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The grue lurks in the darkest places of the earth. Its favorite diet is adventurers, but its insatiable appetite is tempered by its fear of light. No grue has ever been seen by the light of day, and few have survived its fearsome jaws to tell the tale.
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Erdogan
Legendary
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Activity: 1512
Merit: 1005
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July 04, 2014, 12:19:45 PM |
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His writings are a bit murky. Here is my take: Bitcoin has value only from its exchange value. Price is decided from the supply from holders (which can not ever exceed 21 mill BTC) and the reserve demand from holders (meaning there is no demand for direct use). The regression theorem is either false, or otherwise you can say that bitcoin can exist as money in the eyes of the users because they already know fiat money, which also have no direct use value. Bitcoin is not a continuation from gold with reference to the regression theorem, although bitcoin has some properties common with gold. This question can probably never be answered. I prefer the "regression theorem is false, and we are going to prove it" proposition. Regression theorem: Commodities, use value -> commodities, exchange value -> gold is preferred commodity -> gold warehouse receipts -> notes redeemable for gold -> gold backed notes -> fiat. Then jump to bitcoin, no link. Money does not need to have use value, in fact it is better if they don't have. If houses are money because owners think they are a good store of value, you would risk that some people started hoarding houses without they needing them, thus wasting resources. But wait! That is what we have. Empty houses in london owned as a store of value. |
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Robert Paulson
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July 04, 2014, 12:44:52 PM |
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money doesn't need any use value.
money is just a bunch of standardized tokens which people agree to use for trade.
its important that no one could create tokens out of thin air (like governments do with fiat) or else the creator could rob all the other users of the system.
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DannyElfman
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July 11, 2014, 03:03:26 AM |
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money doesn't need any use value.
money is just a bunch of standardized tokens which people agree to use for trade.
its important that no one could create tokens out of thin air (like governments do with fiat) or else the creator could rob all the other users of the system.
Money needs to be widely accepted as a standard measure of value in order for it to work properly. |
This spot for rent.
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GangkisKhan
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July 11, 2014, 03:05:26 AM |
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Value is derived from the demand of people.
Bitcoin has value because people demand it.
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Brewins
Legendary
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Activity: 1120
Merit: 1000
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July 11, 2014, 03:48:04 AM |
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Money has been created to be a standard way to exchange things, so you won't need to exchange stuffs directly, or even receive the goods you need as payment for work. Would be self-contraditory say that money don't need use value, when it being a way of exchange things is, as far as I know, the basic of its definition.
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tee-rex
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July 11, 2014, 03:13:01 PM
Last edit: July 22, 2014, 01:10:19 PM by tee-rex |
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money doesn't need any use value.
money is just a bunch of standardized tokens which people agree to use for trade.
its important that no one could create tokens out of thin air (like governments do with fiat) or else the creator could rob all the other users of the system.
Not quite so. Even a fiat currency has its use value. You pay with it for taxes and duties that government imposes on you. Bitcoin's use value consists in its fast payment technology bypassing banks and payment systems like Visa or Mastercard. Also, it is good for speculation. |
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tee-rex
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July 11, 2014, 03:22:27 PM
Last edit: July 22, 2014, 01:08:23 PM by tee-rex |
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Value is derived from the demand of people.
Bitcoin has value because people demand it.
This is a circular argument - Bitcoin has value because people demand it, and people demand it since it has value. Value comes first, by the way.  |
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Erdogan
Legendary
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Activity: 1512
Merit: 1005
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July 11, 2014, 04:32:59 PM |
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Value is derived from the demand of people.
Bitcoin has value because people demand it.
This is a circular argument - Bitcoin has value because people demand it, and people demand it since it has value. Value comes first, by the way. That is exactly the case. The only reason to have them, is to exchange them for something else, and this is also the case for the next guy, and so on until the money returns to you. This is pure money that has no direct use value. With money that has some value for direct use, such as gold, you can still use it for something even if noone else wants to exchange something for them. Bitcoin and fiat are pure money that is not useful for anything other than exchange. |
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Justine
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July 11, 2014, 04:41:02 PM |
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Value is derived from the demand of people.
Bitcoin has value because people demand it.
