Bitcoin Forum

Is Bitcoin money in the tradition of western philosophy?

In the past year, discussion of Bitcoin as a currency or money has overtaken an earlier paradigm in which Bitcoin began to be interpreted as beyond money and currency. Like many argue that the US Constitution was written in an earlier time, say “before automatic weapons” or “equality,” and thus making it irrelevant, many individuals have noted the ways in which Bitcoin is actually a part of a paradigm outside the purview of money and currency. While containing most, if not all, of the characteristics of Aristotelian money, it also portrays Platonic interpretations of what money is, such as that the value of currency should independent from the material with which money was made. Thus, Bitcoin is both conservative and progressive all at the same time.

Instead of being seen as currency and/or money, Bitcoin can more accurately be seen as the distributed application architecture that partitions tasks or work loads between peers.  Once a p2p exchange comes online – and many programmers do believe such an achievement is possible – this will be truer than ever. This p2p exchange will transform a large part of the Bitcoin network into a near network of equally privileged, equipotent participants in the application. These participants will support a peer-to-peer network of nodes.  Uncommon to the p2p world, Bitcoins’ nodes will not all be made equal. Nonetheless, with the support of p2p exchanges, Bitcoin begins to resemble a pure p2p network (assuming a p2p exchange is developed.), and more accurately, a futuristic p2p network.

The Bitcoin QT client gives Bitcoin a p2p dynamic, insofar as it allows all participants to make a portion of their resources, such as processing power, disk storage or network bandwidth, directly available to other network participants. Reflective of the Bitcoin network QT is designed to mediate, this is done without the use of central coordination by servers or stable hosts.

In a p2p exchange network setting,  all participants would act as both suppliers and consumers of Bitcoin resources.

Bitcoin stands not only to tap into file sharing and p2p networks, but in fact tap into the future of these rather new advents. In astonishing display of the pace of change in the internet age, the future of p2p systems encompasses collaborative themes going beyond peers doing similar tasks while sharing resources, and instead seeking diverse peers that bring unique resources and capabilities to a virtual network, and engaging such participants in greater tasks beyond those that can be accomplished by individual peers, yet that are beneficial to all the peers. This is the sort of p2p exchange Bitcoin stands to become.

So, whilst propelling us into the future, Bitcoin also takes us back to square one: in the context of exchange, Bitcoin has, in some ways, brought us back to “sharing” – that is, file sharing. The practice of distributing or providing access to digitally stored information, like computer programs, multimedia, documents and electronic books is common. This is what Bitcoin is: the sharing of digitally stored information. And, because Bitcoin is a) not an overtly accepted medium of exchange and b) not even predominantly shared amongst what government terms “users”, Bitcoin is not money or currency, and thus is not a financial instrument.

It therefore depends on the future of the Internet, and the Internet alone. Will all sharing of digitally stored information become a matter of public knowledge, with individuals having absolutely no right to privacy via computers and smart phones, etc? Will p2p networks become outlawed?

Using widely available open source software, and the voluntary contributions of globally located nodes and users, the p2p network that is Bitcoin is beyond money and currency. It can be used in exchange for certain things, like money, but so can logins for online paid services. And moreover, most people are merely holding onto bitcoin’s expecting that they will still be around in the future. That is their bet, and their bet alone, and it has very little to do with dollar value. When one holds onto a stock or bond, it is for monetary gain. This cannot be argued of the average Bitcoin user.  One could hold onto a folder of thousands of downloaded albums, betting that their value will rise in the future. Both parties would probably be right. But, this makes neither of the digital packets (either the albums or the BTC) money.

read more: https://www.goldsilverbitcoin.com/bitcoin-beyond-money-peer-to-peers-new-paradigm/

http://evoorhees.blogspot.com/2013/05/bitcoin-2013-role-of-bitcoin-as-money.html?m=1

You're right, Bitcoin is not money. It's more than money! A dollar bill can't send itself. But bitcoin can!

Bitcoin isn't money in the same way that a web site isn't a newspaper.

That is somewhat poetic.

It's more like a social contract backed by mathematics and network, traditional money basically do the same thing, but never had so high credit as bitcoin. Bitcoin has the highest credit rating on the planet

I beg to differ.
I have, at some point, paid someone by folding a paper plane out of a bill and throw it.
You seem to confuse levels of system.
A dollar bill is just a piece of paper unless it functions within a larger system. And it is this system that facilitates transfers.
Likewise in bitcoin the system of internet and miners make sure your transactions get done.
Bitcoin is just a number on your harddrive. Without the rest of the system your bitcoins are nothing. Bitcoin cannot send itself. It requires other things like miners and internet.
So your example conveniently confuses things.


