Why I think Bitcoin will not become an national currency

[grondilu]

1995 article by economist Marry Rot hard about the nature of money.  He talks about how gold can be used to eliminate the Fed. Easy to see how bitcoins could server the same purpose.

"Marry Rot hard"     

[DeathAndTaxes]

Well, it is legal to start your own nation in many parts of the world.

Actually it is not "legal" (recognized is probably a better word) to form a new nation anywhere in the world, at least not one recognized by any current nation.  The "nation" club is a members only club.  Even if there is some undiscovered land (unlikely since the development of global sat mapping) as soon as it is discovered it becomes part of the closest nation.  If a new landmass was built (i.e. massive scale terraforming) it likewise would become part of the closest nation.  The club sometimes expands when existing nations are split (usually due to conflict) but that is it.

[deeplink]

Well, it is legal to start your own nation in many parts of the world.

Actually it is not "legal" (recognized is probably a better word) to form a new nation anywhere in the world, at least not one recognized by any current nation.  The "nation" club is a members only club.  Even if there is some undiscovered land (unlikely since the development of global sat mapping) as soon as it is discovered it becomes part of the closest nation.  If a new landmass was built (i.e. massive scale terraforming) it likewise would become part of the closest nation.  The club sometimes expands when existing nations are split (usually due to conflict) but that is it.

How do you think the nation member club will react, if seasteading someday becomes reality?

http://en.wikipedia.org/wiki/Seasteading

[teodor87]

It will not become a national currency, because it is international.

[ElectricMucus]

It will not become a national currency, because it is international.

Well we could found a "Bitcoin" Nation 

[Luno]

It will not become a national currency, because it is international.

Well we could found a "Bitcoin" Nation 

Such a nation exists, it's called "humanity"

[ElectricMucus]

It will not become a national currency, because it is international.

Well we could found a "Bitcoin" Nation 

Such a nation exists, it's called "humanity"

Does not compute.
In order to be a citizen of a nation you must first be associated with it, most people never heard of bitcoin let alone own some.
Added to that a nation serves more purposes than those bitcoin itself provides.

A bitcoin "nation" would require additional infrastructure like consensus based decision making for example using merged mining proof of work voting. Some database on personal details like contact, ownership of certain things like land or physical infrastructure and so on. Most of these would be very rudimentary since it would most likely be a decentralized republic, but nevertheless it is necessary.

[Luno]

You do compute: English is the language that make the internet possible. The internet is a nation and is defended as such with english as the official language, what you suggest does'nt need a defined area of mud. We are a virtual nation, a hyper state (of mind). Every one that joins in is a citizen.

P2P democracy do not need borders to have impact! Property ownership however is the national state's money cow, If you want land, there are taxes to be paid as infrastructure and an army costs money.

The "Bitcoin Island" in Belize auctioned on ebay,didn't meet it's minimum bid, and is still for sale from a Florida broker.

Democratisation of money would be amazing, a constitutional right to use, accept and hold whatever you like for currency. But i'm afraid that a simple pertition won't cut it. Taxvise you are the property of the state of you citizenship. If you work on-line in another country you are taxed at home, they own your production capacity, end of story.

Sadly we do not live in post dictatorship world, we are owned.

[ElectricMucus]

What you are describing is the status quo, which I am suggesting we could change using the system I outlined above.

[cbeast]

http://thoughtcatalog.com/2013/glenn-beck-wants-to-start-a-libertarian-commune/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ThoughtCatalog+%28Thought+Catalog%29
Someone should introduce Bitcoin to Glenn Beck. 

[Raize]

Honestly, I've always thought Bitcoin was designed to be something more akin to gold, which means that nations will use it more as a reserve currency than anything else. The average person isn't going to like holding Bitcoin, even if it is very divisible. On top of that, colored coin is going to ruin Bitcoin's fungibility, which means it really can't be used as a "currency" anymore.

[ArticMine]

1) Bitcoin will never be a national currency for the same reason that no country will return to the Gold standard.  It is for a completely different reason

2) As the value of BTC rises it will be held by more and more people.  By your logic nobody should buy/trade/acquire any more BTC.  Half of them are already held by a tiny (globally speaking) number of people and thus outside would be better off not buying them and insider would be better off just selling them.  Of course there will never be a scenario where Bitcoin goes to being held by thousands to being held by billions.  The thousands will sell to tens of thousands who will sell to hundreds of thousands who will sell to millions.  At the point where BTC had a large enough coinsupply to be useful for even a small nation the coins wouldn't be held by thousands they would be held by tens of millions.

3) Money isn't wealth, money is an accounting system.  The rich hold a negligible rounding error of their total wealth in cash.  The poor would benefit from a currency which isn't continually debased.

Of course I don't think Bitcoin will ever become a national currency however I don't think that provides any meaningful limit on adoption.  Bitcoin could be used someday (in theory) by nation states as a strategic reserve (like Gold Bullion).

I agree. What Bitcoin does extremely well is handle small international transactions over the Internet so it has a very good chance of becoming the de-facto currency of e-commerce and small international funds transfer (such as migrant workers sending funds to their families). Could it become a reserve currency in the future? This is possible but not until the world's central banks are run by people who today are in their early 20's or teenagers. So for example take Ben Bernanke's age 59 subtract 20. This gives 39 years minimum before Bitcoin has a chance of being recognized as a reserve currency. If one uses Alan Greenspan as an example then it is more like 59 years.

