Long-Term Bulls

[netrin]

I currently live in China - a wink is legal tender here.

Oh, then surely you know very well that a dollar in China is worth more than a dollar in the United States.

[1714927372]

1714927372

[dancupid]

I currently live in China - a wink is legal tender here.

Oh, then surely you know very well that a dollar in China is worth more than a dollar in the United States.

The Chinese seem to be dumping their dollars as fast as they can.

[Crypt_Current]

As for my practical purposes: I regularly buy some Bitcoins, spend some and save some. Call me ignorant, but I don't really care if it is metaphorical-money or not-a-true-currency or only-some-bits-on-a-ledger or not-even-backed-by-anything etc... I'm just happy with the way Bitcoin works and how I can use it. I know I trust the technological foundations - that's what I understand and can be certain of. As for the rest: who knows - it's an experiment and we'll see how it turns out. I for one just use Bitcoin and try to have fun

Agreed; +1

[dree12]

Contrary to popular belief, the dollar is backed by something. If you are a citizen of the United States, there is a certain currency you need to pay taxes in.

Both dollars and bitcoin are backed by a mutable value denominated in that same value.

If the value of a dollar was reduced to the value of a grain of salt, then taxes would be similarly related to a grain of salt.

Bitcoin value is backed by the electricity cost while the electricity cost maintains a strong correlation to the value of a bitcoin. If a bitcoin were worth one grain of salt, the electricity cost would be roughly one grain of salt.

This is where I have to disagree. Dollars cannot be worthless due to the tax backing, because there is always demand. Bitcoin, in contrast, does not have guarenteed demand because you cannot excange Bitcoin for electricity.

[log0s]

Some interesting statements from http://wiki.mises.org/wiki/Money (please read the sources cited for further study):

Note that money is still a good - the most marketable good. Money is valuable to the extent that others are willing to accept it in exchange. But, money itself must first have originated as a directly serviceable good before it could become an indirectly serviceable good.

(emphasis added)

All government fiat currencies originated as commodity backed currencies (whether directly or indirectly) before governments broke their promises to make them redeemable in the commodity.

Money did not and never could begin by some arbitrary social contract, or by some government agency decreeing that everyone has to accept the tickets it issues. Even coercion could not force people and institutions to accept meaningless tickets that they had not heard of or that bore no relation to any other pre-existing money.

The rules of the Bitcoin system (maximum block sizes, total number of bitcoins, block generation, how people "send" Bitcoins, etc.) are a social contract that anyone can freely agree with or not.

[netrin]

The rules of the Bitcoin system (maximum block sizes, total number of bitcoins, block generation, how people "send" Bitcoins, etc.) are a social contract that anyone can freely agree with or not.

The rules of mathematics are not subject to belief. But the technical details of the bitcoin system makes no assertion of value, only authenticity. According to Mises, bitcoin is perhaps not money. But Ludwig von Mises is dead. We should not extrapolate from what he once said before computers existed to what he might say today.

The bitcoin protocol does provide a serviceable good. But there are very few whose benefit from that service was greater than the cost of that service. In other words, today it is a pain in the ass to obtain bitcoins and very few people have made a transaction for which that difficulty was worth it, in and of itself. Once we have a bunch of bitcoins, acquired due to fascination, then perhaps we begin to see some later benefit. But I think things get interesting if/when anyone who currently offers services on the net can reasonable expect to receive bitcoin and spend them on goods or services the same day without an account on an exchange.

[log0s]

The rules of the Bitcoin system (maximum block sizes, total number of bitcoins, block generation, how people "send" Bitcoins, etc.) are a social contract that anyone can freely agree with or not.

The rules of mathematics are not subject to belief.

Who's talking about belief?  I'm talking about people agreeing to abide by a certain set of rules.

According to Mises, bitcoin is not money. But Ludwig von Mises is dead. We should not extrapolate from what he once said before computers existed to what he might say today.

It's not about who said it, but rather about what they said and whether or not it is logically sound.  My reference to that wiki page was not an appeal to authority, but was an attempt to point people towards further arguments that have already been analyzed and expanded on by many economists (and others have failed to refute).

