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Question: Did Bitcoin revolutionize the concept of money?
Yes, it is an entirely new form of money - 82 (78.1%)
No, there's nothing new conceptually - 23 (21.9%)
Total Voters: 105

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Author Topic: Next generation money  (Read 15993 times)
deisik
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June 11, 2016, 03:04:09 PM
 #61

You hit the nail on the head. Economic entities should be able to freely choose what they use as money. If they are regulated to only accept government fiat, there is no voluntarism

There are a few problems with this approach, though (maybe, even more than just a few, lol). First, the counterparties could just barter. Yes, barter is very inefficient but it allows to effectively solve the next problem inexorably rising under the system of monetary voluntarism. Which is a problem of consensus, i.e. the parties actually don't want to choose what to use as money, since they just want to be sure that what they use as money doesn't cease to be money with the next counterparty which might have different views on what is money and what is not...

Government effectively solves this problem by dismissing monetary voluntarism altogether

Barter is inefficient as you said for anything but simple trades: you give me a dozen of eggs, I give you a bottle of milk. We can omit discussing barter.
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This is precisely why it will take significant time for crypto to establish itself as solid trustworthy money, and why it's premature to dismiss gold and silver. Some already have the confidence to accept crypto as preferred currency. Mostly it's geeks, but Rome wasn't built in a day.

Government doesn't solve this entirely, it creates too much money and then resets the financial system. It is safe to assume that most people on the planet will experience a reset of fiat system at least once, with memories of this event lasting to the end of their life. A number of people will make conclusions to explore what options they have to escape being fooled again

It may create a multitude of other problems, but exactly this problem it solves perfectly (by establishing what is legal tender throughout the entire economy). Money may cease to be money due to government operations, but this is not related to the problem of consensus...

That is, this problem arises only if money fails as a means of payment (when the fiat system is reset, in your terms)

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June 11, 2016, 03:05:13 PM
 #62

I am somewhat familiar with the history of coin debasement in Rome and agree with you it is the result of the state's failure. Namely, inability to support large entitlement payments, which undermined fiscal health of the state and ended in coin debasement. This couldn't have happened without fiat. Gold and silver coins can be fiat if this is what the state forces you to accept. The state would have stopped making this many promises if it couldn't enforce what is legal tender, it'd have run out of money and collapsed in a matter of few years if it hadn't. Fiat is the fundamental flaw, monetary voluntarism is what the world needs. I think crypto has a chance to succeed, but the fight will be fierce and bloody, we've just entered the first innings.

Could you please expand more on what you mean by that. It seems that we have agreed that Bitcoin doesn't quite cut it, due to its de-facto centralized nature as of now. As I can guess, you mean that everyone should be free in what to call and use as money. Yes, you are obliged to pay taxes in legal tender, but other than that you are essentially free to trade in whatever you and your counter-party agree upon...

Though you would still have to somehow make others accept your chosen means of payment as such

You hit the nail on the head. Economic entities should be able to freely choose what they use as money. If they are regulated to only accept government fiat, there is no voluntarism.
Bitcoin is one of choices in the monetary voluntarism, the de-facto centralized nature doesn't make it an unviable option for some people. I bet you have savings in Bitcoin. There is hoping that Bitcoin can be fixed if the centralized nature begins to hurt the principles it was founded on, so it's too early to give up on it just yet, but other (crypto) options should be actively researched.
If your chosen means of payment is competitive in the free market of payment options, it will be accepted. What can be wrong with this concept unless someone hates competition?

Bitcoin is de-centralized and this is what most of the Government institutions and politicians dont want. They want control over the currency. And bitcoin is the biggest threat to FIAT. We are moving towards free world where currency should not be control by Govt. but by people themselves and bitcoins support this.

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June 11, 2016, 03:08:15 PM
Last edit: June 11, 2016, 03:30:41 PM by deisik
 #63

You can't directly pay a supplier in another country with your local fiat currency, you have to exchange it to what the supplier believes is money. As long as free trade and free exchange exists money doesn't have to be universal.

