Why bitcoin isn't currency.

[benjamindees]

The OP makes the mistake of assuming that, since currencies have historically been backed by physical objects, and since they have usually been defined in terms of some constant measure of these objects, that "currency" inherently means "unit".

That's not even remotely the case.

Currency means "current value".  Currencies have current value, not because they are backed by some unit of objective backing, but because they circulate (like a current!) as a medium of exchange.

And this is simple to prove.  Look at any unbacked fiat currency in existence today.  Is it defined by an objective "unit"?  No, of course not.  A Federal Reserve note "dollar" is not an ounce of silver.  It's not 1/35th an ounce of gold.  It's not backed by anything whatsoever.  Yet it still has currency because it circulates as a medium of exchange!

So, yeah, in terms of some poorly-worded regulations aimed at preventing the fraudulent issuance of money without the advertised backing, Bitcoin is not a "currency".  Bitcoin is clearly not backed by anything.  And no one has ever claimed otherwise.

But, in terms of the actual definition of currency, namely current value based on circulation as a medium of exchange, Bitcoin clearly is a currency.

[sublime5447]

The OP makes the mistake of assuming that, since currencies have historically been backed by physical objects, and since they have usually been defined in terms of some constant measure of these objects, that "currency" inherently means "unit".

That's not even remotely the case.

Currency means "current value".  Currencies have current value, not because they are backed by some unit of objective backing, but because they circulate (like a current!) as a medium of exchange.

And this is simple to prove.  Look at any unbacked fiat currency in existence today.  Is it defined by an objective "unit"?  No, of course not.  A Federal Reserve note "dollar" is not an ounce of silver.  It's not 1/35th an ounce of gold.  It's not backed by anything whatsoever.  Yet it still has currency because it circulates as a medium of exchange!

So, yeah, in terms of some poorly-worded regulations aimed at preventing the fraudulent issuance of money without the advertised backing, Bitcoin is not a "currency".  Bitcoin is clearly not backed by anything.  And no one has ever claimed otherwise.

But, in terms of the actual definition of currency, namely current value based on circulation as a medium of exchange, Bitcoin clearly is a currency.

Either currency is a system of measurement or it is not. All systems of measurements require a unit of measurement. It is a problem that the dollar is not a true unit and is not an accurate measure of value. It is to the citizens and foreign debt holders disadvantage that the measurement of value is done with a yard stick that changes length.
We have been living 4 decades with a lie, It wont last much longer.   

[benjamindees]

And that's why we have Bitcoin.  A Bitcoin is a unit of measurement.  It represents approximately 1/21,000,000th of the Bitcoin economy.  It is arguably the best economic measurement ever devised.  That doesn't mean it's perfect.  The Bitcoin economy isn't exactly easy to define.  We could imagine ways to come up with a better unit.  We know what it would generally look like.  But it's beyond our capabilities at the moment.  And in fifty years the difference between Bitcoin and a perfect unit of economic measurement would likely be minimal anyways.

Regardless, if you're going to make this huge semantic argument, it would help to start out using the correct definitions of words to begin with.  Currency is not synonymous with money.  Saying that someone needs to make a currency representing to a Joule or whatever is simply ridiculous nonsense.  Here's one.  Try using it as currency.  Don't like it?  What do you think would work better?  Is the petrodollar really such a distant memory?  How well did that turn out?

Now, if you want to argue that Bitcoin isn't *money*, or that Bitcoin is a poor investment, because it doesn't have guaranteed future value, fine.  Many here would even agree with that.  I'm sure it would be an interesting conversation.  But arguing that Bitcoin isn't "currency" because it isn't a "system of measurement," when no system of measurement coming anywhere *close* to Bitcoin has ever even been espoused, let alone devised, and when that isn't even the definition of "currency" anyways, is just confusion.

[sublime5447]

And that's why we have Bitcoin.  A Bitcoin is a unit of measurement.  It represents approximately 1/21,000,000th of the Bitcoin economy.  It is arguably the best economic measurement ever devised.  That doesn't mean it's perfect.  The Bitcoin economy isn't exactly easy to define.  We could imagine ways to come up with a better unit.  We know what it would generally look like.  But it's beyond our capabilities at the moment.  And in fifty years the difference between Bitcoin and a perfect unit of economic measurement would likely be minimal anyways.

