What is Money?

[Liquid]

http://www.youtube.com/watch?v=InwVM6s7WoY&feature=plcp

Guys seen this i think its a simple way of explaining Money

[1714943352]

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[1714943352]

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[1714943352]

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[hazek]

A longer more thorough explanation: http://www.youtube.com/watch?v=vowbrq_g5NM

[Gatorhex]

All you people who think money is a medium of exchange don't know what money is and need to watch this.

http://www.youtube.com/watch?v=rC720Cl3N-0

Money is a debt note.
Banks take money and lend out 10:1 as debt.
You have to earn these debt notes back to pay down your debt.
Debt is slavery.
When you don't take on debt, the government does it for you, and taxes you in debt notes so there is no escape.
When there aren't enough debt notes the Fed has to print up more and this devalues saved debt notes forcing people to spend them into circulation. (velocity of money)

The system is going the way of Do-do because there aren't enough jobs to earn the debt notes back. My local stores are even sacking checkout clerks and replacing them with self service checkout machines. It's crazy.

[odolvlobo]

All you people who think money is a medium of exchange don't know what money is and need to watch this.

http://www.youtube.com/watch?v=rC720Cl3N-0

Money is a debt note.

The distinction here is the concept of money (it is a medium of exchange) versus the implementation of the concept (the money is based on or backed by debt).

[Adrian-x]

Thanks for the links

[Sunny King]

Simply state, money is something that facilitate the monetary functions: unit of account, medium of exchange and store of value.

There has been a debate in Austrian school as to whether bitcoin can be money. The debate centered around Mises' regression theorem, which states that a monetary commodity can be traced back to its original non-monetary use in the market.

Of course the problem is bitcoin does not have a non-monetary use. So some took this as the proof that bitcoin must not be a legitimate form of money.

I find this argument rather disingenuous. I believe if Mises or Rothbard is still around, they would readily recognize the error in the regression theorem when they saw what happened to bitcoin in the market.

Bitcoin has proven that market will value monetary properties alone, regardless of non-monetary use. This does not detract from the brilliance of Mises, as he didn't have the privilege of watching the market valuing monetary properties without any non-monetary value. Yes it's a huge difference if you can see it happening right in front of your eyes.

So yeah cryptocurrency is here to stay and is the most revolutionary form of money to date.

[mobile4ever]

All you people who think money is a medium of exchange don't know what money is and need to watch this.

http://www.youtube.com/watch?v=rC720Cl3N-0

Money is a debt note.

The distinction here is the concept of money (it is a medium of exchange) versus the implementation of the concept (the money is based on or backed by debt).

Money does not have to be based on debt to be money. But..we have been trained to accept it as such.


I am no economist, but I can realize that if a piece of paper comes to me as a loan, or to a country as a loan, it is still a loan and more will have to be paid back than was received.
==

[felipelalli]

What is money in 1 minute: https://www.youtube.com/watch?v=5RJFG99z8GM

[mobodick]

Simply state, money is something that facilitate the monetary functions: unit of account, medium of exchange and store of value.

There has been a debate in Austrian school as to whether bitcoin can be money. The debate centered around Mises' regression theorem, which states that a monetary commodity can be traced back to its original non-monetary use in the market.

Of course the problem is bitcoin does not have a non-monetary use. So some took this as the proof that bitcoin must not be a legitimate form of money.

I find this argument rather disingenuous. I believe if Mises or Rothbard is still around, they would readily recognize the error in the regression theorem when they saw what happened to bitcoin in the market.

Bitcoin has proven that market will value monetary properties alone, regardless of non-monetary use. This does not detract from the brilliance of Mises, as he didn't have the privilege of watching the market valuing monetary properties without any non-monetary value. Yes it's a huge difference if you can see it happening right in front of your eyes.

So yeah cryptocurrency is here to stay and is the most revolutionary form of money to date.

I'm not quite convinced that bitcoins value comes solely from appreciation by the market.
If you take a look at this nice graph i've made you can clearly see a fixed component to bitcoin price.
I would not believe that this is the effect of the bumpy growth of the bitcoin market.
It looks more as if bitcoin deflates at a steady rate over time.
You can see that it defines the bottom, which leads me to believe it is a separate component from the movement above it, like a transposition.

[sunnankar]

I find this argument rather disingenuous. I believe if Mises or Rothbard is still around, they would readily recognize the error in the regression theorem when they saw what happened to bitcoin in the market.

Bitcoin has proven that market will value monetary properties alone, regardless of non-monetary use.

