MoonShadow
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June 25, 2011, 10:31:32 PM |
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There doesn't need to be a loophole around #1, because Bitcoin does have a use value. That use value is derived from the software that forms the client as well as the network. Software represents organized work toward a goal, namely to create a logic machine that performs a desired function. In the case of Bitcoin, that function is to transfer value (not wealth, which is different) over vast distances at unmatched speed and for a very low cost. The kicker for bitcoin (the currency itself) is that bitcoins are required for this function, for no existing form of currency can cooperate with the Bitcoin client to this end. Adding confusion is the fact that, due to the nature of a decentralized currency, there can be no form of backing or peg. So the relative value of bitcoins verses existing currencies must float. Thus the chicken and egg problem then becomes, how does one get an initial relative value for bitcoins? It happens to be that said initial value was established when an early adopter, wishing to advance the currency, chose to offer some of his vast holdings in return for a pizza. He offered 10K BTC, and someone else decided that it was worth that to him. All of point #2 flows from this singular event, but the use value that those two traders saw in bitcoin wasn't in the pizza, but in the functions that the currency and the client together could perform. I.E. to move value across limitless distance. It is this function that no other prior currency on Earth, fiat or otherwise, could perform in an economicly competitive manner.
Hello, It is not necessary justifying Bitcoins value looking at its underlaying infrastructure´s value. No matter the costs of the infrastructure if nobody uses bitcoins, because in that case the infrastructure is worthless unless you use it for something different (web servers or whatever...). Bitcoins are currency, and they were invented specifically for that, and they are valuable becuase they render monetary utility. Once a good renders utility, it is valuable, no matter wich kind of utility. Also, I think there is no such a "chicken and egg" problem. The value of currency or money is discovered by the market, just as it is discovered for any other good. It happens whenever something new is invented or discovered. Did you actually read my post? Or did you just read part of it and assume you understood it? |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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Unlike traditional banking where clients have only a few account numbers, with Bitcoin people can create an unlimited number of accounts (addresses). This can be used to easily track payments, and it improves anonymity.
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manuelgar
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June 25, 2011, 11:10:21 PM |
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Of course I read it, otherwise I wouldn´t have answered. And I found it very interesting. In fact I agree most of you say, maybe my error is the tone I wrote my post which didn´t sound as I agree (sorry about my english).
I agree with you completely on #2 (chicken and egg). On #1 I don´t see the separation you make between bitcoin and its underlying infrastructure, because I think that all were designed as independents parts of a whole "product" since the beginning.
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MoonShadow
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Activity: 1708
Merit: 1007
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June 26, 2011, 12:36:09 AM |
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On #1 I don´t see the separation you make between bitcoin and its underlying infrastructure, because I think that all were designed as independents parts of a whole "product" since the beginning.
I'm not making a seperation. I consider them parts of a whole system. That was my point. |
"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."
- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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manuelgar
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June 26, 2011, 09:53:05 AM |
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On #1 I don´t see the separation you make between bitcoin and its underlying infrastructure, because I think that all were designed as independents parts of a whole "product" since the beginning.
I'm not making a seperation. I consider them parts of a whole system. That was my point. Then I didn´t understand your argument about #1. Sorry about that. |
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manuelgar
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June 26, 2011, 10:11:17 AM |
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On #1 I don´t see the separation you make between bitcoin and its underlying infrastructure, because I think that all were designed as independents parts of a whole "product" since the beginning.
I'm not making a seperation. I consider them parts of a whole system. That was my point. Then maybe I didn´t understand very well your argument about #1. Specially when you say: "The kicker for bitcoin (the currency itself) is that bitcoins are required for this function, for no existing form of currency can cooperate with the Bitcoin client to this end" The Bitcoin client was designed together for Bitcoins, so obviously no other currency fits in there. As well as the bitcoin network and bitcoin associated protocols that were also designed together with Bitcoins. And since bitcoins were designed as currency, the utility of that software, network, etc is not a generic or unknown utility, it is monetary utility. My point is that, as the Austrian/Mengerian economist Carlos Bondone says, the Regression Theorem is unnecesary for monetary theory. Here I explain why: http://eleconomistaprudente.wordpress.com/2011/06/06/bitcoins-and-mises%C2%B4s-regression-theorem/ |
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ArErD
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February 05, 2023, 02:05:17 AM |
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Of course I read it, otherwise I wouldn´t have answered. And I found it very interesting. In fact I agree most of you say, maybe my error is the tone I wrote my post which didn´t sound as I agree (sorry about my english).
I agree with you completely on #2 (chicken and egg). On #1 I don´t see the separation you make between bitcoin and its underlying infrastructure, because I think that all were designed as independents parts of a whole "product" since the beginning.
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nintendo1889
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March 15, 2024, 02:00:11 PM |
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Store of value, then medium of exchange, then unit of account.
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