I promise to pay the bearer, on demand

[CliffordM]

The arguments that Bitcoin has nothing to back it  compared to Fiat currencies are somewhat shallow.

Bitcoin is the only currency (well non-crypto) that comes with its own, almost free, and highly secure banking system
(this is amazingly valuable -- ask any Swiss Bank)

Bitcoin does pass the regression test -- by demonstration of the last few years.  It's just a bit faster.


Which leaves only the issue of being able to pay your taxes.  There is no reason why this could not change in time. 


Anyone who argues that the argument  'it has value because it has value' is a poor argument, really does not understand the basis of Fiat currency.  Fiat currency quite literally has value for that reason only.  It would be quite possible by arrangement (and a small fee) to pay your tax revenues in another currency.

If you are from the UK , our banknotes have false promises printed on them.  Fancy that !  Yet we still use them.

Bitcoin makes no such promise, apart from the stochastic security of the system.

Vote for Satoshi to win the Nobel Prize.

[sebastian]

Actually, the promises are not false, they just have superseded the bearer promise since nobody today uses it.
I think it would in actually get the promise gone through but that would propably require much paperwork and application fees.

The bearer promise come from the history. In the history, you paid by using gold bars, gold coins, metal weights and such, that had a real value. It become a bit unpractical to pay things by gold and such since it was heavy.

Instead the buyer went to a place which both the seller and buyer trusted, and traded the gold for a paper slip that said "I promise to pay whoever that gives me this paper slip, 100 grams of gold". And voilá, the paper slip got the same value as 100 grams of gold.

That was how paper notes was "invented". Since there was many different trustees and hard to work out whichever a seller could trust, the government launched a paper note system with the same inner workings, that everyone could trust.

And in the late decenniums, the "bearer promise" does not have any meaning today, people trust the currency because its rare - like gold, exact in the same way as people trust bitcoins, because they are rare, not because they are backed by something. In other words, the history banknotes had value because they was tied to gold somewhere, today's banknotes have value in itself, like bitcoins.
So basically, both bitcoins and banknotes have the value in itself like gold!

[sebastian]

Yes its because nobody uses the promise, therefore it could be removed without any notice.
The promise was required in the history to assert that the trustee did not "produce" more "notes" than gold/silver. They knew that if there was any doubt in the value of the note, they could simply go to the trustee and exchange the note back to gold/silver, and if there would be more notes than gold/silver, the trustee would lose reputation very fast and nobody would trust those notes anymore.

Basically a IOU translation between gold/silver and money.
Basically, the promise would be used by those that had any doubts on the values of the notes. Since everyone trust the notes today (as opposed to history), theres no need for a bearer promise backend.

Currently, instead, people trust the state and government, and thus the money does have value since the state/government produces money with a specified rate, and thus, people find value in money since they are rare. In other words, the bearer promise does not have any value today. In the same way, Bitcoin is a democratic system where all the partipicants of the bitcoin network regulate the creation rate of "notes" collectively.
Even tought the bank would not satisfy the promise, you could always go to a jewellry shop to get your notes translated into gold or silver.
Same with the digits stored in a bank's computer. Those digits have value since the state/government regulates the system so no bank could create "fake" money. If they would, they would lose the bank license.

[CliffordM]

My point was that if Bitcoin attempted to make anything like a similar promise, it would be ridiculed at best, and litigated against at worst.

Just because it is a historical promise does not allow one to make it without being quite clear what it purports to promising.

If I were to produce a financial contract with similar wording, the FSA would rush to my house to complain.

[franky1]

My point was that if Bitcoin attempted to make anything like a similar promise, it would be ridiculed at best, and litigated against at worst.

Just because it is a historical promise does not allow one to make it without being quite clear what it purports to promising.

If I were to produce a financial contract with similar wording, the FSA would rush to my house to complain.

2 points to make

1. ever since the minimum wage came in. it became widely known that one hours minimum wage is worth £6.20 .. and a mirror to that obviously is that £6.20 is worth 1 hours minimum wage. put it into context of other things. EG a loaf of bread or 4 pints of milk are worth 10 minutes of minimal labour each.

now on that scale the promise would be that you will be paid in something in the equivalent to just over 1 hour 30 minutes of minimal labour in exchange for a £10 note if the bank note disapeared and the government had to trade your bank notes for something new/different.

now lets move onto bitcoin. although its harder to judge true value. i have seen the network hash rate of mining and seen similar waves as the network hashrate sky rocks so has the price. and where the price sky rockets totally unrelated to network hash rate thats where things like the 2011 spike and dump happens.

as long as you can see some form of correlation between new users buying into bitcoin, network hashrate. then bitcoin has a value. if you cannot see the price follow any pattern or statistic at all, then its a speculated bubble.

bitcoin is still too new to have one single set guideline for its value.

point 2.
FSA have no issues of you making bearer bonds and promisary notes. they do however have issues with reproducing the UK pound note using the word 'pound' the symbol '£' and the queens face all in one place without their consent or explanation. but so as long as you ask FSA and the UK government you can (with alot of paperwork and red tape) make your own pound note.
take these guys for instance.
http://bristolpound.org/

[CliffordM]

If I started selling bearer-bonds or promissory notes for £ without an FSA licence I would be prosecuted.

The offence ?  Dealing in investments as either principal or agent.

[sebastian]

No.
Thats what many shops sells today. "gift cards" are they called, and for the gift card, they promise to give you Products of value in return.
So essentially, gift cards are "bearer bonds".

However, the legisation around ANYTHING value-filled (even a metro card), is pretty harsh in EU, and you need to Know your customer and be viligant against Money laundering and financying of terrorism.