Regardless, if you're going to make this huge semantic argument, it would help to start out using the correct definitions of words to begin with.  Currency is not synonymous with money.  Saying that someone needs to make a currency representing to a Joule or whatever is simply ridiculous nonsense.  Here's one.  Try using it as currency.  Don't like it?  What do you think would work better?  Is the petrodollar really such a distant memory?  How well did that turn out?

Now, if you want to argue that Bitcoin isn't *money*, or that Bitcoin is a poor investment, because it doesn't have guaranteed future value, fine.  Many here would even agree with that.  I'm sure it would be an interesting conversation.  But arguing that Bitcoin isn't "currency" because it isn't a "system of measurement," when no system of measurement coming anywhere *close* to Bitcoin has ever even been espoused, let alone devised, and when that isn't even the definition of "currency" anyways, is just confusion.

Quote from: Holliday on October 25, 2013, 02:29:49 PM
cur·ren·cy

noun \ˈkər-ən(t)-sē, ˈkə-rən(t)-\

: the money that a country uses : a specific kind of money

: something that is used as money

: the quality or state of being used or accepted by many people

plural cur·ren·cies

Full Definition of CURRENCY

1
  a :  circulation as a medium of exchange
  b :  general use, acceptance, or prevalence <a story gaining currency>
  c :  the quality or state of being current :  currentness
2
  a :  something (as coins, treasury notes, and banknotes) that is in circulation as a medium of exchange
  b :  paper money in circulation
  c :  a common article for bartering
  d :  a medium of verbal or intellectual expression

So currency is money.

Very good now we have to define money.   

Money = The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value

So money is a unit. Now we need to define unit.

u·nit
ˈyo͞onit/Submit
noun
1.
an individual thing or person regarded as single and complete but which can also form an individual component of a larger or more complex whole.
"the family unit"
synonyms:   component, element, building block, constituent; More
a device that has a specified function, esp. one forming part of a complex mechanism.
"the gearbox and transmission unit"
a piece of furniture or equipment for fitting with others like it or made of complementary parts.
"a sink unit"
a self-contained section of accommodations in a larger building or group of buildings.
"one- and two-bedroom units"
a part of an institution such as a hospital having a special function.
"the intensive care unit"
a subdivision of a larger military grouping.
"he returned to Germany with his unit"
synonyms:   detachment, contingent, division, company, squadron, corps, regiment, brigade, platoon, battalion; More
an amount of educational instruction, typically determined by the number of hours spent in class.
"students take three compulsory core units"
an item manufactured.
"unit cost"
a police car.
"he eased into his unit and flicked the siren on"
2.
a quantity chosen as a standard in terms of which other quantities may be expressed.
"a unit of measurement"
synonyms:   quantity, measure, denomination More
3.
the number one.
the digit before the decimal point in decimal notation, representing an integer less than ten.
Origin

More
late 16th cent. (as a mathematical term): from Latin unus, probably suggested by digit.
Translate unit to
Use over time for: unit

[Ecurb123]

First, I dont want this to be true but it is.

Currency is a unit.

It is a unit in the system of measurement of value. Just like an inch is a unit in the system of measurement for length.

Units (and there have been thousands of different ones) all have 2 things in common.

1- They are not real. They are all made up, everyone of them is just an opinion. Inch, pound, meter, cat 5, g force,currency --- not real.
the are all just an opinion that we chose to share. We all share the opinion that an inch is so long, if we all shared the opinion that an inch was a foot then it would be.

2- All units are equal to a constant.

Bitcoin is not a currency because it is not a unit. It has to be definable it has to be equal to something.  An inch is not real but it is definable. 

Hi, did you call into free talk live maybe last week?

[Shallow]

Most people have already accepted it's a commodity

[MoonShadow]

First, I dont want this to be true but it is.

