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Serious question: even if a currency is only good for exchanging for other currencies, doesn't that still make it a currency? In other words, even if you can't

Serious question: even if a currency is only good for exchanging for other currencies, doesn't that still make it a currency? In other words, even if you can't go buy clothing or games or hosting with BTC, doesn't the fact that you can exchange it for $LOCAL_CURRENCY (which can be used to buy those things) give it value? Basically, a meta-currency or currency of currencies, if you will. Edit: I realize we are saying the problem is a delay and pinning down the real value at a given time, but it sounds like that doesn't matter so much as the volatility itself, which should eventually settle. If delay were really a problem, then I would think stocks wouldn't be a thing.

drabiega 9y ago
Where then, would you draw the line between a currency and a non-currency asset?
- azernik 9y ago
  Liquidity, probably - how fast can you exchange how much of it. Though I do personally think there's a lot more to a currency than that.
- stephengillie 9y ago
  Everything is a currency, if you barter hard enough.
  - librvf 9y ago
    Barter is, by definition, an exchange of goods without using money. In other words if you have to barter to get rid of it, it's not currency.
- librvf 9y ago
  When it hits all of: Acceptability Durability Divisibility Stability Portability (Elasticity) If you can't spend it easily, it's not a (functioning) currency. If it spoils or decays within your lifetime it's not a currency. If it's not something you can divide in order to make payments of a more-or-less arbitrary amount, it's not a currency. If you can't predict how much of the asset you will need to pay your bills next month, it's not a currency If you can't bring it with you to the place where the exchange takes place, it's not a currency. If you can't obtain capital investment in a currency because the currency itself is more valuable than anything you could produce, then it's not a (good long term) currency. This last one is in parens because it one only matters in a growing economy. A deflationary currency can still otherwise function as a viable medium of exchange, but eventually, lack of availability for new entrants will mean that entrepreneurs will begin looking to do business in alternate currencies.
  - blueprint 9y ago
    Are you missing fungibility or is that covered?
    - librvf 9y ago
      Missed it. In my mind I think I lumped it in with divisibility, which is related but not quite the same thing.
      - blueprint 9y ago
        Nice. In that case, I wonder if you've ever heard of Monero? :)
  - cesarb 9y ago
    > If you can't predict how much of the asset you will need to pay your bills next month, it's not a currency Back in the hyperinflation days, we couldn't predict how many Cr$ we would need to pay our bills in the next month. That didn't keep it from being a currency.
    - librvf 9y ago
      That period did not last. Yes, if you try hard enough and look narrowly enough you can find exceptions to any of these rules, but it holds as a general guideline. If hyperinflation had continued indefinitely, it's probable some other commodity would have supplanted it as a de facto currency.
tadfisher 9y ago
No, it becomes an asset, like gold.
- greenhouse_gas 9y ago
  The thing with gold is that it's been valued for thousands of years all around the world and you can show it off, and we're pretty sure that we won't find a pure gold asteroid hurling towards us. BC has none of those advantages.
  - Kattywumpus 9y ago
    http://news.bbc.co.uk/2/hi/sci/tech/401227.stm http://news.bbc.co.uk/2/hi/sci/tech/401227.stm
  - adrianN 9y ago
    Wait, has a pure Bitcoin asteroid been detected already?
nostrademons 9y ago
That makes it a security. By definition, currency is something you can exchange for goods or services, while securities are financial instruments that hold value (i.e. can be exchanged for currency).
- roywiggins 9y ago
  See also: the European Currency Unit. Not a currency, but sort of acted like one. https://en.m.wikipedia.org/wiki/European_Currency_Unit https://en.m.wikipedia.org/wiki/European_Currency_Unit
vxNsr 9y ago
Stocks are a thing because no one thinks of them as liquid assets. Steam is making the same argument about bitcoin essentially.
- ajross 9y ago
  Stocks are an order of magnitude more liquid than Bitcoin, though
  - rebuilder 9y ago
    That would depend entirely on the stock. I'm sure there are many, many companies whose stock trades at less daily volume than BTC. Actually, I'd think few companies' stock trades at BTC's volume.
    - ajross 9y ago
      Oh sure, Berkshire Hathaway is less liquid. There are lots of stocks designed via various tricks (usually just share price) to be held and not traded. Nonetheless, for any of the "commonly traded and indexed investment securities we all talk about colloquially as 'stocks'", the daily trade to capitalization ratio is routinely an order of magnitude higher than bitcoin.
- stephengillie 9y ago
  It was eye-opening to realize people buy stocks for 2 reasons: 1. Dividend payments 2. The expectation that someone else will want the stock more in the future. (Often for reason #1.) Financially, there is no other logical reason to possess stocks. It was part of the larger lesson that companies often perform irrational actions because they are made primarily out of people.
  - meric 9y ago
    3. Voting rights.

