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> Bitcoin is a terrible savings vehicle for the same reason cash in checking accounts or collectibles are: there is no basis for its value. 10 years is a long

by noch 6y ago

> Bitcoin is a terrible savings vehicle for the same reason cash in checking accounts or collectibles are: there is no basis for its value. 10 years is a long time to hold an erroneous belief based on a misunderstanding of what money and assets are. I had the same wrong beliefs as you do now for a long time and misallocated capital at a crucial moment. Parker Lewis explains[0]: > [Bitcoin] is backed by the only thing that backs any form of money: the credibility of its monetary properties. Money is not a collective hallucination nor merely a belief system. An interpretation: Money is an emergent property of human cooperation to allocate capital, labour, and limited resources. (i.e. economics). Productivity is the use of time and energy in the satisfaction of human preferences. What are the properties a money, be it gold, cowrie shells, baseball cards, nudes, exploits, fiat currency (legal tender), must strive to meet for humans to recognise it as "a money": durability, portability, divisibility, uniformity, limited supply (scarcity), and acceptability. [1] Incidentally, if you pick up a US dollar bill, you'll see the inscription: "this note is legal tender, for all debts public and private." Therefore, that note derives its value from the implicit debt underlying it. That debt is based on some person's labour in the creation of a product or delivery of a service. [0] https://unchained-capital.com/blog/bitcoin-is-not-backed-by-nothing/ https://unchained-capital.com/blog/bitcoin-is-not-backed-by-... [1]: https://www.stlouisfed.org/education/economic-lowdown-podcast-series/episode-9-functions-of-money https://www.stlouisfed.org/education/economic-lowdown-podcas...

JumpCrisscross 6y ago
> Therefore, that note derives its value from the implicit debt underlying it That is not what legal tender and “for all debts public and private” mean [1]. That language refers to dollars being currency “courts of law are required to recognize as satisfactory payment for any monetary debt”. On the Parker Lewis article, it’s cute but contrived. A straw man. Bitcoin is backed by nothing. U.S. dollars are, similarly, backed by nothing. Saying they’re suspended by shared perceptions is technically true, but implicitly re-defines backing to a meaningless word. [1] https://en.m.wikipedia.org/wiki/Legal_tender https://en.m.wikipedia.org/wiki/Legal_tender
- noch 6y ago
  > That is not what legal tender and “for all debts public and private” mean [1]. That language refers to dollars being currency “courts of law are required to recognize as satisfactory payment for any monetary debt”. That's exactly what I said: that physical note has value only in so far as there is a debt with which to pay it. That debt is the value someone else's productivity created. If your dollars are backed by nothing, please send them all to me so I can keep them for you.
dragonwriter 6y ago
> Incidentally, if you pick up a US dollar bill, you'll see the inscription: "this note is legal tender, for all debts public and private." Therefore, that note derives its value from the implicit debt underlying it. There's no such thing. That it can be used to pay debts doesn't mean there are debts underlying it, implicit or explicit. It means that if you incur a debt, and you have one, you can use it to resolve the debt.
- noch 6y ago
  > That it can be used to pay debts doesn't mean there are debts underlying it, implicit or explicit. It means that if you incur a debt, and you have one, you can use it to resolve the debt. This is a misunderstanding that guides the idea that we can print money arbitrarily. I'm not saying I am right but I am saying that there's a distortion in our understanding of fiat currency that we need to keep thinking about by examining our base assumptions. Consider: The only reason to receive a dollar is because I've provided you with a service or product. You need to pay for that, therefore you have incurred a debt (we might agree that you pay in 30 days, but even if you pay in 16ms, you had a debt for that amount of time). That dollar, then, is the value of that debt, which is the value of my labour. When it's not the value of my labour, you have either underpaid or overpaid. That dollar is just a paper. The only reason you or I think it's valuable is because we can use it to pay such debts that actually exist in reality. A dollar is an abstract unit of such a debt. It's legal tender because a government promises to enforce debt repayments using fiat. The government creates the currency, the enforces its ability to pay individuals using that currency, and requires individuals to pay the government, through taxes, in that currency. It should then be easy to measure the productivity of a nation by "looking" at the total money supply. If we print money, then prior valuations of productivity in such transactions are debased: I gave you a dollar for your algorithm yesterday, but today there are twice as many dollars. You would have charged me 2 dollars, had you known more would be printed! That's the hypothesis: a dollar is a measure of value of the debt incurred during transactions between productive humans/machines. Holding that dollar implies a debt to me was paid. The dollar stores the value of that productivity for me and allows me to pay a future debt I will incur. dollar <- debt <- transaction <- productivity. So humour me and ask yourself: what if the dollars in existence are, in fact, backed by debts on productivity. What are the implications on monetary policy.

