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"The nature of Bitcoin is such that once version 0.1 was released, the
core design was set in stone for the rest of its lifetime." -- Satoshi
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jnagyjr
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Activity: 100
Merit: 10
Psalm 15
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September 17, 2013, 12:06:12 AM |
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I don't see much of a difference aside from it's natural resistance to inflation, honestly. It spends the same (where it's accepted), the only thing is it only exists as information on computers across the network.
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Proverbs 12:1
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mirelo
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September 17, 2013, 12:46:30 AM |
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Is Bitcoin "virtual gold" better than fiat "virtual money". The answer is yes, but it is still difficult to nail down exactly why, except to fall back upon the all-important 21 million, predefined, currency unit limit.
Bitcoin is no "virtual gold": in order to understand it we must abandon the conceptual standard of gold money. The fundamental originality of Bitcoin is that it distinguishes money from its representation: it first represents money with a private key, then metarepresents it with a public key (see https://bitcointalk.org/index.php?topic=249803.msg2653364#msg2653364). In contrast, gold makes no distinction between money and its representation. |
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Stephen Gornick
Legendary
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Activity: 2506
Merit: 1010
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September 17, 2013, 01:34:13 AM |
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Now, the question for Bitcoiners goes deeper. Is Bitcoin "virtual gold" better than fiat "virtual money". The answer is yes, but it is still difficult to nail down exactly why, except to fall back upon the all-important 21 million, predefined, currency unit limit.
It is like pornography. It is hard to define but you know what it is the moment you see it. The difference is that when trust granted the issuer of the virtual money starts being questioned, the relative value of that virtual money will drop rapidly. We are seeing that right now. After years of quantitative easing, the value of $100K USD is rapidly dropping versus the value of one typical single family house. Go to a restaurant. The value of $5 over the past couple years has dropped rapidly against the typical hamburger and fries. This is why I'm excited not just to see Bitcoin as an alternative to fiat, but I'm also excited to see Open Transactions and Ripple as possible alternatives for recording and transferring value. Let's say my employment contract for my weekly compensation pays me not only $X USDs (or N.N XBTs) but it also pays me a basket of items of value ... a voucher for N ounces of silver from X, a voucher for N gallons of fuel from Y, maybe a week's worth of sandwiches even, etc -- something I can foresee these systems handling. I can consume these by spending the vouchers now or I can save them for later consumption, ... but what I don't end up doing is suffering the frustration that my salary set eight months ago no longer buys what it used to. |
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mirelo
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September 17, 2013, 12:45:37 PM |
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It is like pornography. It is hard to define but you know what it is the moment you see it.
This is not at all true. The form of money of which Bitcoin is an instance never existed before: we are neither used to it nor conceptually equipped to understand it without a huge conceptual overhaul. Despite most people being able to use Bitcoin and other cryptocurrencies without much conceptual effort (yet still not without some technical effort), that does not mean they understand the money they are using. We can hope this new form of money becomes widely adopted because of its practical advantages, like deflation, low fees, transaction speed, and possible transaction privacy, but we should not fool ourselves into mistaking this with conceptual understanding. |
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Ekaros
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September 17, 2013, 01:43:08 PM |
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BTC is kinda like fiat, but it's limited.
I never got why gold would be so good, what is real worth of marginally useful metal...
Still, I don't believe BTC is final solution. I think we need something linked to energy. Only real currency that can exist...
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mirelo
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September 17, 2013, 02:18:20 PM
Last edit: September 20, 2013, 12:27:15 PM by mirelo |
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BTC is kinda like fiat, but it's limited.
The expression "fiat money" designates the myth of money as individually created (think of God saying "fiat lux") while it is rather socially created: even if privately controlled, or centralized, its creation always requires the participation - whether active or passive - of the whole society. I never got why gold would be so good, what is real worth of marginally useful metal... Gold is not money because of its non-monetary utility, but rather because of its monetary utility, which results from its divisibility, homogeneity, durability, and so on. Bitcoin has the same properties of gold, some in a greater degree, and more: in addition to being more divisible, more homogeneous, and practically just as durable, its ownership is much more easily transmittable at a distance, much more easily and securely stored, and inherently private. Still, I don't believe BTC is final solution. I think we need something linked to energy. Only real currency that can exist... The "linkage" of money to something else is precisely the problem Bitcoin solves: the confusion between money and its representation (in Bitcoin, respectively a private key and its corresponding public key). |
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Carlton Banks
Legendary
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Activity: 3430
Merit: 3071
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September 17, 2013, 03:29:02 PM |
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Now, the question for Bitcoiners goes deeper. Is Bitcoin "virtual gold" better than fiat "virtual money". The answer is yes, but it is still difficult to nail down exactly why, except to fall back upon the all-important 21 million, predefined, currency unit limit.