[log0s]

The Bitcoin system, which is a very ingenious system, has the potential to provide a direct service, but does a bitcoin itself provide a direct service to people?  The only direct service the Bitcoin system that one could argue it currently provides is to "send" bitcoins to others.  But if a bitcoin does not provide a direct service, why are people willing to exchange goods for them?  I believe there is among Bitcoin users a widespread misunderstanding of Bitcoin, and after so much discussion on this thread, a misunderstanding of the concept of money itself.  This calls into question the value of the Bitcoin system since it's only direct service is to allow people to "send" an alleged good which provides no direct service.

I could create a ledger with some paper and a pencil, calling the numbers in the ledger "nums", and after someone fulfills some requirement I can write +50 "nums" to their account.  Then, for example, they can then have me write -25 "nums" to their account and +25 "nums" to someone else's account.  But what direct service do "nums" provide?  Why would anyone want to pay a cost (whether it's meeting some arbitrary requirement or offering a good) to acquire any "nums"?  The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.  Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone.  My ledger service has the potential to provide a direct service, but the "nums" it keeps account of do not provide any direct service, so would my ledger service actually be providing a direct service to people by keeping account of "nums"?  I don't think so.

[evoorhees]

The Bitcoin system, which is a very ingenious system, has the potential to provide a direct service, but does a bitcoin itself provide a direct service to people?  The only direct service the Bitcoin system that one could argue it currently provides is to "send" bitcoins to others.  But if a bitcoin does not provide a direct service, why are people willing to exchange goods for them?  I believe there is among Bitcoin users a widespread misunderstanding of Bitcoin, and after so much discussion on this thread, a misunderstanding of the concept of money itself.  This calls into question the value of the Bitcoin system since it's only direct service is to allow people to "send" an alleged good which provides no direct service.

I could create a ledger with some paper and a pencil, calling the numbers in the ledger "nums", and after someone fulfills some requirement I can write +50 "nums" to their account.  Then, for example, they can then have me write -25 "nums" to their account and +25 "nums" to someone else's account.  But what direct service do "nums" provide?  Why would anyone want to pay a cost (whether it's meeting some arbitrary requirement or offering a good) to acquire any "nums"?  The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.  Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone.  My ledger service has the potential to provide a direct service, but the "nums" it keeps account of do not provide any direct service, so would my ledger service actually be providing a direct service to people by keeping account of "nums"?  I don't think so.

Your system requires that people trust you as a third party. Bitcoin requires no such trust.

A transaction system which requires no trusted party - this is as revolutionary as email... and like email, it'll take a while for people to realize the ramifications.

[Crypt_Current]

The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.

Nah; it's totally relevant, otherwise people wouldn't use Bitcoin.

[Crypt_Current]

The Bitcoin system, which is a very ingenious system, has the potential to provide a direct service, but does a bitcoin itself provide a direct service to people?  The only direct service the Bitcoin system that one could argue it currently provides is to "send" bitcoins to others.  But if a bitcoin does not provide a direct service, why are people willing to exchange goods for them?  I believe there is among Bitcoin users a widespread misunderstanding of Bitcoin, and after so much discussion on this thread, a misunderstanding of the concept of money itself.  This calls into question the value of the Bitcoin system since it's only direct service is to allow people to "send" an alleged good which provides no direct service.

I could create a ledger with some paper and a pencil, calling the numbers in the ledger "nums", and after someone fulfills some requirement I can write +50 "nums" to their account.  Then, for example, they can then have me write -25 "nums" to their account and +25 "nums" to someone else's account.  But what direct service do "nums" provide?  Why would anyone want to pay a cost (whether it's meeting some arbitrary requirement or offering a good) to acquire any "nums"?  The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.  Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone.  My ledger service has the potential to provide a direct service, but the "nums" it keeps account of do not provide any direct service, so would my ledger service actually be providing a direct service to people by keeping account of "nums"?  I don't think so.