I agree that Mises or Rothbard would amend or rethink the Regression Theorem. Here is an interview where two Austrian economists discuss how the Regression Theorem applies to Bitcoin.

But the other statement is not correct. You cannot assert that Bitcoin has only monetary properties. See Human Action Chapter 7 Section 1 and Chapter 12 Section 1. After all, some people like to acquire bitcoins to wear them and who are you to tell them they can't?

[niko]

Lots of isms and related confusion, as usual. Money, just like anything else, "is" whatever you decide it to be. Different people will come up with different definitions, and that's perfectly fine unless they forget that these are arbitrary definitions, and start arguing about what something "really is."

[Liquid]

Thanks for the info really useful mine was just a really basic understanding

[jking]

Bitcoin definitely does challenge Mise's Regression theorem. In order to emerge as a "money", an asset must already have been demanded for non-monetary reasons. Bitcoin never had an initial non-monetary use.

There are three ways you can proceed with this.

1. Actually, it did have an initial non-monetary use... In its initial form Bitcoin was valued as a sign of geekiness, a demonstration of one's devotion to technology etc etc. From this initial non-monetary seed, a certain degree of moneyness began to attach itself to Bitcoin.

2. No, Bitcoin never had a non-monetary use. It's intrinsically worthless. It's a ponzi scheme. In the short term, people can irrationally bid up the price to some non-zero amount. But in the long term the rational of the regression theorem requires that the price of Bitcoin fall to zero.

3. The regression theorem is wrong.

[mobodick]

Bitcoin definitely does challenge Mise's Regression theorem. In order to emerge as a "money", an asset must already have been demanded for non-monetary reasons. Bitcoin never had an initial non-monetary use.

There are three ways you can proceed with this.

1. Actually, it did have an initial non-monetary use... In its initial form Bitcoin was valued as a sign of geekiness, a demonstration of one's devotion to technology etc etc. From this initial non-monetary seed, a certain degree of moneyness began to attach itself to Bitcoin.

2. No, Bitcoin never had a non-monetary use. It's intrinsically worthless. It's a ponzi scheme. In the short term, people can irrationally bid up the price to some non-zero amount. But in the long term the rational of the regression theorem requires that the price of Bitcoin fall to zero.

3. The regression theorem is wrong.

I would say a little of everything..

[hazek]

Bitcoin definitely does challenge Mise's Regression theorem. In order to emerge as a "money", an asset must already have been demanded for non-monetary reasons. Bitcoin never had an initial non-monetary use.

There are three ways you can proceed with this.

1. Actually, it did have an initial non-monetary use... In its initial form Bitcoin was valued as a sign of geekiness, a demonstration of one's devotion to technology etc etc. From this initial non-monetary seed, a certain degree of moneyness began to attach itself to Bitcoin.

2. No, Bitcoin never had a non-monetary use. It's intrinsically worthless. It's a ponzi scheme. In the short term, people can irrationally bid up the price to some non-zero amount. But in the long term the rational of the regression theorem requires that the price of Bitcoin fall to zero.

3. The regression theorem is wrong.

I think it did have an initial non-monetary use, specifically it was valued as a collectible. I don't think that guy that was prepared to barter 1 pizza for 10k BTC did so because he though bitcoins were money and he could get the same or more value out of them at a later point but I think it's much more likely he though they were cool and rare and wanted to hold some and thought the price of a pizza is fair while disregarding whether or not he will ever be able to find another person who would accept them for something else.

This argument is explained a bit more thoroughly here: https://bitcointalk.org/index.php?topic=116951.msg1256337#msg1256337 and in the post following that one.

[BitcoinCoffee.com]

Simply state, money is something that facilitate the monetary functions: unit of account, medium of exchange and store of value.

There has been a debate in Austrian school as to whether bitcoin can be money. The debate centered around Mises' regression theorem, which states that a monetary commodity can be traced back to its original non-monetary use in the market.

Of course the problem is bitcoin does not have a non-monetary use. So some took this as the proof that bitcoin must not be a legitimate form of money.

I find this argument rather disingenuous. I believe if Mises or Rothbard is still around, they would readily recognize the error in the regression theorem when they saw what happened to bitcoin in the market.

Bitcoin has proven that market will value monetary properties alone, regardless of non-monetary use. This does not detract from the brilliance of Mises, as he didn't have the privilege of watching the market valuing monetary properties without any non-monetary value. Yes it's a huge difference if you can see it happening right in front of your eyes.

So yeah cryptocurrency is here to stay and is the most revolutionary form of money to date.