The value is in the way the limit is enforced. Currency supply limits could be enforced any number of ways in software; a totally naive way, an oversimplistic way, an overcomplicated way, an uneconomic way, a way that doesn't scale well as the network grows, etc. Or any combination of ways, the design possibilities are vast when you're using the full range of programming logic, design and mathematics. Satoshi came up with a real goldilocks design, or at least the first that could be described that way in the 20 year history of those that have tried. Also, and I often say this, gold only works on a limited timescale, or more accurately with limited space age type technology. Asteroids are full of precious metals, and our solar system is full of asteroids. It doesn't take many more technological leaps before we're mining them, such a proposal even made the news pages earlier this year. Even asteroid landings could yield precious metals, you can bet that's the first question governments want answered when a big rock falls. |
Vires in numeris
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Stephen Gornick
Legendary
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Activity: 2506
Merit: 1010
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September 17, 2013, 05:52:29 PM |
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It is like pornography. It is hard to define but you know what it is the moment you see it.
This is not at all true. I wasn't trying to describe Bitcoin, I was trying to respond to the "why Bitcoin is better than fiat" question that does not mean they understand the money they are using. Yup -- ask five people what a dollar bill is and you'll get five different answers. One might say it represents a tiny fraction of gold held in Ft. Knox, another might say it is the only legal form of money allowed, etc. But everyone knows the basics -- that fiat currency and coin is accepted by merchants for making purchases and we know that's how employers pay compensation. If this fiat buys a gift card and that card is then accepted by merchants, it makes no difference to the consumer if what is stored is $50 fiat USD or 0.5 Bitcoins -- as long as it holds at least the same purchasing power as it had when purchased. While the CPI numbers keep being fabricated (e.g., excluding gas because, you know, nobody drives) and the resulting inflation numbers appear tame, the insanity of fiat is being learned by some, albeit slowly. But useful on that is a saying on a related topic ... “How did you go bankrupt?" Two ways. Gradually, then suddenly.” ― Ernest Hemingway, The Sun Also Rises |
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mirelo
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September 17, 2013, 09:37:27 PM |
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It is like pornography. It is hard to define but you know what it is the moment you see it.
This is not at all true. I wasn't trying to describe Bitcoin, I was trying to respond to the "why Bitcoin is better than fiat" question You mean you were referring to the practical advantages of Bitcoin rather than to its conceptual understanding. that does not mean they understand the money they are using. Yup -- ask five people what a dollar bill is and you'll get five different answers. One might say it represents a tiny fraction of gold held in Ft. Knox, another might say it is the only legal form of money allowed, etc. But everyone knows the basics -- that fiat currency and coin is accepted by merchants for making purchases and we know that's how employers pay compensation. If this fiat buys a gift card and that card is then accepted by merchants, it makes no difference to the consumer if what is stored is $50 fiat USD or 0.5 Bitcoins -- as long as it holds at least the same purchasing power as it had when purchased. People want their money to have all properties money must have, not only to be a trustful store of value. Knowing which properties are those, and why, depends on a conceptual understanding of money. For example, the most fundamental property money must have is that its monetary value must be private while its representation must be public. Our current monetary representation is partially private: banks control its creation, which allows them to "relocate" monetary value privacy, hence ownership, through inflation. In contrast, public keys are an inherently public way of representing money, which leaves monetary value privacy, hence ownership, intact. Our problem is not just inflation, but systemic inflation in a centralized monetary system where monetary representations are privately public. While the CPI numbers keep being fabricated (e.g., excluding gas because, you know, nobody drives) and the resulting inflation numbers appear tame, the insanity of fiat is being learned by some, albeit slowly. But useful on that is a saying on a related topic ...
“How did you go bankrupt?"
Two ways. Gradually, then suddenly.”
― Ernest Hemingway, The Sun Also Rises
A lot of people will not see that coming, and another lot will not fully understand it despite becoming aware of it to a certain degree. However, some people should fully understand it. |
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