Your system requires that people trust you as a third party. Bitcoin requires no such trust.

A transaction system which requires no trusted party - this is as revolutionary as email... and like email, it'll take a while for people to realize the ramifications.

Exactly

[zby]

The Bitcoin system, which is a very ingenious system, has the potential to provide a direct service, but does a bitcoin itself provide a direct service to people?  The only direct service the Bitcoin system that one could argue it currently provides is to "send" bitcoins to others.  But if a bitcoin does not provide a direct service, why are people willing to exchange goods for them?  I believe there is among Bitcoin users a widespread misunderstanding of Bitcoin, and after so much discussion on this thread, a misunderstanding of the concept of money itself.  This calls into question the value of the Bitcoin system since it's only direct service is to allow people to "send" an alleged good which provides no direct service.

I could create a ledger with some paper and a pencil, calling the numbers in the ledger "nums", and after someone fulfills some requirement I can write +50 "nums" to their account.  Then, for example, they can then have me write -25 "nums" to their account and +25 "nums" to someone else's account.  But what direct service do "nums" provide?  Why would anyone want to pay a cost (whether it's meeting some arbitrary requirement or offering a good) to acquire any "nums"?  The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.  Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone.  My ledger service has the potential to provide a direct service, but the "nums" it keeps account of do not provide any direct service, so would my ledger service actually be providing a direct service to people by keeping account of "nums"?  I don't think so.

You are right that it all revolves around trust.  The fact that you can buy something for dollars (or gold) is because other people trust that whey they in turn need something they'll be able to turn the dollar they received into something else.  This is the same case with bitcoin.   Dollars don't provide any what you call 'direct service' (if you don't use them as a wall paper that is), or 'use value' (in Marks terms I think), they only value is 'exchange value'.  

[Steve]

I could create a ledger with some paper and a pencil, calling the numbers in the ledger "nums", and after someone fulfills some requirement I can write +50 "nums" to their account.  Then, for example, they can then have me write -25 "nums" to their account and +25 "nums" to someone else's account.  But what direct service do "nums" provide?  Why would anyone want to pay a cost (whether it's meeting some arbitrary requirement or offering a good) to acquire any "nums"?  The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.  Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone.  My ledger service has the potential to provide a direct service, but the "nums" it keeps account of do not provide any direct service, so would my ledger service actually be providing a direct service to people by keeping account of "nums"?  I don't think so.

Yes, your ledger services would be valuable.  The service would solve at least a couple problems including:
- the double coincidence of wants
- time preference for consumption

However, you would need to convince a critical mass of people that your "nums" are somehow superior to other peoples' "nums" such that people would feel confident that the "nums" they control will be worth something at the time they need to trade them for something.  Given that your system has a weak, centralized point of failure and there are better alternatives, it's unlikely your "nums" will gain widespread adoption.

Banks almost work as you describe, except that they introduce new "nums" by lending them at interest (which creates a whole other set of problems).

[dree12]

I could create a ledger with some paper and a pencil, calling the numbers in the ledger "nums", and after someone fulfills some requirement I can write +50 "nums" to their account.  Then, for example, they can then have me write -25 "nums" to their account and +25 "nums" to someone else's account.  But what direct service do "nums" provide?  Why would anyone want to pay a cost (whether it's meeting some arbitrary requirement or offering a good) to acquire any "nums"?  The only difference between "nums" and bitcoins (and this difference is actually irrelevant) is one of who or what is trusted.  Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone.  My ledger service has the potential to provide a direct service, but the "nums" it keeps account of do not provide any direct service, so would my ledger service actually be providing a direct service to people by keeping account of "nums"?  I don't think so.

You are right that it all revolves around trust.  The fact that you can buy something for dollars (or gold) is because other people trust that whey they in turn need something they'll be able to turn the dollar they received into something else.  This is the same case with bitcoin.   Dollars don't provide any what you call 'direct service' (if you don't use them as a wall paper that is), or 'use value' (in Marks terms I think), they only value is 'exchange value'.  

