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Author Topic: Why Bitcoin Fails as Currency of the Future  (Read 4371 times)
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February 20, 2013, 05:17:00 AM

Maybe so then it is

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February 20, 2013, 07:02:29 AM

There is no such thing as intrinsic value.
No there isn't, but this is not the same thing as saying a society of humans couldn't possibly agree on a set of economic rules that assumes things have intrinsic value and that ends up serving them well according to their expectations.
But I digress. (Your mistakes as a Mises-ian will be many more than I have time to point out and correct so I better give up on that type of reply right now.)

Value is determined as part of the economic calculation and it is always measured relative to something.
This says nothing about what makes a currency system better than others. I will tell you what makes a currency better than others (better than fiat and better than Bitcoin): it should have little or no deflation or inflation; and if it does these phenomena should only affect the people responsible for them and not also everyone else.

Grignon's Digital Coin system has these properties, unlike Bitcoin: the producers of goods and services are also the issuers of specific types of digital coin with which those goods and services can be bought. Therefore, all coin in circulation is always backed by real values available to be transacted on the market. Therefore, if a producer/issuer makes any calculation mistakes and issues too much or too little of their own coin relative to how much product they make available to be bought with it, the ensuing inflation or deflation will only affect them and not the whole economy. Two major problems solved right there. Bitcoin doesn't touch either of these.

So where you might ask did the initial value of the bitcoin come from. It came when Satoshi expended the first electron to decrypt the very first block (not counting his work in developing and testing bitcoin).
That looks kinda like a circular definition: Bitcoin has value because effort was spent doing something that creates trust in the Bitcoin system. It's almost as bad as fiat currency. Coins should have value because they're backed by real values available to be exchanged for it on the market - that's healthy currency, not any of these other distorted systems based on little more than mental gymnastics.

I like converting the value of a currency into the amount of primary energy that it purchases.
I would like that too, but unfortunately you can't convert human expectations into energy units, so in a perfectly rational monetary system you will probably need at least two different types of currency that cannot be converted into eachother: one that reflects the physical properties of the goods being traded (and prices in this currency cannot be subject to the laws of the free market but must be established by extremely rigorous and precise calculations based on the laws of physics) and another that reflects all the human subjective factors that go into establishing "value" (and prices in this currency can be subject to free market phenomena, no problem).
But we digress again. Smiley

So "the joint" please refrain from denigrating bitcoin. You do not have a logically defensible position.
Yes I do, see above. Bitcoin is not backed by real values on the market any more than fiat currency is and when someone or something causes inflation/deflation in Bitcoin, that affects everyone at the same time, even people who weren't at fault. Grignon's Digital Coin system is clearly better, as it solves these two major problems.

If you doubt its value, don't trade in it.
I don't doublt its "value" as expressed in $ and while it still has that I will probably continue to trade in it - for purely speculative reasons. What I doubt is its "value" in the long term, its "value" as a monetary system.

If you are trading in it then you don't even believe your own gas, because your act of trading is adding value to bitcoin.
No it's not. Speculation adds to instability, which lowers Bitcoin's "value" as a monetary system. All I'm doing is speculating - I want to see Bitcoin crash and burn ASAP (and get a little richer while I'm at it, if possible). Smiley

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February 20, 2013, 07:14:02 AM

Posts count don't set the character, it's just there to filter out trolls, so please don't use as a argument.

The main post is a bit hard to read, you may might need to break it up a little better (dyslexia whoo hooo).

That out of the way I have to say that it's very hard to figure out the value of things, as some people might even value flying into towers as a greater value than their wife, kids and friends. What is the value of a currency? It's all about how many people use it, and that's all we can really say, and then in the future we can tell what really happened.

Even if there is something wrong with Bitcoin it does not matter, there is something wrong with religions and statisme, and they are super big. There are some really skilled people on Youtube that produce amazing content, and they have few viewers, and there are these who get 100000 subscribers underservingly.

Value is a unknown variable, only testing can take samples of it, and only marketing can alter it.

Consider this scenario.  Let's say you have a guy who likes to work on cars.  He wants to run a mechanic shop.  Let's also say that there's a global currency, x.  Who are the customers that are going to be able to have their cars repaired?  The ones with greater amounts of x and x only.  But, if there's no global currency, then the mechanic is going to have to be much more thoughtful in what he could accept as payment that would be of value to him.  It seems like this may help eliminate the huge gap between the very rich and very poor over time.  I agree with you that figuring out the value of something is relative.  And that's why I think that any global currency will fail under the weight of its own problems.  If you place value on the process of exchange, then it places value on the relationship between exchangers.  I just think it might promote social harmony.  Global currencies create classes of social rank, and with it, greed.

Good quote, words to live by.
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