[xxjs]

1) Bitcoin will never be a national currency for the same reason that no country will return to the Gold standard.  It is for a completely different reason

2) As the value of BTC rises it will be held by more and more people.  By your logic nobody should buy/trade/acquire any more BTC.  Half of them are already held by a tiny (globally speaking) number of people and thus outside would be better off not buying them and insider would be better off just selling them.  Of course there will never be a scenario where Bitcoin goes to being held by thousands to being held by billions.  The thousands will sell to tens of thousands who will sell to hundreds of thousands who will sell to millions.  At the point where BTC had a large enough coinsupply to be useful for even a small nation the coins wouldn't be held by thousands they would be held by tens of millions.

3) Money isn't wealth, money is an accounting system.  The rich hold a negligible rounding error of their total wealth in cash.  The poor would benefit from a currency which isn't continually debased.

Of course I don't think Bitcoin will ever become a national currency however I don't think that provides any meaningful limit on adoption.  Bitcoin could be used someday (in theory) by nation states as a strategic reserve (like Gold Bullion).

I agree. What Bitcoin does extremely well is handle small international transactions over the Internet so it has a very good chance of becoming the de-facto currency of e-commerce and small international funds transfer (such as migrant workers sending funds to their families). Could it become a reserve currency in the future? This is possible but not until the world's central banks are run by people who today are in their early 20's or teenagers. So for example take Ben Bernanke's age 59 subtract 20. This gives 39 years minimum before Bitcoin has a chance of being recognized as a reserve currency. If one uses Alan Greenspan as an example then it is more like 59 years.

I don't like this talk that money is not wealth. It is wealth, and the value is exactly the exhange value of the money, as the traders (everbody) values it. A peculiar thing about money is that it has no other value, meaning that the total money supply is of no consequence. There could be 42 million bitcoins, or just one. It would be the same. But it is still value and thus wealth to the owner.

If nobody had money, that would not be of any consequence to the total wealth of mankind, utility of all goods would still be there. Except the current state of affairs could not be achieved, because it would be difficult to exchange and therefore divide the labour and increase productivity of labour trough capital formation. The same would be true if one person owned all the bitcoins, it would be of no exchange value.

Bitcoin shares this trait with fiat money. They also have no intrinsic value, all the value is in the exchange value, or its moneyness. Of course there is a difference - the fiat money does not have a constrained supply. Hoarding money is just a choice to consume later. Some people wants to consume everything now, or even before they have it. There are lots of situations where this is sensible, for instance buy a durable good like a car or a house. Some people want to have something handy for the immediate future, for years later, and somebody also saves for the benefit of the next generation. Still, the purpose is always to consume later.

Imagine a world where food was money, for instance all the staple grains at the same time. Then saving would be a problem - you save tons of corn for instance, while other people have to starve. A bit less so with gold - if gold should again be preferred money, gold in electronics would have to yield for something less adequate. The fact that bitcoins and fiat does not have intrinsic value, is good.

In case it was not clear - intrinsic value is value other than its moneyness.

[xxjs]

About bitcoins as a central bank reserve currency: Of course it could be. The central banks (currently inflating in concert) could buy half of the existings bitcoins now, and hump along regulating the prices with market operations - buy or sell to manipulate the exchange value. After all, the stated goal of all central banks is to stabilize the currency. Problem is, they really want to inflate it, to confiscate part of the value in the money supply for themselves. This can go on for a while with bitcoins, but sadly for them it has to stop when they have sold all their bitcoins.

[cbeast]

About bitcoins as a central bank reserve currency: Of course it could be. The central banks (currently inflating in concert) could buy half of the existings bitcoins now
<snip>

How would they buy half of the existing bitcoins?

[xxjs]

About bitcoins as a central bank reserve currency: Of course it could be. The central banks (currently inflating in concert) could buy half of the existings bitcoins now
<snip>

How would they buy half of the existing bitcoins?

On MtGox? It would be harder to do it later.

[cbeast]

About bitcoins as a central bank reserve currency: Of course it could be. The central banks (currently inflating in concert) could buy half of the existings bitcoins now
<snip>

How would they buy half of the existing bitcoins?

On MtGox? It would be harder to do it later.

People don't panic as quickly anymore. You'll only see the price rise quite a bit and once it hits a certain point, folks will no longer trade bitcoins for fiat.

[justusranvier]

I don't like this talk that money is not wealth.  It is wealth,

If nobody had money, that would not be of any consequence to the total wealth of mankind, utility of all goods would still be there.

I agree with the latter statement, and I'm concerned about how you don't appear to notice how it clearly contradicts the former.

[xxjs]

I don't like this talk that money is not wealth.  It is wealth,

If nobody had money, that would not be of any consequence to the total wealth of mankind, utility of all goods would still be there.

I agree with the latter statement, and I'm concerned about how you don't appear to notice how it clearly contradicts the former.

Nah. Money has no utility in itself, but it has exhange value. What is the problem?

[thoughtfan]

When countries start using it out of necessity of foresight it still won't be a national currency, just like it isn't a drug or gambling or sock currency.

Being a national currency does not mean that the currency belongs to a nation.  It just means that this nation officially uses this currency.

Same as the english language is the official language in Great-Britain, and yet english is not only used by british people.

Pedantic correction:  English isn't an official language of Great Britain - just the de facto language.  Interestingly it is an official language in Wales though