I still disagree that the ability to pay taxes is not a direct service. I know that I need to pay a certain amount of taxes. So, for me, the dollar is backed: this 1000 dollar bill will be able to pay off 10% of my taxes, so if I get 10 of them they have served a direct service (me not being in jail).

Currently, Bitcoin is not backed this way. However, it can be. That's the extent of my argument.

[log0s]

Wow, did all of you miss this line?

"Even assuming you had full trust in me and my ability to keep the ledger accurate and secure, "nums" still provide no direct service to anyone."

The same is true of Bitcoin.  Despite having full trust in the Bitcoin system, a bitcoin is not a directly serviceable good.

EDIT: To clarify, it was irrelevant as far as my the argument I was making was concerned.  It seems many of you got hung up on something other than the argument that I was making, like the probability of my service gaining wide-spread trust.  However, trust was irrelevant, because even if I were trusted by everyone just as much as they trust the Bitcoin network, the "nums" still would not be a directly serviceable good.

[log0s]

Dollars don't provide any what you call 'direct service' (if you don't use them as a wall paper that is), or 'use value' (in Marks terms I think), they only value is 'exchange value'.  

Dollars, like all other fiat money, originated as a commodity backed currency, either with direct backing of a commodity, or indirect backing of a commodity by being backed by another currency that originated as a commodity backed currency.  Bitcoin is not a commodity in itself (only directly serviceable goods can become a commodity), and has no direct or indirect commodity backing it.

[zby]

Dollars don't provide any what you call 'direct service' (if you don't use them as a wall paper that is), or 'use value' (in Marks terms I think), they only value is 'exchange value'.  

Dollars, like all other fiat money, originated as a commodity backed currency, either with direct backing of a commodity, or indirect backing of a commodity by being backed by another currency that originated as a commodity backed currency.  Bitcoin is not a commodity in itself (only directly serviceable goods can become a commodity), and has no direct or indirect commodity backing it.

It is possible that money started as commodity - but the point is that what differentiates money from commodity is that it has much higher 'exchange value' then 'use value'.  This is really what defines money - so when you have something that has only exchange value and no use value - then it is kind of 'pure money'.

[log0s]

Dollars don't provide any what you call 'direct service' (if you don't use them as a wall paper that is), or 'use value' (in Marks terms I think), they only value is 'exchange value'.  

Dollars, like all other fiat money, originated as a commodity backed currency, either with direct backing of a commodity, or indirect backing of a commodity by being backed by another currency that originated as a commodity backed currency.  Bitcoin is not a commodity in itself (only directly serviceable goods can become a commodity), and has no direct or indirect commodity backing it.

It is possible that money started as commodity - but the point is that what differentiates money from commodity is that it has much higher 'exchange value' then 'use value'.  This is really what defines money - so when you have something that has only exchange value and no use value - then it is kind of 'pure money'.

I'm willing to trade all kinds of umarketable, worthless shi...err, I mean "pure money" for your real money.

Money can only emerge in an economy if it is first a directly serviceable good.  If something provides no direct service to anyone (meaning it does not provide a direct means to anyone's desired ends, and is therefore not valued by anyone), why would anyone buy it?  If people realize that it provides no direct service to anyone, and therefore has no value to anyone, and no one is willing to give up something they do value in exchange for it, how could it ever emerge as a money?  What business would accept it?  What person would accept it as a salary?  Social contract based "pure money", metaphorical goods, etc., only have exchange value when there are people buying them that do not fully understand what it is that they are buying.

Bitcoin is, and always has been a bubble.  It's price is disconnected from the reality that it is not a directly serviceable good.

[Steve]

Money can only emerge in an economy if it is first a directly serviceable good.

And therein lies the crux of the debate.  Some people, like yourself, believe this statement to be true.  Others do not.

[jago25_98]

 What other options are there?

Gold? - gets confiscated at customs (the typical $10,000 allowance is getting smaller every day)
Other digital currencies - centralised. Remember eGold? Hmm...

 So is Bitcoin is the only option? Even if it's thought to be going down... it still has utility.