Please stop comparing bitcoin to stocks. It is kind of annoying how people like to describe bitcoin by whatever suits the particular argument. In general it's a currency, but when an argument arises that it is a currency of low quality, then it suddenly becomes a stock. And If I explain that if bitcoin is a stock, then you are buying stock from a company that actually uses it's resources without any gain, then I'l bet it becomes a commodity. Imagine a company that digs a hole, then covers it up again, then digs it again and repeats the process to eternity. But the company is saying that this use of resources is very constructive, and some fools believe it. This would be the case if bitcoin would be anywhere near in being a stock. But, bitcoin is not a stock and it's nowhere close to being a stock. It's a commodity at best.
I'll stop making the comparison when it is no longer germane. Bitcoin is like a stock in the ways that it is like a stock. It is like a commodity in the ways in which it is like a commodity, and it is like a currency in the ways in which it is like a currency. It should not be surprising that something so fundamentally new and innovative should not be perfectly modeled by analogy with any one of its predecessors. It is like a stock in that purchasing it adds to the capitalization of the system, which makes it able to do things in the broader economy which can only be done with greater capitalization. It is like a stock in that capital invested adds to the growth of the organization and its productive capacity, which in this case lies at least in part in its ability to create economic efficiencies by disintermediation. That there are many use cases for bitcoin adds to its value and utility, and makes it more difficult to replace. When one thing can fulfill many functions which formerly were done by several things, life is improved, and wealth is increased. This is the case, for example, with smartphones. In that sense bitcoin is principally a network protocol. This is very different from a stock, a commodity, a note, a swap, or a currency. Yet it is also a fair and accurate characterization of bitcoin.
If you are unable to deal with the actual characteristics, the actual variety of use cases, the actual complexity of the relationship between bitcoin and the economy, then you might be better off applying your analytic efforts in another domain, more suited to your talents and interests.
If the world's "wealth" -- meaning energy consumption -- continues increasing exponentially then we will all die in fire. If that is your inflationary paradise, we have very different world-views.
I agree with you here, that this is a matter of different world views. One view says that we have to conserve our resources, because if they end then there will be nothing left to consume. The other view tells that we have to consume resources to discover new resources to use on our benefit. I tend to fall on the second view.
As do I in fact. But exponential growth in the money supply impedes that goal, because it degrades capital formation.
No, everyone who is brainwashed by the Keynesian school "knows" that. It is a false knowledge, which has never been true, as history demonstrates abundantly.
Now, this got interesting! Tell me how is it false knowledge and tell me when has history proven that it is false knowledge.
The single example which is closest to home for me is the catastrophic failure of the FRB under Burns, which was thoroughly Keynesian. It took Volcker to break that model. Another dramatic failure of Keynesian prescriptions was in England in the late 60s. I'm frankly not interested in arguing economic policies, in part because I am ill-prepared to do it, but also in part because it is a second-order issue. Policies are constructed by command complexes to effect the goals of the command complex. The first-order issue is: Who has the command and are their interests aligned with general welfare? I am of the view that the interests and goals of the command complex in the current regime are not aligned with the general welfare. If they are able to effect their policies and their policies are effective, then the general welfare will be the worse for it. Much of your reasoning is based on buying the marketing material used to co-opt polities, to marshal political support for policies which serve the interests of a very small minority of the wealthiest people on Earth, at the expense of 7 billlion others. No one should have that power. Bitcoin decentralizes that power, and places it back into the market, which is brutish perhaps, but at least is not actively malignant.
Your complaint about bitcoin boils down to this: You can't force people to use their savings on what you want them to use it for. I regard that as a feature, not a bug.
If an country would adopt this "feature" in it's currency then it will soon fall behind competitiveness, because it hurts both trade and production. That is why countries are not using this model. The bitcoin community isn't a pack of tortured geniuses who knows the answer how to prosper, while the rest of the world is just so dumb, that they wont understand the enlightened truth. This is the work of the cult mentality that I've been talking about.
The bitcoin community is diverse. But the impact of bitcoin is very much in accordance with its design, to decentralize power, and to clean out corruption, by moving law enforcement into software logic and protocol design. Rule of law, rather than rule of men, is often regarded as a brilliant innovation, which equalizes the playing field and creates many efficiencies which are not found in African dictatorships, European monarchies, or one-party totalitarian regimes which subordinate the law to the interests of those in power. You are on the side of vested powers. I consider them inimical and corrupt. Bitcoin removes much opportunity for corruption. It will take time for people to learn to adapt, but those who do will benefit from the resulting efficiencies.
No nation is likely to adopt bitcoin as a national currency any time soon. If one does, we may see whether you are correct, but since it is not relevant to the actual situation, I think your point is a red herring. The issue of actual interest is whether the global availability of this new kind of "currency" (really just a token-based ledger system) creates new efficiencies and new opportunities in the form of novel workflows and modes of organization. I find it difficult to imagine how it could fail to do so, as a great deal of entrepreneurial innovation and energy is being sparked by this innovation.
Why do you feel it is necessary or appropriate to argue that bitcoin is a bad design for a national currency when no one cares, no one is making a credible case that it should be adopted as one, and no one has an interest in doing so? I think it is only to distract from the actual merits of bitcoin, and it bespeaks a monomaniacal antipathy which I see as deeply pathological and very misleading.
You don't see the store of wealth use case as a beneficial one. I do.
Speculative investment is not store of wealth. If someone sees a commodity, that's value is purely based on speculation as a good store of wealth, then that someone shouldn't handle money. Speculative value is a fragile thing that can appear and disappear very very fast.
And if no one bothered to mine iron, there would be no steel, no ships, no cars, no planes, no modern technology as we know it. If speculators create a market for iron, then it will be mined.
Speculation is not intrinsically evil. Speculation allocates resources towards productive ends. Anticipating future needs and allocating resources accordingly is the kernel of speculation. Whether speculation is wise for your own financial goals, I would not presume to say. Certainly the appropriate application of suitable analysis is required to achieve many goals. You may not have the necessary information to speculate productively in a given area. Or you might suffer from a gambling addiction which leads to unsuitable risk/reward trade-offs, and damages you personally. Or you might speculate in a Machiavellian manner, make a gain, but at terrible social cost. People are certainly capable of doing evil in almost any area of life. That's their choice, and their responsibility. Hopefully we can order incentives to minimize results which are harmful. Every time an entrepreneur creates a business to serve some need in society, they are speculating, allocating resources responsive to a need, and thereby creating new wealth. The speculative venture of buying bitcoin is similar, in that one is allocating resources to a business process, one of global scope, providing a lawful means of recording transactions openly. If the "long speculator", the investor, is correct, and the market needs this service, can create new efficiencies, new forms of wealth when this need is met, then we all benefit.
It is hubris, effrontery, to pretend to know better how to price money than does the invisible hand.
This last line is a little hard to understand what point you are actually trying to make.
My point is that the complexity of the system is too great to allow effective central controls over resource levels to be helpful to the general welfare. Those who have attempted it have typically created great harm, such as the Chinese famine which followed the Great Leap, or the starvation of the Ukraine, or the general pervasive dysfunction which characterized the late Soviet economy. Controlling money supply by fiat has the harmful characteristics of a big knob that foolish men cannot help but twiddle according to their preconceived ideologies and their personal goals and ambitions. I am claiming that a market-based determination of the price of money is necessary in order for market disciplines to prevent gross inefficiencies which can beggar us all.
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