Your example actually proves my point. I worked with such contracts (concluded between parties in different countries), and the price of the contract is always set in one currency, mostly in the currency that has wider recognition and acceptance in the world (say, the US dollar)...

That is, in the currency which is more universal (being a truer money)

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June 11, 2016, 03:26:29 PM
 #64

That is, this problem arises only if money fails as a means of payment (when the fiat system is reset, in your terms)

Watching how this problem arises every single time with fiat currencies, can we agree that government doesn't solve it entirely? My definition of entirety is the problem not rearing its ugly head longer than three decades, and that is a very modest request, unfortunately largely unfeasible under fiat systems.
Supposedly the two of us reach consensus that the fiat I accept from you has the medium of exchange trait of money, but I have a hard time trusting it as a store of value which is another important feature, I can't use it for savings but for short term. After fiat and product changed hands, I can spend part of it and also exchange part of it to what I think will store value better. The former part will be used as money to transact with another party, the latter part will be viewed by me as a transitory container of value, not fit for the job I intend it to do - savings. You see how fiat can be both money and not money in my view depending how I use it.

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June 11, 2016, 03:34:16 PM
 #65

You can't directly pay a supplier in another country with your local fiat currency, you have to exchange it to what the supplier believes is money. As long as free trade and free exchange exists money doesn't have to be universal.

Your example actually proves my point. I worked with such contracts (concluded between parties in different countries), and the price of the contract is always set in one currency, mostly in the currency that has wider recognition and acceptance in the world (say, the US dollar)...

That is, in the currency which is more universal (in a truer money)


US dollar has wider acceptance and universality because it has stronger "arms" supporting it. This doesn't make it better money intrinsically, unless you count army as a variable in the intrinsic value equation Smiley

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June 11, 2016, 03:44:54 PM
Last edit: June 12, 2016, 12:20:53 PM by deisik
 #66

That is, this problem arises only if money fails as a means of payment (when the fiat system is reset, in your terms)

Watching how this problem arises every single time with fiat currencies, can we agree that government doesn't solve it entirely? My definition of entirety is the problem not rearing its ugly head longer than three decades, and that is a very modest request, unfortunately largely unfeasible under fiat systems

No, we can't agree since in this case the government can't solve another problem, a problem of enforcement, since the problem of consensus is, well, a consensus problem, i.e. a problem of coming to an agreement. In this case that would be an agreement as to what to use as a means of payment between economic entities. Government, on the other hand, doesn't have to negotiate (come to an agreement) with economic entities about what to use as money...

Thereby, the consensus problem doesn't even arise in the latter case

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June 11, 2016, 03:56:21 PM
 #67

I found this picture posted somewhere and I think it's perfect to illustrate how bitcoin is a new type of money never seen before which has better characteristics than anything else we've ever had:


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June 11, 2016, 03:57:40 PM
 #68

You can't directly pay a supplier in another country with your local fiat currency, you have to exchange it to what the supplier believes is money. As long as free trade and free exchange exists money doesn't have to be universal.

Your example actually proves my point. I worked with such contracts (concluded between parties in different countries), and the price of the contract is always set in one currency, mostly in the currency that has wider recognition and acceptance in the world (say, the US dollar)...

That is, in the currency which is more universal (in a truer money)


US dollar has wider acceptance and universality because it has stronger "arms" supporting it. This doesn't make it better money intrinsically, unless you count army as a variable in the intrinsic value equation Smiley

Strictly speaking, the only intrinsic value money could and should have is transactional utility. And yes, money that has wider acceptance and universality has undoubtedly higher transactional utility (I hope you won't argue with that), thereby making it a truer money...

