Can Bitcoin replace the dollar?

[porc]

This is a long text, but I think it contains some interesting arguments. To understand if Bitcoin can replace the dollar (or what is needed mentally for this to happen) we have to understand how we price things, why the dollar is used and how gold was established as a media of exchange.

1) Pricing Something in Something.

What is a Price?

"In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services." WIKI

I can price something in something.

Example 1: A ocean front villa costs 10 Ferrari.

This statement has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (10 ferrari) have value (to society, not necessarily the individual). A Ferrari has value because it is pretty, a form of transport and fast.

Exampe 2: A ocean front villa costs 1000 ounces of gold.

This statement also has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (1000 gold) have value (to society, no necessarily the individual). Golds value is that it is pretty and rare. Everybody can understand the concept of pretty.

Example 3: A ocean front villa costs 1000 dollar (backed by gold, aka gold standard)

Now the dollar once was pegged to gold thus the dollar had value.

2) Pricing Something in Nothing

Now what happens if we price something (value) in nothing (no value). Well that is impossible if we only look at the nothing and the something.

Example 1: 1 loaf of bread costs 1/1000 Bitcoin.

This price is devoid of meaning as 1/1000 Bitcoin has no value. Yes we can transfer 1/1000 Bitcoin cheaply but that does not give Bitcoin itself value. "dafadfas" has no value. Being able to transfer "dafadfas" of no value cheaply, does not give it value.

Example 2: 1 house costs 1 million dollars (fiat).

Now we again have priced something in nothing. Yes I can burn dollars and receive energy. However we often transact in digital dollars not actually backed by physical dollars.

So why does a dollar price have meaning?

Well the government a) forces us to use dollars and b) guarantees implicitly that the dollar supply will expand at a predictable and slow rate. With both of these data points we can start making prices which have meaning! Now we can price these goods in relation to each other and then assign each good a theoretical dollar value. The goods with the most value get the highest percentage of the dollar supply

For example: We have 30 dollars (dollar supply) and in the american economy for example 6 houses and 12 ferrari. The value judgement of Society (result of thousands of individual value judgements) is that 1 house is worth 2 ferrari. Now we can express that value judgement in dollar by giving the house a dollar price which is twice as high as the ferrari dollar price (house is worth 2 dollar and ferrari 1 dollar).

Now if we look at the price in isolation (ferrari costs 1 dollar) it has no meaning. But if we look at the dollar price in context with other dollar prices we can see that it expresses a value judgement (2 ferrari are worth 1 house).

3) Can Bitcoin take the role of the dollar (fiat)?


Now obviously theoretically Bitcoin could take the role of the dollar (fiat). It is possible to express our value judgements of the worth of somethings (houses and ferrari in last example) in nothing (bitcoin, dollar fiat), as explained above.

But just like the with fiat dollar americans would need to know a) how many bitcoins will be created b) a guarantee that people will use it (number of goods, services backing bitcoin).

Now what has to be understood about gold is that even gold gains above its initial value as soon as it is used as money. In this case the price in gold not only reflects gold pretty value but also golds now new found money use (acceptance). In this regard it is similar to bitcoin and dollar. However we can price in gold without the need for a theoretical construct/ additional information like with dollar/ bitcoin as it has a value (it looks pretty) to us. We are pricing something in something not something in nothing like we do when we price in bitcoin.

With bitcoin we have to assume a certain backing by goods, bitcoins quantity (solved) and then assume that bitcoin will continue to be used (theoretical construct needed to price something in nothing). If we assume this we can make a price. If we do not assume this, we can not, as bitcoin itself has no value. This "assumption" problem is leapfrogged/eliminated by governments through the use of force.

4) Can bitcoiners get  people to accept nothing for something?


We have seen that in order to price things in bitcoin people need to know 1) that a certain pool of people will (always) accept bitcoin and back it up with goods and services 2) bitcoin supply stays the same. Now 2) has been solved by the bitcoin code.

How can you convince a certain number of people to hold onto bitcoin and use it (for ever preferably).

Methods employed:

Now what bitcoiners argue is that if we should all accept bitcoin as transaction costs will be cheaper. This argument is basically the following: Yes you exchange your something for nothing but if everybody accepts nothing you can buy something with the nothing I gave you and we save costs because exchanging nothing is cheaper than exchanging something (gold, silver).

Now this argument would probably fail if your nothing could not immediately be converted to dollars. As we can see merchants are not accepting nothing for something unless they can dump for dollars (so they are not accepting bitcoin).