Currency is a unit.

It is a unit in the system of measurement of value. Just like an inch is a unit in the system of measurement for length.

Units (and there have been thousands of different ones) all have 2 things in common.

1- They are not real. They are all made up, everyone of them is just an opinion. Inch, pound, meter, cat 5, g force,currency --- not real.
the are all just an opinion that we chose to share. We all share the opinion that an inch is so long, if we all shared the opinion that an inch was a foot then it would be.

2- All units are equal to a constant.

This is provablely false.  Most units of measurement are, in fact, arbitrarily chosen standards of agreement.  Currencies are, truthfully, a unit of measurement; but only of value.  Value is, itself, highly subjective.  No currency has a constant value relative to anything other than itself, and often not even to itself over time.  Yes, Bitcoin is both a currency and a commodity, in many respects; it's also a service, and that service also contributes value to the users.

[Thenen]

Because the country can't print Bitcoin easily. So it isn't a currency, its just an exchange like gold...

[Rupture]

Bitcoin isn't a currency. yet.

[sublime5447]

First, I dont want this to be true but it is.

Currency is a unit.

It is a unit in the system of measurement of value. Just like an inch is a unit in the system of measurement for length.

Units (and there have been thousands of different ones) all have 2 things in common.

1- They are not real. They are all made up, everyone of them is just an opinion. Inch, pound, meter, cat 5, g force,currency --- not real.
the are all just an opinion that we chose to share. We all share the opinion that an inch is so long, if we all shared the opinion that an inch was a foot then it would be.

2- All units are equal to a constant.

Bitcoin is not a currency because it is not a unit. It has to be definable it has to be equal to something.  An inch is not real but it is definable. 

Hi, did you call into free talk live maybe last week?

Yes that was me!

[Adrian-x]

First, I dont want this to be true but it is not.

Currency is a unit.

It is a unit in the system of measurement of value* wealth. Just like an inch is a unit in the system of measurement for length.

Units (and there have been thousands of different ones) all have 2 things in common.

1- They are not real. They are all made up, everyone of them is just an opinion. Inch, pound, meter, cat 5, g force,currency --- not real.
the are all just an opinion that we chose to share. We all share the opinion that an inch is so long, if we all shared the opinion that an inch was a foot then it would be.

2- All units are equal to a constant.

Bitcoin is not a currency because it is not a unit. It has to be definable it has to be equal to something.  An inch is not real but it is definable.  

FTFU

Value is a subjective term it is time, space, and need dependent. No 2 being value everything equality.
wealth on the other hand is a shared opinion of what we value.

Bitcoin is equal to a constant as it, for arguments sake has a finite number.
It is the most practical unit of measure ever to exist that supports the meme of money.

While the value of a glass of water depends on whether you are drowning in it or dying from lack of it.
Wealth as an opinion that we chose to share is relatively constant,  Bitcoin is the most appropriate unit of measure (currency) to have ever existed that can be used to measure wealth.

Value on the other hand remains a subjective process by which individuals make decisions and does not need a unit of measure. (Many may actually use the collective shared opinion of value ie. wealth to help them make subjective decisions involving value judgments - it's called following the judgment of the herd) the underlying collective opinion of what we all value (wealth) is not affected (food, safety, comfort, free will, - Maslow's hierarchy of needs ).

[Ecurb123]

First, I dont want this to be true but it is.

Currency is a unit.

It is a unit in the system of measurement of value. Just like an inch is a unit in the system of measurement for length.

Units (and there have been thousands of different ones) all have 2 things in common.

1- They are not real. They are all made up, everyone of them is just an opinion. Inch, pound, meter, cat 5, g force,currency --- not real.
the are all just an opinion that we chose to share. We all share the opinion that an inch is so long, if we all shared the opinion that an inch was a foot then it would be.

2- All units are equal to a constant.

Bitcoin is not a currency because it is not a unit. It has to be definable it has to be equal to something.  An inch is not real but it is definable.  

Hi, did you call into free talk live maybe last week?

Yes that was me!