A stronger army does contribute to this utility through exerting military power abroad (foreign military bases, selling of weapons, etc)

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June 11, 2016, 03:58:18 PM
 #69

That is, this problem arises only if money fails as a means of payment (when the fiat system is reset, in your terms)

Watching how this problem arises every single time with fiat currencies, can we agree that government doesn't solve it entirely? My definition of entirety is the problem not rearing its ugly head longer than three decades, and that is a very modest request, unfortunately largely unfeasible under fiat systems

No, we can't agree since in this case the government can't solve another problem, a problem of enforcement, since the problem of consensus is, well, a consensus problem, i.e. a problem of coming to an agreement. In this case that would be an agreement as to what to use as a means of payment between economic entities. Government, on the other hand, doesn't have to negotiate (come to an agreement) with economic entities what to use as money...

Thereby, the consensus problem doesn't even arise

Some economic entities disagree with government on using fiat for savings. Something else becomes money for them when they think about savings, and this cannot be enforced. Crypto takes the enforcement effort to a whole new level of difficulty. I don't see entirety to problem solving in any of this.

Strictly speaking, the only intrinsic value money could and should have is transactional utility.

Why?

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June 11, 2016, 04:08:47 PM
Last edit: June 11, 2016, 05:39:47 PM by deisik
 #70

I found this picture posted somewhere and I think it's perfect to illustrate how bitcoin is a new type of money never seen before which has better characteristics than anything else we've ever had

This table has next-to-nothing to do with reality. Just a few notes below:

1. Fiat mostly exists in digital form (i.e. no issue with durability)*
2. Fiat can be divided as required through denominations (i.e. no issue with divisibility)**
3. Fiat in digital form can't be counterfeited (you will have to hack the Central bank servers)***
4. Bitcoin has long ceased to be decentralized
5. Fiat is actually by far "smarter" than Bitcoin (it can be created and destroyed endogenously as required by the economy)****

*Bitcoins can be lost or just irrevocably sent nowhere, which is impossible with digital fiat (even losing your bank card doesn't mean losing your money)
**Divisibility for the sake of divisibility doesn't cut it
***Bitcoin itself has problems closely related to counterfeiting (such as double-spends)
****This is a major flaw of Bitcoin conceptually (which can't be fixed by however smart an algorithm), and, consequently, a huge advantage of fiat money

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June 11, 2016, 04:21:51 PM
Last edit: June 11, 2016, 05:42:14 PM by deisik
 #71

That is, this problem arises only if money fails as a means of payment (when the fiat system is reset, in your terms)

Watching how this problem arises every single time with fiat currencies, can we agree that government doesn't solve it entirely? My definition of entirety is the problem not rearing its ugly head longer than three decades, and that is a very modest request, unfortunately largely unfeasible under fiat systems

No, we can't agree since in this case the government can't solve another problem, a problem of enforcement, since the problem of consensus is, well, a consensus problem, i.e. a problem of coming to an agreement. In this case that would be an agreement as to what to use as a means of payment between economic entities. Government, on the other hand, doesn't have to negotiate (come to an agreement) with economic entities what to use as money...

Thereby, the consensus problem doesn't even arise

Some economic entities disagree with government on using fiat for savings. Something else becomes money for them when they think about savings, and this cannot be enforced. Crypto takes the enforcement effort to a whole new level of difficulty. I don't see entirety to problem solving in any of this

This is still not a consensus problem. I see what you mean, and what you mean has nothing to do with the problem that arises when there is no forced money. Some "economic entities" may not even deem legal tender as money altogether, but that would mean going against the rules (e.g. refusing to accept legal tender as payment or pay taxes with it). And consider the situation when there are no binding rules, no one is forcing anyone to use anything as money, and all the economic entities should somehow agree on what to use as a means of payment ("consensus problem")...

These are two very different scenarios (disobedience vs disagreement)

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June 11, 2016, 05:00:01 PM
Last edit: June 11, 2016, 05:29:30 PM by deisik
 #72

Strictly speaking, the only intrinsic value money could and should have is transactional utility.

Why?