This is a circular argument - Bitcoin has value because people demand it, and people demand it since it has value. Value comes first, by the way. That is exactly the case. The only reason to have them, is to exchange them for something else, and this is also the case for the next guy, and so on until the money returns to you. This is pure money that has no direct use value. With money that has some value for direct use, such as gold, you can still use it for something even if noone else wants to exchange something for them. Bitcoin and fiat are pure money that is not useful for anything other than exchange. Fiat used to be backed by gold. So it does have value at one point in history. |
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tee-rex
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July 11, 2014, 04:44:27 PM |
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Value is derived from the demand of people.
Bitcoin has value because people demand it.
This is a circular argument - Bitcoin has value because people demand it, and people demand it since it has value. Value comes first, by the way. That is exactly the case. The only reason to have them, is to exchange them for something else, and this is also the case for the next guy, and so on until the money returns to you. This is pure money that has no direct use value. With money that has some value for direct use, such as gold, you can still use it for something even if noone else wants to exchange something for them. Bitcoin and fiat are pure money that is not useful for anything other than exchange.Yes, that's what I'm talking about! |
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tee-rex
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July 11, 2014, 04:46:09 PM |
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Value is derived from the demand of people.
Bitcoin has value because people demand it.
This is a circular argument - Bitcoin has value because people demand it, and people demand it since it has value. Value comes first, by the way. That is exactly the case. The only reason to have them, is to exchange them for something else, and this is also the case for the next guy, and so on until the money returns to you. This is pure money that has no direct use value. With money that has some value for direct use, such as gold, you can still use it for something even if noone else wants to exchange something for them. Bitcoin and fiat are pure money that is not useful for anything other than exchange. Fiat used to be backed by gold. So it does have value at one point in history. We are talking here about direct use value, not use value (utility) as such (or its absence). Fiat which is backed by gold still has the same use value as fiat not backed by anything. The only difference is that its value is fixed in respect to the asset by which it is backed. |
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painlord2k
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July 11, 2014, 04:49:33 PM |
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The regression theorem just state the initial value of a commodity money is the direct use value of the commodity at the time of the first use as a mean of indirect exchange.
Some people mistakenly believe this imply a non zero value.
But it don't.
If we add "noise" to the "non zero value" of Bitcoin (or anything else) we have the value moving randomly around zero.
But, if the characteristics of the commodity are right, any non zero positive value will cause a positive feedback loop increasing the use of it as a mean of indirect exchange.
It is just easier to start with an already always positive value (for example, gold vs salt vs seashells) even if the characteristics are not completely right but Bitcoin show it is not necessary.
As BTC are not consumed for direct use value (like gold or any other commodity) there is no risk of a deflation caused by an sudden increase of direct use value of the commodity.
And given the limited and finite number of coins in existence now and in the future, there is no risk of inflation due to the sudden increase of production.
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tee-rex
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July 11, 2014, 04:52:30 PM |
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As BTC are not consumed for direct use value (like gold or any other commodity) there is no risk of a deflation caused by an sudden increase of direct use value of the commodity.
The same pertains to pure fiat (not backed by anything). Actually, that was one of the reasons it came into existence and got universal acceptance (exclusion of externalities, such as finding a gold asteroid, for example). |
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CoinsCoinsEverywhere
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July 11, 2014, 05:54:43 PM |
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As BTC are not consumed for direct use value (like gold or any other commodity) there is no risk of a deflation caused by an sudden increase of direct use value of the commodity.
The same pertains to pure fiat (not backed by anything). Actually, that was one of the reasons it came into existence and got universal acceptance (exclusion of externalities, such as finding a gold asteroid, for example). The correlation isn't as strong as it used to be when fiat was backed by gold, but I think that fiat is still essentially backed by the production capacity and assets of a country. That's more of an abstract concept, but the strength of a currency is generally based on the strength its country's economy, factoring in things like amount of debt, the ability to repay debt, trust in the country/currency, etc. |
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twiifm
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July 11, 2014, 06:11:57 PM |
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As BTC are not consumed for direct use value (like gold or any other commodity) there is no risk of a deflation caused by an sudden increase of direct use value of the commodity.
