fiat currencies. So I feel even though there is a bubble in fiat currency still it has got more value than these online currencies.

Bitcoin can bring flood of profit at any time in future and it is because of its decentralised nature as you depicted in your one of the assumption. It's not bubble, it's truth that is hard to believe that bitcoin can be worth millions dollars one day. See the charts and waves of bitcoins in the trade market it always fluctuates but with incriminate in value as the time is passing.  :)

Could you post a link, I might have missed that post of yours


As I said, this is inconsequential to the matter in question

In other words, it is no use sidestepping this issue. Forget about gold at last, it won't help you. We are talking about present day, and till recently governments had monopoly on money issuance since they controlled means of communication via which value can be transferred. As I also said, private money in the form of cash (i.e. which relies only on hand-to-hand transactions) is devastatingly useless. And with the Internet arising from obscure military labs, the state lost its monopoly on global means of communication and thus lost its monopoly on money (obviously, they couldn't foresee that). Money, conceptually, is all about transferring value, and in today's world transferring value means transferring it instantly and to every corner of the world. Anything which aims to become money but doesn't offer the possibility of such transfers is set to fail miserably

Did the state take over Western Union?

It is simply absurd to assert that the state no longer has a monopoly on money.  If we are not using dollars or euro, are we using clam shells to buy stuff?

Sure, say anything to justify that state money is stable.

Western Union doesn't print their own money

The same pertains to PayPal and other payment processing companies whatever their name might be. Honestly, somehow I thought you were smarter than that. Anyway, the question is not about clam shells, the question is about Bitcoin. And yes, Bitcoin did break the government monopoly on issuing money big time, and it happened precisely because the government lost their monopoly on communications. A few private companies tried to do essentially the same in the past with their money tokens but they were small fish and didn't end up well in the end. I remember about some Canadian company that was dismissed by the government for doing something which they hadn't the right to do (i.e. issue money). Bitcoin is global, and as such it is effectively beyond government control of any particular country. A government can forbid the circulation of bitcoins in the area, but they lack the power to forbid Bitcoin as such just like they lack the power to forbid, say, gravity

Any currency can depreciate and bitcoin also. It is well thought out and develops, but no one can be sure what will happen in a few years. I hope he will still exist and make a profit.

Decentralised currency is the main motto of bitcoin and it can not be misunderstood with bullish goals. It is the only thing that makes bitcoin so much flexible in its transaction and behaviour. People are interested in that flexibility so bitcoin will always have preference as fiat money. We can store any amount of bitcoins without any hassle and restrictions. I believe it is possible to be one if the best fiat.

The fact remains, the government has always maintained a monopoly on money issuance in modern times.  I don't care if your definition of money requires that money must know how to fly.  You can't change this fact.  Gold and Bitcoin might come the closest among everything else in challenging the monopoly, but they're not nearly close enough.

Since it's obvious for anyone to see, any attempt to deny this merely confirms your desperation to argue that state money will be stable, by any means possible.

The only thing that gives the money value is its relative scarcity and the faith placed in it by the people that use it.
Tell me what gives value to bitcoin? Technology behind it, or its also cause people have faith in it? From my objective point of view both can be bubbles.

Bubbles are common in every market, regardless of whatever it is. So, this whole thread is worthless.

You may like it or not but Bitcoin IS money

It is mostly used as a financial asset nowadays (which I always emphasize myself every time), but it fits the definition of money and does what this definition requires. And by its sheer existence, it proves that the government monopoly has been broken (the reasons why it happened I explained before). To successfully support your claim (i.e. that the state still keeps their monopoly on the issuance of money), you basically have to prove either of the following two points. First, that Bitcoin can't transfer value (I guess you won't deny Bitcoin existence as such, though who knows), or, second, that money is not about transferring value. And the latter is not my definition, just in case, since when money can no longer transfer value, it just ceases to be money. This is particularly true with respect to money tokens which have no value of their own, i.e. they are valued only as long as they can fulfill the function of money, that of transferring value


That's hilarious (I hope you understand it yourself)

No, I don't have to, in order to support my claim that the state maintains a monopoly on money, which comes with all the incentives for the elites to destabilize their own system.

Because it's obvious that the state has the monopoly.

Prisoners use cigarettes to carry value and exchange them like money.  Their cigarettes didn't break the back of the dollar.  Neither has Bitcoin.  (Although one day it might, if state money self-destructs due to the above incentives, but that day is not here yet, so the incentives are alive and well.)

You seem to be stuck in your own mental prison

I have explained it just a few posts before that any quasi money is set to fail if it can't transfer value over long distances and do it fast (preferably instantly). Cigarettes can't do that, why I should ever explain it at all? On the other hand, the US dollar is not the only pebble on beach, but according to your logic, all other fiat monies out there are not monies? Or are they money just because they happen to be issued by some government? Bitcoin has already got circulation exceeding that of some currencies, and personally, I expect its growth to go exponential when its issues with fees and confirmation times get fixed in due course. Then you may want to raise this question again

This is nothing really new hyperinflation comes from the Romans,  the difference is there is a currency so dominant that if it were to fall it will bring the whole world down with, but make no mistake bitcoin is also a bubble but with the difference that bitcoin cannot be printed at will.

Every cryptocurrency is speculative functioning. This will be the best to make an decentralized system  work in​a perfect manner. As said we can't print as Countries that print of their own to make the economy strong at times of unexpected fall that recently happened with China.