by noch 6y ago

JumpCrisscross 6y ago

> Therefore, that note derives its value from the implicit debt underlying it That is not what legal tender and “for all debts public and private” mean [1]. That language refers to dollars being currency “courts of law are required to recognize as satisfactory payment for any monetary debt”. On the Parker Lewis article, it’s cute but contrived. A straw man. Bitcoin is backed by nothing. U.S. dollars are, similarly, backed by nothing. Saying they’re suspended by shared perceptions is technically true, but implicitly re-defines backing to a meaningless word. [1] https://en.m.wikipedia.org/wiki/Legal_tender https://en.m.wikipedia.org/wiki/Legal_tender

noch 6y ago
> That is not what legal tender and “for all debts public and private” mean [1]. That language refers to dollars being currency “courts of law are required to recognize as satisfactory payment for any monetary debt”. That's exactly what I said: that physical note has value only in so far as there is a debt with which to pay it. That debt is the value someone else's productivity created. If your dollars are backed by nothing, please send them all to me so I can keep them for you.

dragonwriter 6y ago

> Incidentally, if you pick up a US dollar bill, you'll see the inscription: "this note is legal tender, for all debts public and private." Therefore, that note derives its value from the implicit debt underlying it. There's no such thing. That it can be used to pay debts doesn't mean there are debts underlying it, implicit or explicit. It means that if you incur a debt, and you have one, you can use it to resolve the debt.

noch 6y ago
> That it can be used to pay debts doesn't mean there are debts underlying it, implicit or explicit. It means that if you incur a debt, and you have one, you can use it to resolve the debt. This is a misunderstanding that guides the idea that we can print money arbitrarily. I'm not saying I am right but I am saying that there's a distortion in our understanding of fiat currency that we need to keep thinking about by examining our base assumptions. Consider: The only reason to receive a dollar is because I've provided you with a service or product. You need to pay for that, therefore you have incurred a debt (we might agree that you pay in 30 days, but even if you pay in 16ms, you had a debt for that amount of time). That dollar, then, is the value of that debt, which is the value of my labour. When it's not the value of my labour, you have either underpaid or overpaid. That dollar is just a paper. The only reason you or I think it's valuable is because we can use it to pay such debts that actually exist in reality. A dollar is an abstract unit of such a debt. It's legal tender because a government promises to enforce debt repayments using fiat. The government creates the currency, the enforces its ability to pay individuals using that currency, and requires individuals to pay the government, through taxes, in that currency. It should then be easy to measure the productivity of a nation by "looking" at the total money supply. If we print money, then prior valuations of productivity in such transactions are debased: I gave you a dollar for your algorithm yesterday, but today there are twice as many dollars. You would have charged me 2 dollars, had you known more would be printed! That's the hypothesis: a dollar is a measure of value of the debt incurred during transactions between productive humans/machines. Holding that dollar implies a debt to me was paid. The dollar stores the value of that productivity for me and allows me to pay a future debt I will incur. dollar <- debt <- transaction <- productivity. So humour me and ask yourself: what if the dollars in existence are, in fact, backed by debts on productivity. What are the implications on monetary policy.