From the perspective of the merchant he takes the risk of nothing not being accepted for something. That he safes transaction costs is not going to soothe him as he is effectively holding nothing unless the rest of us agree to exchange nothing for something. Again it is a mind twist that might work (however I believe government will not allow it). We all agree to change something for nothing because its cheaper to exchange nothing for something is what bitcoiners argue.

Now before this acceptance was only possible by governments because nothing is normally plentiful. Only through the use of force could you convince somebody to accept nothing for something especially because nothing could back in the day be created out of thin air (printing more dollar). Now we know that nothing will remain scarce (bitcoin 21 million) but it is still nothing that only has value if we all agree to exchange something for it. Its a mind twist that takes a first step, that gold does not need to take.

[amencon]

1) Pricing Something in Something.

What is a Price?

"In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services." WIKI

I can price something in something.

Example 1: A ocean front villa costs 10 Ferrari.

This statement has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (10 ferrari) have value (to society, not necessarily the individual). A Ferrari has value because it is pretty, a form of transport and fast.

Exampe 2: A ocean front villa costs 1000 ounces of gold.

This statement also has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (1000 gold) have value (to society, no necessarily the individual). Golds value is that it is pretty and rare. Everybody can understand the concept of pretty.

Didn't have to go far into this post.

When people judge how fair a trade is for a villa for 1000oz of gold they aren't judging the villa against how "pretty" gold is.  If that were the case then something (villa in this case) would always be judged to be worth the exact same amount of gold since gold has remained equally pretty for as long as we've used it.  In fact what happens is that people think of what other things the villa is worth as well as what other things the gold is worth to determine if the trade is fair or not.  In this case "other things" would be money of some sort most likely (that's essentially it's job after all). 

Much of gold's value is speculative, it is not valued based on it's utility or "intrinsic value" as some like to call it.  So the villa is being compared to a speculative value placed on something, replace that with it being compared against the speculative value of bitcoins and it's really the same difference.

Thus the "something for something" vs "something for nothing" comparison falls flat in my opinion.

[porc]

1) Pricing Something in Something.

What is a Price?

"In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services." WIKI

I can price something in something.

Example 1: A ocean front villa costs 10 Ferrari.

This statement has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (10 ferrari) have value (to society, not necessarily the individual). A Ferrari has value because it is pretty, a form of transport and fast.

Exampe 2: A ocean front villa costs 1000 ounces of gold.

This statement also has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (1000 gold) have value (to society, no necessarily the individual). Golds value is that it is pretty and rare. Everybody can understand the concept of pretty.

1) a) When people judge how fair a trade is for a villa for 1000oz of gold they aren't judging the villa against how "pretty" gold is.  If that were the case then something (villa in this case) would always be judged to be worth the exact same amount of gold since gold has remained equally pretty for as long as we've used it. b) In fact what happens is that people think of what other things the villa is worth as well as what other things the gold is worth to determine if the trade is fair or not.  In this case "other things" would be money of some sort most likely (that's essentially it's job after all).  

2) Much of gold's value is speculative, it is not valued based on it's utility or "intrinsic value" as some like to call it.  So the villa is being compared to a speculative value placed on something, replace that with it being compared against the speculative value of bitcoins and it's really the same difference.

1) a) No because sometimes people judge the worth of the villa higher and sometimes lower. The same goes for gold. Sometimes pretty things are in high demand and sometimes they are in low demand.
b) money is not the point at this moment. I am only displaying how a comparison of the value of valuable things (somethings) has meaning.

2) No its not. I am not referencing the price of gold. Yes the price of gold can change. But its value for society cant change. We will always think its pretty (this has been burnt into our brain). Its like water: It will always be necessary for humanity. Now the price of water can change. But we are not talking about this. Again in the section you quote I am showing how you can compare the value of somethings with one another. This has nothing to do with price.

Now Bitcoin itself has not value. I cant do anything with a bitcoin. That I can give it to you at little cost does not change this fact. This part comes later (Something for Nothing).  Bitcoin does however have a price. This price can change in future just like golds price can (we are in agreement here).  

[LiteCoinGuy]

short answer no. does it want to replace it: no.

[LuisBCoin]

No, Bitcoin never can replace dollar. Can you imagine bitcoin without exchange Dollar? All our minds are thinking in Dollars, euros, etc...

[zimmah]

the value of the dollar has nothing to do with gold.

the only thing giving the dollar value right now is the petrodollar status, which is by the way declining, and this is also the reason of the wars in the middle east.

the dollar will likely be pretty much worthless in the near future.