Cool! I'm a big fan of the show and really like to hear people call in with opinions which are not in alignment with the hosts.

[Karmicads]

First, I dont want this to be true but it is.

Currency is a unit.

It is a unit in the system of measurement of value. Just like an inch is a unit in the system of measurement for length.

Units (and there have been thousands of different ones) all have 2 things in common.

1- They are not real. They are all made up, everyone of them is just an opinion. Inch, pound, meter, cat 5, g force,currency --- not real.
the are all just an opinion that we chose to share. We all share the opinion that an inch is so long, if we all shared the opinion that an inch was a foot then it would be.

2- All units are equal to a constant.

This is provablely false.  Most units of measurement are, in fact, arbitrarily chosen standards of agreement.  Currencies are, truthfully, a unit of measurement; but only of value.  Value is, itself, highly subjective.  No currency has a constant value relative to anything other than itself, and often not even to itself over time.  Yes, Bitcoin is both a currency and a commodity, in many respects; it's also a service, and that service also contributes value to the users.

This.  ^^^

It seems the OP has common misconception that value is objective, intrinsic to the thing being valued and fixed on an absolute, rather than a relative scale. A unit of measure is only ever an approximation of relative measurement, and not a perfect quantity of fixed objective existence.

Much can be gained from realizing that value is subjective and relative. OP also needs to consider that there is no logical inconsistency in the concept of 'relative value'. Just because it cant be resolved to an objective and fixed unit of measure, does not mean it cant be a unit of measure. Value is assigned by cognative projection in the first instance, and then by social consensus as the process of invoking the value vested in any common medium, that might be called currency.

Currency btw, is also a relative term. Something gains 'currency' as it gains acceptance as medium of exchange. It is essential fwiw, that an honest currency must allow the value to fluctuate as demand and supply dictate. The requirement to do otherwise, is not sound economics, but rather corruption.

[ekiro]

BTC is a commodity. Get your Econ right noob.

[sublime5447]

To the value is subjective so it is okay that the unit of value is subjective crowd.


Value is subjective to the individual but objective to mankind.. I can say I dont value water because I am not thirsty, I can never say that mankind doesnt value water.

Further the measure of the subjective nature of value is called price!!!!

This happens in other systems of measurement too.

Imagine you weight a bowling ball on earth and it weighs 10 pounds then you weigh the same ball on the moon and it is 2 pounds. The pound didnt change, human perception changed. We could say that the ball weighed 10 earth pounds or 10 moon pounds but we dont. We represent the change in perception with a qualifier. The ball weighs 10 pounds on earth, earth being the qualifier or the ball weighs 2 pounds on the moon, the moon is the qualifier.

We could do the same thing with currency we could say water is worth 10 units of desert currency or it is worth 1 unit of beach currency, but we dont.

We use price as the qualifier to represent the change in human perspective!

People say that gold and silver are not a constant because their value measured against other items changes. It is not the UNIT that changes it is human perspective.

   

[BobMarley]

Lol the original poster was probly a high english teacher

[benjamindees]

To the value is subjective so it is okay that the unit of value is subjective crowd.

Value is subjective to the individual but objective to mankind.. I can say I dont value water because I am not thirsty, I can never say that mankind doesnt value water.

Further the measure of the subjective nature of value is called price!!!!   

And price is measured by currency.  And Bitcoin is currency.  So what's the problem?

You can't have an objective measure of value that is disconnected from price.  It's just not possible.  Gold is a joke.  Fiat currencies are inherently flawed.  The "accounting" profession is a total fraud.  What else is there?  Nothing.  That's why we have Bitcoin.

Like I said, in fifty years, price and value will likely converge in Bitcoin anyways.  If you can come up with an "objective" measure of value between now and then, more power to you.  Odds are you won't.  It's a hard problem.  So just accept that Bitcoin is a currency in the short term, and (hopefully) an objective measure of value in the long term.

[sublime5447]

To the value is subjective so it is okay that the unit of value is subjective crowd.

Value is subjective to the individual but objective to mankind.. I can say I dont value water because I am not thirsty, I can never say that mankind doesnt value water.

