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Author Topic: competing bitcoins  (Read 10813 times)
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July 21, 2010, 05:02:30 PM

=P I'm quite aware of local-maxima phenomenon.  I was simply defending the current system as not "arbitrarily difficult".  Each aspect of the solution has a purpose.  Whether said solution is the best was not what I was debating.  If you've got an alternative, feel free to share.

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July 22, 2010, 04:15:18 PM

Makes sense, too, considering the decline of use of gold as currency.

gold declined as a currency because there wasn't enough of it, so credit was invented, and then fiat.

Credit existed under the gold standard as well.  As the division of labor exploded during the gold standard the need for localized liquidity arose that the physical movement of metal could not keep up with; hence bank notes and credit forms of currency which traded at some discount to physical gold.  To say that credit was invented after gold is only true insofar as we go back to the beginning of humans using any form of exchange medium.

Credit has always existed.  Fractional reserve banking existed under the gold standard, locally.  They will exist under any potential bitcoin standard as well.  The issue with fiat currency is the consequence of the liquidity is can produce because of the incentive to produce money by those who issue it for their own purpose, ie. a theft of property by devaluing the currency units previously in circulation.

If communications technology had exploded at the same rate as the demands for money, digital gold currencies would have arisen and solved the liquidity problem by increasing the clearing rate of transactions.  They didn't, of course, and for a variety of reasons the system we have now was implemented.  Now that technology has caught up with the opportunity exists to swing the monetary pendulum back.

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