To answer your question:

Theoretically it could replace the dollar, but i don't think humanity is ready for it yet, and it probably won't happen in the next few years. Maybe in the next decade, or century.

[porc]

the value of the dollar has nothing to do with gold.

the only thing giving the dollar value right now is the petrodollar status, which is by the way declining, and this is also the reason of the wars in the middle east.

the dollar will likely be pretty much worthless in the near future.

To answer your question:

Theoretically it could replace the dollar, but i don't think humanity is ready for it yet, and it probably won't happen in the next few years. Maybe in the next decade, or century.

humanity is not ready to exchange nothing for something. And it never will be.

[Ekaros]

Dollar's and Euro's value comes from use. The fact that there is countless contracts and such using these currencies. Bitcoin theoretically could take the same place.

But, it has some issues in replacing it. Main problem is why would majority of people trade euros and dollars to bitcoin specifically. They would lose some not minor part of value they hold to early adopters. Is the value of what BTC provides that much higher than losses?

And then there is the other issues like technical questions of scaling of BTC. If it doesn't: we could adopt systems now used in payment processing and digital banking, but the similar costs would still be there.

As such, I don't believe BTC in replacing any large currency.

Crypto might be possible, in controlled forced mass adoption.

[Thracian]

Quick answer:No.
 
As long as there are taxes denominated in "government-issued" money,
this government fiat money will continue to exist.

[Jcw188]

Quick answer:No.
 
As long as there are taxes denominated in "government-issued" money,
this government fiat money will continue to exist.

I agree.  Taxes are one issue.  The govt has a vested interest in making sure their currency remains the reserve currency so that it can issue as much of it as it wants.  The only way around this is if people somehow agree to let the govt "take over" BTC.  Which I don't see us doing.  I fear it will remain stuck on the peripheral for the time being.  Maybe if it was easier to trade back and forth between fiat and btc it could make more progress (but I know this goes against what some btc users believe is right).

[donbu7]

jajajajaj, this topic is insane

[Peter Lambert]

porc is the most long-winded troll I have ever seen.

Bitcoins will never completely replace all the other forms of money, but they don't have to. Bitcoins are great for some things, not as great for others. I see bitcoins taking over the role of gold and USD as a reserve currency. Bitcoins are also great for making international payments and online payments.

People keep saying that taxes somehow make everybody accept fiat dollars, that is silly. You could do all your business in bitcoins and the at the end of the year just trade the little bit you need into fiat to pay taxes. If bitcoin catches on, the government could even add a way to pay taxes using bitcoins; the government IT people are notoriously incompetent, but making a bitcoin payment processor can't be much harder than the system they currently use to collect tax payments electronically. The US government already holds hundreds of thousands of bitcoins, they might decide they like them.

While the price of bitcoins is currently so volatile that pricing things using them is hard, that will change over time. Already there are a handful of people who earn income in bitcoins, and they say it really changes the way you view prices. As more people switch to the mindset of pricing things in bitcoins, and as large contracts are made in bitcoins, and as the financial sector finally build strong mechanisms for options and futures on the bitcoin price, the price will stabilize and bitcoins will become more readily usable for pricing in contracts.

[amencon]

1) Pricing Something in Something.

What is a Price?

"In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services." WIKI

I can price something in something.

Example 1: A ocean front villa costs 10 Ferrari.

This statement has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (10 ferrari) have value (to society, not necessarily the individual). A Ferrari has value because it is pretty, a form of transport and fast.

Exampe 2: A ocean front villa costs 1000 ounces of gold.

This statement also has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (1000 gold) have value (to society, no necessarily the individual). Golds value is that it is pretty and rare. Everybody can understand the concept of pretty.

1) a) When people judge how fair a trade is for a villa for 1000oz of gold they aren't judging the villa against how "pretty" gold is.  If that were the case then something (villa in this case) would always be judged to be worth the exact same amount of gold since gold has remained equally pretty for as long as we've used it. b) In fact what happens is that people think of what other things the villa is worth as well as what other things the gold is worth to determine if the trade is fair or not.  In this case "other things" would be money of some sort most likely (that's essentially it's job after all).  

2) Much of gold's value is speculative, it is not valued based on it's utility or "intrinsic value" as some like to call it.  So the villa is being compared to a speculative value placed on something, replace that with it being compared against the speculative value of bitcoins and it's really the same difference.

1) a) No because sometimes people judge the worth of the villa higher and sometimes lower. The same goes for gold. Sometimes pretty things are in high demand and sometimes they are in low demand.
b) money is not the point at this moment. I am only displaying how a comparison of the value of valuable things (somethings) has meaning.

