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If we look at the past 10,000 years of history - commodities are useful things, objects with utility. Currencies are commodities which people begin to favor fo
by Ologn 9y ago
If we look at the past 10,000 years of history - commodities are useful things, objects with utility. Currencies are commodities which people begin to favor for use in trading. Currencies are commodities which have properties that make them good currencies - they have properties such as uniformity, durability, divisibility, portability. This is why precious metals like gold have been favored as currencies through history - gold is uniform, durable, divisible and portable.
The paper dollar bill is, and always has been, completely worthless in and of itself. It is just a piece of paper. Just like Confederate bills were and are pieces of paper, just like the Papiermark was and is a piece of paper. US bills have a history, just as German bills do.
In 1914, the German Mark, or "Goldmark" was redeemable for gold. The Mark/gold link was broken in 1914 and the Mark became the "Papiermark". By 1923, hyperinflation had made the Papiermark near worthless and it was replaced by the Rentenmark and then in the next year this was replaced by the Reichsmark.
Swinging back to the USA, the words "redeemable in gold" were removed from the hundred dollar bill in 1934, and then by 1971 Nixon had closed the gold window entirely. Sort of. Because if he really had, he could have just taken the thousands of tons of gold in Fort Knox and paid down the US debt. But he couldn't. Because that gold still backs the dollar. The dollar was an abstraction of gold before 1934 and 1971, a promise. Then it became an abstraction of the abstraction. It's still on some level backed by the gold in Fort Knox, Trump and the Fed chair could just reopen gold/dollar reconversion if need be, and a hard floor would suddenly appear under the dollar.
Bitcoin has no such floor. There are no thousands of tons of gold waiting in the wings for Bitcoin, no nuclear armed #1 (going on #2) world economy with the power to tax and receive tax payments backing it. We don't even know who created Bitcoin.
It's an odd argument - the only commodity people can find which has no apparent value is the dollar (or euro), so that's what people compare it to.
If this was 1917, you might be asking me why the Papiermark had worth when it was not backed by something, and thus Bitcoins must have value. What people found out was that the Papiermark unhooked from gold did not have value, as the German government of the time didn't give a damn about its value. It's kind of the same argument - Papiermarks in 1917 had value, so Bitcoins must have value. People found out in the 1920s that Papiermarks didn't have value as the implicit promise of government gold conversion went away.
- dmichulke 9y agoPapiermark got printed. BTC gets ...?
- kodfodrasz 9y agoI believe that the deflationary nature of cryptocurrencies is the real problem in replacing money. Also the fact that a trail is left behind transactions is unlike it is with cash. This property is cool for the government, but the users may not want to have it. On question that bugs me, but don't have enough knowledge bout Bitcoin: are the transactions public? (I believe they are). So anybody could map the wealth of the members of the bitcoin network? If it were used instead of cash my money movements could me monitored by anyone, eg. my employer?
- dmichulke 9y agoDeflationary is not a bad thing at all - though I realize that most of mainstream economics thinks it is. A few thoughts on that: - Real wages rise when the currency deflates (good for working class, think about the effect of wealth inequality) - Debt becomes a problem (bad for indebted, such as government) The main official reason why deflation would be a bad thing is that it discourages spending. I think it discourages non-necessary spending. People will still eat, they just wait a few months more to buy their TV. However, they can buy more TVs now or other things because they have more disposable income. I don't think forcing people to spend is in any way a good thing, neither economically nor ecologically. But enough of this, I want a non-inflationary currency to save in. If there are enough of me, that's sufficient to make something "have a value". Re the public transactions, I assume that sooner or later it can be tracked to a high probability. However, I also think this is the case with other non-cash transactions, so while it's not relatively better than fiat in that sense, it's still not worse either. For me that's ok since I'm not in the money laundering or tax evasion business.
- kodfodrasz 9y agoI agree with the traditional view about deflation. It is bad, especially for the workers, who have almost no money to save, thus they do not get any of the benefits, but they take the most burden, as they must spend almost all of their income on survival. On the other hand others with more income have their savings growing in value, thus not spending, making consumption fall, which renders workers unneeded, etc... about public transactions I beleive this is a real privacy problem. The government can track my spendings every day (well, not cash, but eletronic transactions which are the bulk of my money movements) even now (when a judge has signed a permit for them). The problem is if anyone can do that. I have given up some privacy to the government, but not to the random guy. Now my question is: is this concern of mine about public traceability existing with bitcoin technology, or not? (only the technical aspects please. the philosophical side is out of scope here)