I assume you imply that money should also have some additional intrinsic value due to money's capacity to serve as a store of value, right? But this value is already "incorporated" in the transactional utility since transactions usually happen at different moments of time (and in different points of space). Otherwise (if offsetting transactions happened simultaneously, like in barter deals), there would be no need for money to "materialize" as something existing objectively and separately from the goods the exchange of which it serves to facilitate (for example, as coins, banknotes, or digits in a Central bank server)...

In that case there would be no transactional utility, and, consequently, no utility of preserving value, which are essentially the same, though the concept of money would still hold stripped of all intrinsic value


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upsidedown75
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June 11, 2016, 06:07:56 PM
 #73

That is, this problem arises only if money fails as a means of payment (when the fiat system is reset, in your terms)

Watching how this problem arises every single time with fiat currencies, can we agree that government doesn't solve it entirely? My definition of entirety is the problem not rearing its ugly head longer than three decades, and that is a very modest request, unfortunately largely unfeasible under fiat systems

No, we can't agree since in this case the government can't solve another problem, a problem of enforcement, since the problem of consensus is, well, a consensus problem, i.e. a problem of coming to an agreement. In this case that would be an agreement as to what to use as a means of payment between economic entities. Government, on the other hand, doesn't have to negotiate (come to an agreement) with economic entities what to use as money...

Thereby, the consensus problem doesn't even arise

Some economic entities disagree with government on using fiat for savings. Something else becomes money for them when they think about savings, and this cannot be enforced. Crypto takes the enforcement effort to a whole new level of difficulty. I don't see entirety to problem solving in any of this

This is still not a consensus problem. I see what you mean, and what you mean has nothing to do with the problem that arises when there is no forced money. Some "economic entities" may not even deem legal tender as money altogether, but that would mean going against the rules (e.g. refusing to accept legal tender as payment or pay taxes with it). And consider the situation when there are no binding rules, no one is forcing anyone to use anything as money, and all the economic entities should somehow agree on what to use as a means of payment ("consensus problem")...

These are two very different scenarios (disobedience vs disagreement)
Hearing many good opinion about the NGM.
It may and may not arise any issue, as long as government agree with the system works it could solve problems for the future generation also. You can even buy anything with the new money now itself, so for next generation we might leave a versatile one.
samlanhan1
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June 11, 2016, 06:26:40 PM
 #74

It's the same concept as money and goes through the sam e process of inflation and deflation. It's just a better option that what we have currently.
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June 13, 2016, 10:58:20 AM
 #75

Strictly speaking, the only intrinsic value money could and should have is transactional utility.

Why?

I assume you imply that money should also have some additional intrinsic value due to money's capacity to serve as a store of value, right? But this value is already "incorporated" in the transactional utility since transactions usually happen at different moments of time (and in different points of space). Otherwise (if offsetting transactions happened simultaneously, like in barter deals), there would be no need for money to "materialize" as something existing objectively and separately from the goods the exchange of which it serves to facilitate (for example, as coins, banknotes, or digits in a Central bank server)...

In that case there would be no transactional utility, and, consequently, no utility of preserving value, which are essentially the same, though the concept of money would still hold stripped of all intrinsic value



When the value saving horizon is a few months, very little or no value will be lost. For most humans it's important that the time offset between input and output can last many years and that value of their retirement savings is preserved to the end of their life. Fiat just can't do it. I don't affirm that Bitcoin can do it, but it's an interesting alternative to fiat and bonds. Transactional utility is defined by certain properties, much like store of value is defined by certain properties, no they are not the same. It's not convenient to use gold coins to buy a loaf of bread, because divisibility, etc, their transactional utility is small compared to fiat, you can still transact to buy large items with gold coins. But store of value utility of gold coins is higher compared to fiat over long spans of time.

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June 13, 2016, 11:18:17 AM
Last edit: June 13, 2016, 11:28:55 AM by deisik
 #76

Strictly speaking, the only intrinsic value money could and should have is transactional utility.

Why?