2) No its not. I am not referencing the price of gold. Yes the price of gold can change. But its value for society cant change. We will always think its pretty (this has been burnt into our brain). Its like water: It will always be necessary for humanity. Now the price of water can change. But we are not talking about this. Again in the section you quote I am showing how you can compare the value of somethings with one another. This has nothing to do with price.

Now Bitcoin itself has not value. I cant do anything with a bitcoin. That I can give it to you at little cost does not change this fact. This part comes later (Something for Nothing).  Bitcoin does however have a price. This price can change in future just like golds price can (we are in agreement here).  

For people using Gold as a store of wealth, isn't it's "value" really just determined by what someone can trade for it on the market (price)? 

If someone stores their wealth in Gold they will want to someday trade back that Gold for something else again.  What they can trade that Gold back for will be determined by the speculative price of Gold and not Gold's utility or how pretty it is. 

If anything all Gold's utility, industrial usage and being pretty (what you consider it's "value" right?) does is put a floor on Gold's price if it's speculative value were to shrink away some day.  A floor low enough that Gold would no longer be considered a good store of value and where most of it's holders would have dumped it on it's way to the floor price.

[Ibian]

A bitcoin-based economy could never function as long as we also have usury (interest on loans). It's not the dollar that matters, it's the fundamentals of our economic system.

[Ibian]

Quick answer:No.
 
As long as there are taxes denominated in "government-issued" money,
this government fiat money will continue to exist.

I agree.  Taxes are one issue.  The govt has a vested interest in making sure their currency remains the reserve currency so that it can issue as much of it as it wants.  The only way around this is if people somehow agree to let the govt "take over" BTC.  Which I don't see us doing.  I fear it will remain stuck on the peripheral for the time being.  Maybe if it was easier to trade back and forth between fiat and btc it could make more progress (but I know this goes against what some btc users believe is right).

You give me fiat and an address, I give you bitcoins. Easy. Right now we mostly use exchanges, but as adoption grows it will become common, eventually standard, to deal this way.

[zimmah]

the value of the dollar has nothing to do with gold.

the only thing giving the dollar value right now is the petrodollar status, which is by the way declining, and this is also the reason of the wars in the middle east.

the dollar will likely be pretty much worthless in the near future.

To answer your question:

Theoretically it could replace the dollar, but i don't think humanity is ready for it yet, and it probably won't happen in the next few years. Maybe in the next decade, or century.

humanity is not ready to exchange nothing for something. And it never will be.

they are perfectly happy to exchange toilet paper fiat for something.

[zimmah]

Dollar's and Euro's value comes from use. The fact that there is countless contracts and such using these currencies. Bitcoin theoretically could take the same place.

But, it has some issues in replacing it. Main problem is why would majority of people trade euros and dollars to bitcoin specifically. They would lose some not minor part of value they hold to early adopters. Is the value of what BTC provides that much higher than losses?

And then there is the other issues like technical questions of scaling of BTC. If it doesn't: we could adopt systems now used in payment processing and digital banking, but the similar costs would still be there.

As such, I don't believe BTC in replacing any large currency.

Crypto might be possible, in controlled forced mass adoption.

when you buy bitcoins you don't lose money (or value at least)

if you buy $1000 worth of bitcoins (let's say 1 BTC = $1000 at this point) you can then use the BTC to buy something worth 1 BTC.

It would be the same for 'buying' euros with dollars.

Yes you may gain more or less value depending on the exchange rate, but unless bitcoin crashes (unlikely) you will not lose your money.

[porc]

1) Pricing Something in Something.

What is a Price?

"In ordinary usage, price is the quantity of payment or compensation given by one party to another in return for goods or services." WIKI

I can price something in something.

Example 1: A ocean front villa costs 10 Ferrari.

This statement has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (10 ferrari) have value (to society, not necessarily the individual). A Ferrari has value because it is pretty, a form of transport and fast.

Exampe 2: A ocean front villa costs 1000 ounces of gold.

This statement also has meaning and everybody will have an opinion on whether this price is to high or to low as the good (villa) and the price (1000 gold) have value (to society, no necessarily the individual). Golds value is that it is pretty and rare. Everybody can understand the concept of pretty.

1) a) When people judge how fair a trade is for a villa for 1000oz of gold they aren't judging the villa against how "pretty" gold is.  If that were the case then something (villa in this case) would always be judged to be worth the exact same amount of gold since gold has remained equally pretty for as long as we've used it. b) In fact what happens is that people think of what other things the villa is worth as well as what other things the gold is worth to determine if the trade is fair or not.  In this case "other things" would be money of some sort most likely (that's essentially it's job after all).  