Further the measure of the subjective nature of value is called price!!!!   

And price is measured by currency.  And Bitcoin is currency.  So what's the problem?

You can't have an objective measure of value that is disconnected from price.  It's just not possible.  Gold is a joke.  Fiat currencies are inherently flawed.  The "accounting" profession is a total fraud.  What else is there?  Nothing.  That's why we have Bitcoin.

Like I said, in fifty years, price and value will likely converge in Bitcoin anyways.  If you can come up with an "objective" measure of value between now and then, more power to you.  Odds are you won't.  It's a hard problem.  So just accept that Bitcoin is a currency in the short term, and (hopefully) an objective measure of value in the long term.

You will never get me to believe that you can have a system of measurement without a UNIT of measurement. You can believe a lie if you like. The whole world has been believing a lie for the last 40+ years, but that is coming to an end. Reality is the ultimate regulator. People can go a long time ignoring reality like when we believed the world was flat, but reality always wins out in the end.

[MoonShadow]

To the value is subjective so it is okay that the unit of value is subjective crowd.

Value is subjective to the individual but objective to mankind.. I can say I dont value water because I am not thirsty, I can never say that mankind doesnt value water.

Further the measure of the subjective nature of value is called price!!!!   

And price is measured by currency.  And Bitcoin is currency.  So what's the problem?

You can't have an objective measure of value that is disconnected from price.  It's just not possible.  Gold is a joke.  Fiat currencies are inherently flawed.  The "accounting" profession is a total fraud.  What else is there?  Nothing.  That's why we have Bitcoin.

Like I said, in fifty years, price and value will likely converge in Bitcoin anyways.  If you can come up with an "objective" measure of value between now and then, more power to you.  Odds are you won't.  It's a hard problem.  So just accept that Bitcoin is a currency in the short term, and (hopefully) an objective measure of value in the long term.

You will never get me to believe that you can have a system of measurement without a UNIT of measurement.

Bitcoin IS the unit of measurement.  It seems so unmoored only beause it's trying to measure something that is subjective, the value of products and services.  The measurement system still requires the pricing mechanisim that a live trade market provides, and even that is only valid momentarily.

[benjamindees]

You will never get me to believe that you can have a system of measurement without a UNIT of measurement.

Have you ever, by chance, studied the way the actual (SI) units of measurement are defined?  The second and the kilogram, which are both arbitrarily defined*, are used to derive 6 out of the 7 standard units.  Only one other unit (the Kelvin) is not defined in terms of these two.  That's a good thing.  It means that, even though the base units are arbitrary, all of the measures are consistent with each other.

We have this system of measurement, now, only because of hundreds of years of study during which scientists catalogued and refined the fundamental laws of nature that govern the interrelationships between different physical phenomena.  The only reason we haven't unified the second and kilogram, for instance, is because no one has yet to unify gravity and relativity.  Many physical units are named after those who discovered these fundamental laws, such as the Newton (which defines force in terms of mass, distance and time) or the Ampere (which defines current in terms of mass, distance, and time).  Yet, still, the base units from which the others are derived, are arbitrary.

So, since you are fundamentally opposed to a similar kind of arbitrary definition of economic "units", have you done the same for, say, gold?  Do you know the physical law that determines the economic conversion between gold and steel, for instance?  (This would have been nice for Greenspan to have known.)  You haven't found it?  Better get to work, then.  Once you discover this fundamental objective ratio of value, I'm sure it will be named after you, and then you can feel free to lecture us on the fundamental superiority of objective units of measure.  Until then, take a look at this arbitrarily-defined kilogram, and perhaps try to gain a little perspective.



*And here's the definition of the second.  Does it sound anything like the definition of a Bitcoin to you?  (It should.)

the duration of 9,192,631,770 periods of the radiation corresponding to the transition between the two hyperfine levels of the ground state of the caesium 133 atom.[1]

If that seems a little too precise, go back and look at a previous definition:

Between AD 1000 (when al-Biruni used seconds) and 1960 the second was defined as 1/86,400 of a mean solar day