I think the OP is misguiding. It suggests there is a way of looking at bitcoin as non-money but in the end offers no real explanation for why bitcoin is not money.

In the end all forms of money are informational systems.
What OP needs to realize is that the actual 'shape' of money depends on what the intended use is.
In that respect bitcoin is as much money for our age as gold coins were for the romans.

The only prerequisite for being money is that something is a practical way of handling value.
All idealizations of money systems stem from this.
Bitcoin is just better adapted to current environment.
One could say that bitcoun got its 'shape' because of the current environment.
But that does not make it less than 100% money.

agreed.

I don't know why people are talking about this still, Evoorhees nailed it.

I think we need to start at a more basic level. What is "money"? Is what we use as currency money? Can the old definitions of money apply to bitcoin?

Money in economic terms is only a medium of exchange, which society generally agree has value. The currency we use today is worthless, unless we trust it has value. And today that value is backed up by faith that I can spend it on the things I need and want. There is no stored value in a piece of paper that has numbers that represent value, only faith in there are others who will believe it is worth some tangible value.

Money from a banking prospective: Take a look at the amount of currency being used in the world, and the amount of transaction occurring at the same time. If all the bank account holders demanded payment all of their "money" the banks don't have enough physical "money" to pat account holders. In other words "money" is a number on computers that move through wires to other banks who pay bank deposits. So from the banks standpoint "money" is a number in an account ledger. And that those digits have value that can be used in place of paper notes with numbers printed on them.

Money for the users is a promise that the paper has value. A promissory note if you will, and if you look on a US paper bill, you will notice it is a Federal Reserve Note, and it is "legal tender for all debts...". This paper note is nothing more than a debit obligation that people believe has value to trade for goods and services, a promise to pay something in the future to someone. The digits in a bank account is the same thing, a promise to pay some future amount of something in the future.

Bitcoin is the same thing. people who use bitcoin have faith there is value in the digital currency. In theory a country could exchange all of its "money" in to bitcoin, and then bitcoin would be that countries currency. And their banking system would go on as if the only thing that happened was the change in the symbol in front of the "money."

It all boils down to how much faith do you (the users of bitcoin) have in bitcoin's ability to hold value over time, and if you can spend it on goods and services you enjoy.

Bitcoin is digital gold. Is gold money? No. So bitcoin is not money.

It's okay, I'm not 100% convinced that the US dollar is money, but you know what? It works, so it is...

/thread

Dollar is "fiat money"

Bitcoin is "gold for nerds."

Yes. Gold for nerds!

Or, as we nerds like to call it, Mithril! Brighter than silver, stronger than steel, mined by the dwarves in Moria until they dug too deep and released Durin's bane!

http://www.patriotresource.com/lotr/pics/characters/balrog.jpg

Bitcoin!

in prison people trade cigarettes to ensure they dont get raped in the shower and to pay for extra food from other prisoners. in european countries alcohol is used to get friends to do you favours. such as helping you fix a car or paint a housewall. these are not money. these are currencies. money bears the trademarked symbols of the governments using it EG £ $.

so you are right bitcoin is not money. bitcoin is:
functionally: a currency(product used in trade)
physically: an asset(a possession holding value)

bitcoin (paper wallet) is not a payment system. it is just a bunch of letters and number and a promise that those letters and numbers can be redeemed for a value they represent.

much like the serial numbers and 'promise' on a bank note

the payment system (bitcoin client/miners) is not essential to bitcoins use. as there are many off the chain methods of moving bitcoin.

we need to get a trusted service to start a calculation based on how many coins are made per day (3600) divided by the number of miners, to get an average income per day/month/year value.

and then compare that to food, commodity values. much like governments compare cost of living vs minimum wage. then we will be free from the fiat controls. if we can easily see that bitcoin is worth X loaves of bread, milk grams of gold etc.

bitcoin is not a commodity but we do need to start pricing bitcoin against commodities instead of the fiat value of commodity

gold is indeed money. Historically, that has been it's primary use. That it also has industrial uses is irrelevant.

That most countries no longer view it as money has a lot to do with deliberate disinformation by a group of talented liars and their less talented useful idiots. Prior to 1944, the whole world viewed gold as money. Prior to 1971, most of the world still did. In 1971 the link between fiat and gold was broken definitively, to allow for a free floating currency so that governments no longer had ANY restraint on their nefarious activities.