The same pertains to pure fiat (not backed by anything). Actually, that was one of the reasons it came into existence and got universal acceptance (exclusion of externalities, such as finding a gold asteroid, for example). The correlation isn't as strong as it used to be when fiat was backed by gold, but I think that fiat is still essentially backed by the production capacity and assets of a country. That's more of an abstract concept, but the strength of a currency is generally based on the strength its country's economy, factoring in things like amount of debt, the ability to repay debt, trust in the country/currency, etc. Fiat like USD doesn't need to be backed by anything. Its legal tender so by law you have to pay your taxes in fiat. Its the only acceptable form of payment. The amount of taxes are correlated to GDP so you are correct. The price (compared to other currencies) fluctuate on economics Because its mandated that people have to pay taxes w fiat, the demand is always there. This guaranteed demand is what makes USD stable. As long as US economy is stable |
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tee-rex
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July 11, 2014, 06:46:15 PM |
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As BTC are not consumed for direct use value (like gold or any other commodity) there is no risk of a deflation caused by an sudden increase of direct use value of the commodity.
The same pertains to pure fiat (not backed by anything). Actually, that was one of the reasons it came into existence and got universal acceptance (exclusion of externalities, such as finding a gold asteroid, for example). The correlation isn't as strong as it used to be when fiat was backed by gold, but I think that fiat is still essentially backed by the production capacity and assets of a country. That's more of an abstract concept, but the strength of a currency is generally based on the strength its country's economy, factoring in things like amount of debt, the ability to repay debt, trust in the country/currency, etc. Yes, it can be said that it is backed by the goods you can buy with it and services that can be rendered to you in exchange for it. |
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tee-rex
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July 11, 2014, 06:49:37 PM |
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As BTC are not consumed for direct use value (like gold or any other commodity) there is no risk of a deflation caused by an sudden increase of direct use value of the commodity.
The same pertains to pure fiat (not backed by anything). Actually, that was one of the reasons it came into existence and got universal acceptance (exclusion of externalities, such as finding a gold asteroid, for example). The correlation isn't as strong as it used to be when fiat was backed by gold, but I think that fiat is still essentially backed by the production capacity and assets of a country. That's more of an abstract concept, but the strength of a currency is generally based on the strength its country's economy, factoring in things like amount of debt, the ability to repay debt, trust in the country/currency, etc. Fiat like USD doesn't need to be backed by anything. Its legal tender so by law you have to pay your taxes in fiat. Its the only acceptable form of payment. The amount of taxes are correlated to GDP so you are correct. The price (compared to other currencies) fluctuate on economics Because its mandated that people have to pay taxes w fiat, the demand is always there. This guaranteed demand is what makes USD stable. As long as US economy is stable In a broad sense any money is backed by the utility it provides, either as a payment of taxes or as a means to purchase goods and services (including a utility for speculation, of course). |
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CryptInvest
Legendary
Offline
Activity: 2156
Merit: 1132
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July 11, 2014, 08:37:28 PM |
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Money - a means exchanged, nothing more.
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ShakyhandsBTCer
Sr. Member
Offline
Activity: 448
Merit: 250
It's Money 2.0| It’s gold for nerds | It's Bitcoin
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July 12, 2014, 03:57:42 PM |
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As BTC are not consumed for direct use value (like gold or any other commodity) there is no risk of a deflation caused by an sudden increase of direct use value of the commodity.
The same pertains to pure fiat (not backed by anything). Actually, that was one of the reasons it came into existence and got universal acceptance (exclusion of externalities, such as finding a gold asteroid, for example). The correlation isn't as strong as it used to be when fiat was backed by gold, but I think that fiat is still essentially backed by the production capacity and assets of a country. That's more of an abstract concept, but the strength of a currency is generally based on the strength its country's economy, factoring in things like amount of debt, the ability to repay debt, trust in the country/currency, etc. Fiat like USD doesn't need to be backed by anything. Its legal tender so by law you have to pay your taxes in fiat. Its the only acceptable form of payment. The amount of taxes are correlated to GDP so you are correct. The price (compared to other currencies) fluctuate on economics Because its mandated that people have to pay taxes w fiat, the demand is always there. This guaranteed demand is what makes USD stable. As long as US economy is stable The US dollar is backed by the US economy. |
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