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Bitcoin has few attributes of money but all the attributes of a collectible

93 points by iokevins 5y ago

khazhoux 5y ago
One difference though is that all baseball cards were acquired for pennies originally, then grew in value. You don't have to spend a month of heavy-duty electrical bills or $50K to buy a fresh baseball card or a beanie baby or a pez dispenser.
- john_alan 5y ago
  you can’t use a beanie baby or baseball card as a permissionless, decentralised, censorship resistant global remittance tool. That said, BTC lacking the fungible property of sound money is a glaring issue. Though a money system like Monero may end up becoming very important global money for the internet age. I think the author is shortsighted.
  - throwaway_kufu 5y ago
    So long as the internet is required to use Bitcoin it’s not exactly as permissionless or decentralized as it’s marketing buzzwords pretend. It is also pretty trivial to fork Bitcoin so there is no more inherent value in Bitcoin vs a clone or fork. Compare that to a USD I think the last attempted fork was the currency of the confederacy going to show it’s not so trivial to fork.
    - john_alan 5y ago
      It’s permissionless because you don’t need a home or other status to use it. It’s decentralised because the US can’t globally stop it.
      - jazzyjackson 5y ago
        I'm pretty sure we just haven't seen the war that would stop it. A few cut undersea cables and a dose of kessler syndrome would make all those burned cpu cycles for naught.
- notRobot 5y ago
  > You don't have to spend a month of heavy-duty electrical bills or $50K to buy a fresh baseball card You didn't have to do that to get bitcoin until recently either. And even today, you don't have to mine. You can purchase bitcoin for whatever amount in USD, and like baseball cards, it'll (probably) grow in value.
- herbst 5y ago
  I've spent like $200 for a graphics card (that i used for 6+ years after that) and $100 on power to mine about 3-5 Bitcoins within a few months until the summer heat did not allow me to proceed (plus back then it was literally not worth it). However your argument is invalid. Also you could have just bought the $0.1 bitcoin back then. You also are not buying machines to build your own baseball cards and complain about the electric bill.
jdnordy 5y ago
A key difference between collectibles and bitcoin/cryptocurrency is that collectibles don't claim to be money nor are they trying to replace current money systems. I'm no expert on money, how it works and how it gets value, but I would be interested to find an article discussing whether cryptocurrency has enough of the qualities of "money" to replace any current money system.
- darksaints 5y ago
  The Hitachi Magic Wand never claimed to be a sex toy, and yet it is almost universally recognized as one. It doesn't really matter what is claimed...there are some cryptocurrencies that are technically better suited to currency use cases than Bitcoin, but they aren't popular enough to be used as a currency, so Bitcoin is still more of a currency than they are. Even Tide detergent can be recognized as a currency if enough people use it like one [0]. Bitcoin and other cryptocurrencies certainly share a lot of the properties of money: cleanly divisible, readily accepted as a medium of exchange, and difficult to counterfeit. But as much as it is used as a currency, there doesn't appear to exist much of a lending market (a key property of money), and there are tons of people that are sitting on it like an investor might sit on gold stockpiles or land, which makes me think the baseball card analogy is still appropriate. [0] https://www.aei.org/carpe-diem/markets-in-everything-tide-laundry-soap-as-street-currency/ https://www.aei.org/carpe-diem/markets-in-everything-tide-la...
RcouF1uZ4gsC 5y ago
Addendum: Now imagine that these baseball cards, instead of featuring professional baseball players, instead featured people who had run on a giant hamster wheel for some time at some speed. Also, the more baseball cards that get made, the longer/faster the person has to run on the hamster wheel. Initially, you could run on the giant hamster wheel for a few minutes and make a baseball card. Now, because so many baseball cards have been made, you have to run for months on a giant hamster wheel. Eventually, professional athletes figure out that instead of using their athletic prowess to play sports, they can actually make more money by taking their athletic ability and running on giant hamster wheels. In addition, many metal shops have also figured out that instead of making other stuff, they can maximize their revenue by instead concentrating on making giant hamster wheels so people can run on them to make these cards.
graeme 5y ago
The funny thing is that Bitcoin will basically only have value as a collectible as long as substantial numbers of people believe this essay’s argument is false. People want to collect bitcoin at current valuations because they are convinced it will become a currency/store of value of the future and hence rise in value. If everyone suddenly switched to believing “Oh bitcoin doesn’t do anything but it is a fun collectible which also has mining costs to track ownership” its value would plummet.
- danjac 5y ago
  > The funny thing is that Bitcoin will basically only have value as a collectible as long as substantial numbers of people believe this essay’s argument is false. Is this the "greater fool" argument against Bitcoin?
- paxys 5y ago
  Bitcoin can be a collectible and a store of value without ever becoming a currency. Gold, art, baseball cards etc. all fall into that category.
  - graeme 5y ago
    Those all have some kind of use value, and a story attached. Gold makes beautiful jewelry, collector’s cards remind people of childhood and baseball flory, art is lovely to look at and a way to flaunt wealth or feel a connection through the ages. You can look at all three and feel a fuzzy glow of happiness as you ponder the attached narrative. My point was that, if the author’s argument is true, bitcoin will only have value as a pure collectible if people maintain some wider narrative that opposes the argument in the essay. No one would collect a sterile piece of cardboard devoid of any story, just as no one would collect “Digital token #385839, definitively devoid of use”. I’m not saying Bitcoin needs to become a useful currency to maintain a value. I’m saying it needs to have people believe it will, or to believe some other narrative about it which makes them consider it as more than a collectible.