Bitcoin is more like Milton Friedman's idea of money (Peer to Peer coin even more so), where a computer or network controls the rate of inflation.

I think Bitcoin is useful and interesting, and yes, money. It is used as a medium of exchange beyond direct barter, it is portable, durable, and easily divisible without incurring total loss by division. It meets all the criteria except being a stable store of value, and frankly only precious metals have really stood up to that test. Even then, shakily. I think Bitcoin has the capability of doing so for the same reason: Scarcity. I suspect that it will be that most feared (by Keynesians) of monetary units, the deflationary model.

Deflation, contrary to Keynes, is generally a GOOD thing in a money. Sure, it makes prices go down over time, but that's not because the VALUE of goods goes down, it's because the value of the currency goes UP! So if the unit value changes upward, causing a decline in prices, this is good for all involved except accountants who tend to view things only from the POV of their books.

I am reminded yet again of the "useful idiots" who decried Ford paying their workers five dollars a week. They were arguing on imposing a minimum wage, and using a historical example completely out of context. So, here's the context. Ford was paying almost TWICE the going labor rate for skilled workers, and that payment was in a currency backed by gold. Specifically, they were being paid five dwt a week. Given today's price of gold, that equals out to 346.25 a week. And gold just took a hit vs. the dollar. At minimum wage, excluding tax (which in the time frame we're discussing didn't exist on such low incomes) you would make 290 a week right now. Since even at minimum wage the combined leeching is in the neighborhood of 15% (prior to refunds, if any) and Ford's workers paid AT WORST 1%, the comparison falls the hell apart. Gold deflated significantly vs. the dollar, now that it is free floating and inflationary. Yet it's PURCHASING ABILITY is about the same. A model T cost, at it's lowest, $300.00, or 15 oz. troy of gold. Today, that is $20,775. That will in fact buy you several different cars all significantly superiour to the Model T.

Fiat hasn't fared well against deflationary currency, and if you've been paying attention, the "owners" of the fiat (central banks and their pet politicians) have been investing quietly but heavily in gold. Why? Because they KNOW that the ponzi scheme known as Fiat currency inflation has to end, and that it ends badly for those who hold nothing else.

Where bitcoin will figure into all of this is hard to tell, but it's biggest uptick was in the wake of the central banks of Cypress, with the IMF's hearty approval, confiscating the accumulated fiat wealth of practically everyone on the island. From the time the writing was on the wall to the time the trigger was pulled, a lot of people bought bitcoins as an escape from the dirty trick. A lot of you on this forum benefited from that, but so did those Cyprians who managed to save a bit of their treasure. It certainly gained the bitcoin some legitimacy AS MONEY.

I think the cryptocurrency idea is a good one. Flawed in some ways, but all monetary systems are. By decentralizing the notes, you take away a lot of the ability to abuse it. By being deflationary, it's perceived value is likely to increase over time. It's not a good substitute for precious metals for long term valuation, but it's a good substitute for centralized fiat.

I have a lot more questions than answers at the moment, so I'll end this here for now.

LOL!

And more seriously, we all know that nerds get their post high school revenge by accumulating a large amount of the gold...

Its the same thing weve being doing ages. Trading one thing of percieved value for another thing of percieved value.

http://www.forbes.com/sites/afontevecchia/2011/07/13/bernanke-fights-ron-paul-in-congress-golds-not-money/


Bernanke says it is not money so it is not money  ;D

Mithril = cryptography (impervious to violence)
Dwarves = cypherpunks or software developers (tinkerers who constantly build tools searching for market solutions)
Durin's Bane = the Free Market (ability to perform economic calculation without regulatory censorship enforced through violence)

Bernanke says that inflation is less than 2%. Yet the cost of my staple foods have nearly doubled in two years. As I live on the edge of homelessness at all times, that level of inaccuracy is NOT useful in any way. Besides, Bernanke is a weak kneed toad. If the Fed is to regain any credibility they need another Volker, or at least a Greenspan. If you are going to play crazy games with the economy, you should be an INTELLIGENT traitor. Not just an academic follower.

Fiat money is just metal and linen with no intrinsic value on their own. It is only worth something because we say it is worth something. Fiat might as well be seashells or leaves, as Bernake and his international banker cronies can just keep making more endlessly.

I'm not 100% convinced the Dollar is money.