2) Much of gold's value is speculative, it is not valued based on it's utility or "intrinsic value" as some like to call it.  So the villa is being compared to a speculative value placed on something, replace that with it being compared against the speculative value of bitcoins and it's really the same difference.

1) a) No because sometimes people judge the worth of the villa higher and sometimes lower. The same goes for gold. Sometimes pretty things are in high demand and sometimes they are in low demand.
b) money is not the point at this moment. I am only displaying how a comparison of the value of valuable things (somethings) has meaning.

2) No its not. I am not referencing the price of gold. Yes the price of gold can change. But its value for society cant change. We will always think its pretty (this has been burnt into our brain). Its like water: It will always be necessary for humanity. Now the price of water can change. But we are not talking about this. Again in the section you quote I am showing how you can compare the value of somethings with one another. This has nothing to do with price.

Now Bitcoin itself has not value. I cant do anything with a bitcoin. That I can give it to you at little cost does not change this fact. This part comes later (Something for Nothing).  Bitcoin does however have a price. This price can change in future just like golds price can (we are in agreement here).  

For people using Gold as a store of wealth, isn't it's "value" really just determined by what someone can trade for it on the market (price)?  

If someone stores their wealth in Gold they will want to someday trade back that Gold for something else again.  What they can trade that Gold back for will be determined by the speculative price of Gold and not Gold's utility or how pretty it is.  

2) If anything all Gold's utility, industrial usage and being pretty (what you consider it's "value" right?) does is put a floor on Gold's price if it's speculative value were to shrink away some day.  A floor low enough that Gold would no longer be considered a good store of value and where most of it's holders would have dumped it on it's way to the floor price.

2) See people holding gold bars like gold for itself. They like the look of it. Yes they have not made jewelry out of it. But that is irrelevant. You can not say what part of the market price is down to it being held and what part is down to it actually being used for jewelry. People who hold it only hold it because they know that it has value in and of itself. Because they know its pretty and decorative and thus has value. If it had no value to begin with they would not be able to use it as a store of value, as something that has no value can not have value in the future when you want to retrieve the value.

Again NOBODY would be holding gold, if it had NO value. Therefore every bit of golds market price is dependent on it being pretty. Nobody would have started to save something that is nothing (no value).

[porc]

porc is the most long-winded troll I have ever seen.

Bitcoins will never completely replace all the other forms of money, but they don't have to. 1) Bitcoins are great for some things, not as great for others. I see bitcoins taking over the role of gold and USD as a reserve currency. 2) Bitcoins are also great for making international payments and online payments.

3) People keep saying that taxes somehow make everybody accept fiat dollars, that is silly. You could do all your business in bitcoins and the at the end of the year just trade the little bit you need into fiat to pay taxes. If bitcoin catches on, the government could even add a way to pay taxes using bitcoins; the government IT people are notoriously incompetent, but making a bitcoin payment processor can't be much harder than the system they currently use to collect tax payments electronically. The US government already holds hundreds of thousands of bitcoins, they might decide they like them.

4) While the price of bitcoins is currently so volatile that pricing things using them is hard, that will change over time. Already there are a handful of people who earn income in bitcoins, and they say it really changes the way you view prices. As more people switch to the mindset of pricing things in bitcoins, and as large contracts are made in bitcoins, and as the financial sector finally build strong mechanisms for options and futures on the bitcoin price, the price will stabilize and bitcoins will become more readily usable for pricing in contracts.

1) For what things are Bitcoin great? What can I do with a Bitcoin?

How can something of value (gold) be replaced by something of no value (bitcoin)?

2) To what extend are they great to make international payments? If I pay with nothing (bitcoin) for something (goods), how is that a great payment method?

3) Straw man. Government forces us to use dollars, they make any other media of exchange use either unpractical or if turns out to be practical despite their laws (Liberty Gold), they make it illegal. Its not about only paying taxes in it. Its that they enforce the media of exchange monopoly of the dollar. They force us to accept dollars for payment fo debts as well.

4) Why should the price of something that has no inherent value whatsoever stabilize? After all I cant find a fair market value, as it has no value to begin with.

Simple Questions. Instead of answering especially question 1) you call me a troll.

[Anon136]

these tired arguments have been debunked so many times. but you know that dont you. you arnt here to have an open minded discussion. you are here to spread fud. ignored.