2013-08-25 Forbes: FedGov's Reaction To Bitcoin Acknowledges USD Vulnerability

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More of an anti-USD piece than a pro-Bitcoin piece.  Starts out well as you'd expect from the title, but frustratingly loses the plot goldbug-style towards the end, trotting out the intrinsic value argument and championing commodity-linked vehicles inevitably reliant on 3rd party trust:

It is not Bitcoin that will arise as the alternative global reserve currency, because as discussed above, it has no inherent value either, so it is subject to wide swings in market value too.  The real threat to the dollar is a different, private, alternative currency that can arise, that is based in real commodities with inherent value.

Such a currency will not be rooted only in the imagination of cyberspace, but will look more like the currencies of old that gave rise to booming capitalism.  A foreign financial institution free from meddling, destabilizing, self-interested, U.S. policy interference can issue a currency where each unit entitles the bearer to specified quantities of a diversified basket of precious commodities, like gold, silver, copper, oil, diamonds and similar commodities that inherently hold their value over the long run.

http://www.forbes.com/sites/peterferrara/2013/08/25/the-federal-governments-reaction-to-bitcoin-is-an-acknowledgement-of-the-dollars-vulnerability/

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[bitfromit]

The theorists still can't get there heads out of their textbooks from 1950s. Lol.

The "must have intrinsic value" (read heavy and shiny) argument just doesn't cut it i'm afraid.

Imagine a tomorrow with no computers (so not even a pocket calculator) - The 1st world economy would cease.

Yet isn't that all just a bunch of computation? ...with apparently no "intrinsic value".

[aigeezer]

I take some comfort in noting that Forbes' reaction to the federal government's reaction to BTC is also an acknowledgement of the dollar's vulnerability.

[Carlton Banks]

The theorists still can't get there heads out of their textbooks from 1950s. Lol.

The "must have intrinsic value" (read heavy and shiny) argument just doesn't cut it i'm afraid.

Imagine a tomorrow with no computers (so not even a pocket calculator) - The 1st world economy would cease.

Yet isn't that all just a bunch of computation? ...with apparently no "intrinsic value".

I'd steer away from using "intrinsic", at least some dictionary definitions cite it as meaning something more like "essential" or "indispensable to life", which is subjective at the moment (I'd argue that cryptocurrency is indispensable in the long term at least, but hey, I'm a Bit-believer  ).

"Inherent" is incontrovertible in it's meaning, use that expression religiously IMO. "Intrinsic" is subject to subversion, depending on which dictionary you're fondest of.

[Carlton Banks]

Interesting read this.

It's a fairly objective piece, or at least honestly written. He specifically states "it is created in the cybersphere out of nothing more than imagination, with no inherent value, unlike gold or silver coins, or currencies backed by precious metals."

I wonder if he thinks of it in the naive way that people often understand computer programming. It feels like the "no inherent value" argument comes from such a misunderstanding: if you assume that Bitcoin et al are just a bunch of floating point numbers stored in a database, then yup, no inherent monetary value there. The cryptographic enforcement of the accounting, of the supply control and of the access protection are what gives it the monetary value. Once commentators begin to understand that aspect and combine it with their monetary theory, it'll be larger denominations than pennies that will be dropping. When that understanding gives way to the enthusiasm that lets people understand what else this cryptographic leveraging can achieve, well, they'll be back where we all were about 2 years ago.

[Mike Christ]

Interesting read this.

It's a fairly objective piece, or at least honestly written. He specifically states "it is created in the cybersphere out of nothing more than imagination, with no inherent value, unlike gold or silver coins, or currencies backed by precious metals."

I wonder if he thinks of it in the naive way that people often understand computer programming. It feels like the "no inherent value" argument comes from such a misunderstanding: if you assume that Bitcoin et al are just a bunch of floating point numbers stored in a database, then yup, no inherent monetary value there. The cryptographic enforcement of the accounting, of the supply control and of the access protection are what gives it the monetary value. Once commentators begin to understand that aspect and combine it with their monetary theory, it'll be larger denominations than pennies that will be dropping. When that understanding gives way to the enthusiasm that lets people understand what else this cryptographic leveraging can achieve, well, they'll be back where we all were about 2 years ago.

If by inherent value, he means, without human life, gold and silver would still be integral to a functioning universe, I suppose they might have their purpose--but without humans, who would be around to care?  The most valuable currency, it seems, is the one which functions best as a currency and worst at everything else, and Bitcoin's perfect for being the absolute worst at anything but being money; sure, I can't mold the Bitcoin into a rod and hit a guy over the head with it (inherent value gone right there), and I can't wipe my nose with it either, but for what it's designed to do, it's the best thus far, just as there are objects specifically designed for hitting guys over the head, and others specifically for wiping one's nose, which do far better jobs than gold and fiat.  In other words, gold has inherent value because someone, and at least one other person, finds it valuable, while anything this someone doesn't find valuable will not have inherent value, and it seems you can't tell this to a goldbug and expect them to understand; such irrational thoughts can only be worked out by their owners.

[Carlton Banks]

Interesting read this.

It's a fairly objective piece, or at least honestly written. He specifically states "it is created in the cybersphere out of nothing more than imagination, with no inherent value, unlike gold or silver coins, or currencies backed by precious metals."

I wonder if he thinks of it in the naive way that people often understand computer programming. It feels like the "no inherent value" argument comes from such a misunderstanding: if you assume that Bitcoin et al are just a bunch of floating point numbers stored in a database, then yup, no inherent monetary value there. The cryptographic enforcement of the accounting, of the supply control and of the access protection are what gives it the monetary value. Once commentators begin to understand that aspect and combine it with their monetary theory, it'll be larger denominations than pennies that will be dropping. When that understanding gives way to the enthusiasm that lets people understand what else this cryptographic leveraging can achieve, well, they'll be back where we all were about 2 years ago.

If by inherent value, he means, without human life, gold and silver would still be integral to a functioning universe, I suppose they might have their purpose--but without humans, who would be around to care?  The most valuable currency, it seems, is the one which functions best as a currency and worst at everything else, and Bitcoin's perfect for being the absolute worst at anything but being money; sure, I can't mold the Bitcoin into a rod and hit a guy over the head with it (inherent value gone right there), and I can't wipe my nose with it either, but for what it's designed to do, it's the best thus far, just as there are objects specifically designed for hitting guys over the head, and others specifically for wiping one's nose, which do far better jobs than gold and fiat.  In other words, gold has inherent value because someone, and at least one other person, finds it valuable, while anything this someone doesn't find valuable will not have inherent value, and it seems you can't tell this to a goldbug and expect them to understand; such irrational thoughts can only be worked out by their owners.

The goldbugs are a curious breed, they have a very static, narrow view of possibility. "There currently exists only 6000 tons of gold on the planet" they say, "this number cannot be changed". They fail to recognise it could be mined on another planet in the distant future, from a drifting asteroid in the middle-future, or from a meteorite crash on a totally unpredictable timescale (such an event could occur tomorrow). Gold is only any good as a medium term solution, when you think of the absolute long term.