drabiega 9y ago

Where then, would you draw the line between a currency and a non-currency asset?

azernik 9y ago
Liquidity, probably - how fast can you exchange how much of it. Though I do personally think there's a lot more to a currency than that.
stephengillie 9y ago
Everything is a currency, if you barter hard enough.
- librvf 9y ago
  Barter is, by definition, an exchange of goods without using money. In other words if you have to barter to get rid of it, it's not currency.
librvf 9y ago
When it hits all of: Acceptability Durability Divisibility Stability Portability (Elasticity) If you can't spend it easily, it's not a (functioning) currency. If it spoils or decays within your lifetime it's not a currency. If it's not something you can divide in order to make payments of a more-or-less arbitrary amount, it's not a currency. If you can't predict how much of the asset you will need to pay your bills next month, it's not a currency If you can't bring it with you to the place where the exchange takes place, it's not a currency. If you can't obtain capital investment in a currency because the currency itself is more valuable than anything you could produce, then it's not a (good long term) currency. This last one is in parens because it one only matters in a growing economy. A deflationary currency can still otherwise function as a viable medium of exchange, but eventually, lack of availability for new entrants will mean that entrepreneurs will begin looking to do business in alternate currencies.
- blueprint 9y ago
  Are you missing fungibility or is that covered?
  - librvf 9y ago
    Missed it. In my mind I think I lumped it in with divisibility, which is related but not quite the same thing.
    - blueprint 9y ago
      Nice. In that case, I wonder if you've ever heard of Monero? :)
- cesarb 9y ago
  > If you can't predict how much of the asset you will need to pay your bills next month, it's not a currency Back in the hyperinflation days, we couldn't predict how many Cr$ we would need to pay our bills in the next month. That didn't keep it from being a currency.
  - librvf 9y ago
    That period did not last. Yes, if you try hard enough and look narrowly enough you can find exceptions to any of these rules, but it holds as a general guideline. If hyperinflation had continued indefinitely, it's probable some other commodity would have supplanted it as a de facto currency.

tadfisher 9y ago

No, it becomes an asset, like gold.

greenhouse_gas 9y ago
The thing with gold is that it's been valued for thousands of years all around the world and you can show it off, and we're pretty sure that we won't find a pure gold asteroid hurling towards us. BC has none of those advantages.
- Kattywumpus 9y ago
  http://news.bbc.co.uk/2/hi/sci/tech/401227.stm http://news.bbc.co.uk/2/hi/sci/tech/401227.stm
- adrianN 9y ago
  Wait, has a pure Bitcoin asteroid been detected already?

nostrademons 9y ago

That makes it a security. By definition, currency is something you can exchange for goods or services, while securities are financial instruments that hold value (i.e. can be exchanged for currency).

roywiggins 9y ago
See also: the European Currency Unit. Not a currency, but sort of acted like one. https://en.m.wikipedia.org/wiki/European_Currency_Unit https://en.m.wikipedia.org/wiki/European_Currency_Unit

vxNsr 9y ago

Stocks are a thing because no one thinks of them as liquid assets. Steam is making the same argument about bitcoin essentially.

ajross 9y ago
Stocks are an order of magnitude more liquid than Bitcoin, though
- rebuilder 9y ago
  That would depend entirely on the stock. I'm sure there are many, many companies whose stock trades at less daily volume than BTC. Actually, I'd think few companies' stock trades at BTC's volume.
  - ajross 9y ago
    Oh sure, Berkshire Hathaway is less liquid. There are lots of stocks designed via various tricks (usually just share price) to be held and not traded. Nonetheless, for any of the "commonly traded and indexed investment securities we all talk about colloquially as 'stocks'", the daily trade to capitalization ratio is routinely an order of magnitude higher than bitcoin.
stephengillie 9y ago
It was eye-opening to realize people buy stocks for 2 reasons: 1. Dividend payments 2. The expectation that someone else will want the stock more in the future. (Often for reason #1.) Financially, there is no other logical reason to possess stocks. It was part of the larger lesson that companies often perform irrational actions because they are made primarily out of people.
- meric 9y ago
  3. Voting rights.