I'm not quite convinced that bitcoins value comes solely from appreciation by the market.
If you take a look at this nice graph i've made you can clearly see a fixed component to bitcoin price.
I would not believe that this is the effect of the bumpy growth of the bitcoin market.
It looks more as if bitcoin deflates at a steady rate over time.
You can see that it defines the bottom, which leads me to believe it is a separate component from the movement above it, like a transposition.

Sorry, but what exactly is the algorithm of your graph's 'fixed component'?

[mobodick]

Sorry, but what exactly is the algorithm of your graph's 'fixed component'?

y=x^c where c is a constant and unequal to 1.
That's why it kindof stumped me.

[jking]

Bitcoin definitely does challenge Mise's Regression theorem. In order to emerge as a "money", an asset must already have been demanded for non-monetary reasons. Bitcoin never had an initial non-monetary use.

There are three ways you can proceed with this.

1. Actually, it did have an initial non-monetary use... In its initial form Bitcoin was valued as a sign of geekiness, a demonstration of one's devotion to technology etc etc. From this initial non-monetary seed, a certain degree of moneyness began to attach itself to Bitcoin.

2. No, Bitcoin never had a non-monetary use. It's intrinsically worthless. It's a ponzi scheme. In the short term, people can irrationally bid up the price to some non-zero amount. But in the long term the rational of the regression theorem requires that the price of Bitcoin fall to zero.

3. The regression theorem is wrong.

I think it did have an initial non-monetary use, specifically it was valued as a collectible. I don't think that guy that was prepared to barter 1 pizza for 10k BTC did so because he though bitcoins were money and he could get the same or more value out of them at a later point but I think it's much more likely he though they were cool and rare and wanted to hold some and thought the price of a pizza is fair while disregarding whether or not he will ever be able to find another person who would accept them for something else.

This argument is explained a bit more thoroughly here: https://bitcointalk.org/index.php?topic=116951.msg1256337#msg1256337 and in the post following that one.

Even before the pizza guy there was a market being made here:

http://newlibertystandard.wetpaint.com/page/2009+Exchange+Rate

"During 2009 my exchange rate was calculated by dividing $1.00 by the average amount of electricity required to run a computer with high CPU for a year, 1331.5 kWh, multiplied by the the average residential cost of electricity in the United States for the previous year, $0.1136, divided by 12 months divided by the number of bitcoins generated by my computer over the past 30 days."

Not sure how much was transacted. But it's an odd way to calculate price.

[hazek]

Bitcoin definitely does challenge Mise's Regression theorem. In order to emerge as a "money", an asset must already have been demanded for non-monetary reasons. Bitcoin never had an initial non-monetary use.

There are three ways you can proceed with this.

1. Actually, it did have an initial non-monetary use... In its initial form Bitcoin was valued as a sign of geekiness, a demonstration of one's devotion to technology etc etc. From this initial non-monetary seed, a certain degree of moneyness began to attach itself to Bitcoin.

2. No, Bitcoin never had a non-monetary use. It's intrinsically worthless. It's a ponzi scheme. In the short term, people can irrationally bid up the price to some non-zero amount. But in the long term the rational of the regression theorem requires that the price of Bitcoin fall to zero.

3. The regression theorem is wrong.

I think it did have an initial non-monetary use, specifically it was valued as a collectible. I don't think that guy that was prepared to barter 1 pizza for 10k BTC did so because he though bitcoins were money and he could get the same or more value out of them at a later point but I think it's much more likely he though they were cool and rare and wanted to hold some and thought the price of a pizza is fair while disregarding whether or not he will ever be able to find another person who would accept them for something else.

This argument is explained a bit more thoroughly here: https://bitcointalk.org/index.php?topic=116951.msg1256337#msg1256337 and in the post following that one.

Even before the pizza guy there was a market being made here:

http://newlibertystandard.wetpaint.com/page/2009+Exchange+Rate

"During 2009 my exchange rate was calculated by dividing $1.00 by the average amount of electricity required to run a computer with high CPU for a year, 1331.5 kWh, multiplied by the the average residential cost of electricity in the United States for the previous year, $0.1136, divided by 12 months divided by the number of bitcoins generated by my computer over the past 30 days."

Not sure how much was transacted. But it's an odd way to calculate price.

Yeah but that's really the cost of manufacturing not really a valuation by a market..

[DryPowder]

A unit of weight equaling 371 4/16th grains (24.057 grams) of pure silver, Like pre 1964 Morgan and Peace 1 Dollars Coin's .