I would argue further that it's counterfeit, as it's initial run was supposed to be backed in gold (read the earlier "legal tender" clauses) and then, by using the frog boiling method, it was stripped of all backing.

How bitcoin is valued will be market based. If you live in the USA, its going to be valued in dollars. If you are using bitcoin in the jungles of South America, it may be valued in coconuts. There will always be a need for some kind of exchange. Weather that is a currency exchange or a commodity exchange does not matter. Ultimately the user will have to be able to use bitcoin as easily as they are using their own countries currency. Businesses will also have to easily exchange bitcoin for what ever medium their suppliers use. It would be nice if everyone would accept bitcoin, and forgo any exchange. Exchanges are an inefficient way to move money. But until I can call up my supplier in China, and do business in bitcoin, I will have to use something that is acceptable for all parties.

Large companies use to have their own banking system, called the payroll department. With large sums of currency, or gold/silver. This is going to be needed again, as bitcoins need to work outside of the current central banking system. Companies will have to be able to maintain a store of bitcoin for this to work.

Reminds me of my six year old, who said that he wanted to invent a system that involved taking a picture of you holding money "to prove that you had it" in order to buy something.  He was upset because he wanted to buy a game but didn't have a credit card.  We later had to get him to think about why his invention wouldn't quite work the way that he thought it would.  He wouldn't need his invention with BTC though.

Sounds like Bitcoin could be a valuable teaching tool there  :)

This is the true power of BTC as a currency. As system where all of the money must be made accountable. If a loan is made in BTC, it is made with actual currency and not air. It is still the transfer of wealth from one person to another, just like loaning out some amount of physical gold or loaning cash to a friend to be paid back.

A "loan" now is just the creation of more debt overall and is based on nothing as a future liability for the bank. Technically the bank didn't actually loan you anything at all but some run time on Bernake's Magic Money Machine.

If the world operated on a free market system that cannot be corrupted by endless printing of money, that means our government would have to be accountable for their spending because they can't just spend their way out of it (which never works obviously). It means that the rich and powerful only stay that way if society allows it. Imagine a government that only functions financially at the will of the public, since they can never tax us by force. If they want to go to war it would only happen through willful public spending. Their salaries are only as big as we allow them to be, as the menial government jobs they should be. Obviously there are some hypotheticals in there, but overall a BTC conversion would create accountability unseen at any point in US history, or world history for that matter.

Operatr, you are an idealist. I know my tribe  ;)

Currently there is no bitcoin bank to speak of, so bitcoin loans are person to person, and can not be hypothacated. In other words if I have 2 BTC to loan, I can't make loans on 10BTC. This would be fraud unless you are a part of the central banks, then it is regular business. Can anybody say legalized theft...

Bitcoin as a store of value...Today yes I put a value to it. As for the future it is too early to tell. The central banks (and Governments) will try to kill it as bitcoin as a trade facilitator threatens their power, and gives that power to bitcoin users.

Currency, whether bitcoin, seashells, or cash, used as a medium of exchange, is Money.

 ;D I do believe in a better tomorrow, and pushing through the coming pain to get there for our combined futures. My generation is out of gas, it's time to step up and right this wrong after 100 years of money generated misery.

Gold is not "money" in the usual meaning because it lacks certain essential and practical features. Bitcoins solves that (and more).

Otherwise you can also say: Dollars are bits on a bank's server. Are bits money? No. So Dollars are not money.

Anyway:
This.

For all of you who missed this, here's Erik's excellent article once again: http://evoorhees.blogspot.com/2013/05/bitcoin-2013-role-of-bitcoin-as-money.html?m=1 ← Read this!

I have to take issue with this. The 'standard' definition of money has been Aristotle's for more generations than the very concept of fiat.  To whit
Gold meets all of that. Little else does, bit coin included. It misses on part 4, as despite its decentralized nature, it IS a fiat currency. A novel approach, but still...

Or perhaps, Bitcoin is not compatible to gold, or fiat, because Bitcoin is a new class of its own. Really it isn't as it does not work in any way like the currencies preceded it beyond the analogs of physical gold mining built into it and the ability to spend it for goods and services as a bartering medium.

Barter>Metal>Fiat>Crypto

I am willing to entertain that idea. It still parallels fiat more than gold.

OP,

Everyone has a differing definition of MONEY.

Simply put: Your definition may not line up with others. So don't try so hard to understand. Just keep your definition and accept that others are different.