I assume you imply that money should also have some additional intrinsic value due to money's capacity to serve as a store of value, right? But this value is already "incorporated" in the transactional utility since transactions usually happen at different moments of time (and in different points of space). Otherwise (if offsetting transactions happened simultaneously, like in barter deals), there would be no need for money to "materialize" as something existing objectively and separately from the goods the exchange of which it serves to facilitate (for example, as coins, banknotes, or digits in a Central bank server)...

In that case there would be no transactional utility, and, consequently, no utility of preserving value, which are essentially the same, though the concept of money would still hold stripped of all intrinsic value

When the value saving horizon is a few months, very little or no value will be lost. For most humans it's important that the time offset between input and output can last many years and that value of their retirement savings is preserved to the end of their life. Fiat just can't do it. I don't affirm that Bitcoin can do it, but it's an interesting alternative to fiat and bonds. Transactional utility is defined by certain properties, much like store of value is defined by certain properties, no they are not the same. It's not convenient to use gold coins to buy a loaf of bread, because divisibility, etc, their transactional utility is small compared to fiat, you can still transact to buy large items with gold coins. But store of value utility of gold coins is higher compared to fiat over long spans of time.

I'm afraid that you are confusing the utility of money itself (which stems from the function of money, that of facilitating the exchange of goods) with the utility of an asset which happens to represent the money (e.g. gold), and which is more or less constant due to the specific nature of this asset (the root of your confusion). But these are two entirely different utilities...

The latter (as you mean it) is not related to the concept of money as such

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freshman777
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June 13, 2016, 11:31:56 AM
 #77

I'm afraid that you are confusing the utility of money itself (which stems from the function of money, that of facilitating the exchange of goods) with the utility of an asset which happens to represent the money (e.g. gold), and which is more or less constant due to the specific nature of this asset (the root of your confusion)...

But these are two entirely different utilities (the latter is not related to the concept of money as such)

Utility of money comes from utility of asset that represents the money, can't separate one from the other. For the average person the difference is not distinguishable. Can they make savings and be sure they can purchase the same amount of goodies at the end of life is all that matters to them, and fiat doesn't cut it. Nobody can argue with a straight face that fiat is good at preserving retirement savings. Wait, politicians can. When is a politician not telling lies, when his mouth is not moving.

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Ayers
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June 13, 2016, 11:37:10 AM
 #78

It's the same concept as money and goes through the sam e process of inflation and deflation. It's just a better option that what we have currently.

yes but with deflation as ultimate goal, instead fiat is inflation as ultimate goal, very bad,defaltion is better than defaltion, because it make your money more powerful and it kill poverty, inflation increase poverty
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June 13, 2016, 11:40:02 AM
 #79

Bitcoin can be our next generation money, But i think its not applicable in our daily lives in just buying stuffs from online, Many stores are not applying bitcoin as payment. But im hoping that in future they will adopt bitcoin payment
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June 13, 2016, 11:40:48 AM
Last edit: June 13, 2016, 11:57:32 AM by deisik
 #80

I'm afraid that you are confusing the utility of money itself (which stems from the function of money, that of facilitating the exchange of goods) with the utility of an asset which happens to represent the money (e.g. gold), and which is more or less constant due to the specific nature of this asset (the root of your confusion)...

But these are two entirely different utilities (the latter is not related to the concept of money as such)

Utility of money comes from utility of asset that represents the money, can't separate one from the other. For the average person the difference is not distinguishable. Can they make savings and be sure they can purchase the same amount of goodies at the end of life is all that matters to them, and fiat doesn't cut it. Nobody can argue with a straight face that fiat is good at preserving retirement savings. Wait, politicians can. When is a politician not telling lies, when his mouth is not moving.

This is not an intrinsic utility of money, that's what you started with if you happen to forget. For example, real estate is a good store of value (maybe, even better that gold), but that doesn't make it money. As I said, money's only intrinsic utility is transactional utility, and it necessarily includes the utility of a store of value (since transactions are separated in space and time). And this utility (which is the same transactional utility only viewed from another angle) is totally independent of a store-of-value utility of an asset representing money...

I hope this clarifies it for you (and other readers who might have been equally confused)

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