    - zbraniecki 5y ago
purplecabbage77 5y ago
Something this article misses though is that Bitcoin, unlike stamps and Beanie Babies, is digital, which I'd argue makes a huge difference. Imagine if you could exchange Beanie Babies with anyone in the world with an internet (or satellite) connection. That seems...at least a little more useful?
- travisgriggs 5y ago
  I'll bite. Isn't that essentially what eBay and the like are? Among other things, a beanie baby exchange? I'm curious why you feel that being digital "makes a huge difference"? Sure it's different. And coincident with a current popular disruption (digitization of everything we can think of), but does that make it transcendentally different? Or just different because times are different? Honestly curious.
  - purplecabbage77 5y ago
    I would say transcendentally different. Unlike eBay, with Bitcoin I can transact nearly instantly and without going through any middle men like PayPal and the like. This is huge. I can also store 1bitcoin and 1million bitcoin on the same USB drive, and know that also unlike beanie babies, they won't deteriorate at all ever.
syllable_studio 5y ago
I don't agree with this assessment at all. I think the immense value of bitcoin and other technologically advanced, secure, decentralized networks comes from the detailed network communications which they enable. They allow global financial transactions through a powerful medium in a way that has never existed before. This has nothing to do with baseball cards. The fact that decentralized networks enable NFTs and collectibles is a small subset of the value and power of decentralized networks. The network is the value. To me, this is what bitcoin is. https://medium.com/the-capital/the-network-is-the-value-an-essay-about-the-value-of-a-bitcoin-c49fec8c3d1b https://medium.com/the-capital/the-network-is-the-value-an-e...
- dehrmann 5y ago
  You're conflating the value of blockchains with the value of bitcoin. A bet on bitcoin is a bet that more people will want bitcoins, so the price goes up. This trades a lot like baseball cards that random drug dealers also accept. A bet on blockchain tech is that someone finds a use case for it that isn't a solution in search of a problem.
- agumonkey 5y ago
  what if decentralized monetary network ends up having the same effect on communication and social relationship as internet did ? are we becoming degen gig economists ?
- yourabstraction 5y ago
  Exactly, cryptocurrency is a powerful human coordination tool that allows us to build networks that contain real monetary value on top of legacy infrastructure. I'm not surprised to see this on the front page, hacker news has taken misrepresenting Bitcoin to a professional level.
sMarsIntruder 5y ago
I really don't care getting downvoted, but I really think this is the worst explanation of what bitcoin is. There's a book that I strongly recommend to the author of this article: the bitcoin standard. The book gives also some fundamentals of what money is, and what bitcoin solves and can solve. (talking also about bitcoin layers) I understand this is a divisive topic, but there's really nothing to with the baseball cards here.
- Closi 5y ago
  You’ve not countered any of their arguments. Of course there isn’t anything directly to do with baseball cards, but there are probably more similarities than with fiat currency, which is their argument.
thesausageking 5y ago
This doesn't make any sense. That's a poor definitely of money. And Bitcoin does not have "all of the elements of a collectible". Collectibles have cultural, artistic, or other value on their own and are limited numbers of a set ("non-fungible"). Bitcoin is very fungible. If you own 2 BTC, there aren't specific Bitcoins that are marked for you.
- brbsix 5y ago
  If you own 2 BTC, there aren't specific Bitcoins that are marked for you. If you mine 2 BTC, you posses the private keys to two very specific BTC (unspent outputs) on the blockchain. No one else may spend them without the private keys. If you own 2 BTC in an exchange then it is true that you are unlikely to own any specific 2 BTC but that's an entirely different subject. At that point you don't really own them.
  - beefield 5y ago
    Out of curiosity, as I do not know enough details: 1. Alice owns one BTC 2. Bob owns one BTC 3. Both send their BTC to Charlie 4. Charlie sends one BTC to David Question: Is there unambiguous way to define whether David got the BTC originally owned by Alice or the one owned by Bob? If yes, how? If no, doesn't that mean that there exist no specific bitcoins anywhere?
    - john_alan 5y ago
      > Is there unambiguous way to define whether David got the BTC originally owned by Alice or the one owned by Bob? Yes. BTC is completely traceable. You can follow the TXOs
    - cesarb 5y ago
      Yes. What you think of as a "specific Bitcoin" doesn't actually exist; what exists is an "unspent transaction output", which can be used as an input for a new transaction if certain conditions are met. So what really happens in your example scenario is: 1. Alice knows the private keys corresponding to one or more unspent outputs of transactions, with a total value of 1 BTC; 2. Bob knows the private keys corresponding to one or more unspent outputs of transactions, with a total value of 1 BTC; 3. Both create new transactions, specifying one or more of their formerly unspent outputs as inputs to the new transaction, and Charlie's address (which is a hash of a public key) as one of the outputs of the new transaction, that output having the value of 1 BTC; 4. Charlie creates a new transaction, with David's address as one of the outputs, having the value of 1 BTC. Note that, at this point, Charlie can chose which of the unspent outputs will be used as the input for the new transaction. It can be the output from Alice's transaction, it can be the output from Bob's transaction, it can be the output from some other transaction, or it can even be a combination of them: the transaction could have both Alice's and Bob's outputs as inputs, and have two outputs, one going to David, the other going to a new address (which can be a "change address" on the same wallet, or an address belonging to someone else).
eMGm4D0zgUAVXc7 5y ago
Whenever people argue as strongly about something as they do with "is Bitcoin a currency?", I think there's a heuristic which can be applied: If people argue very much about if X applies or not, then X probably applies to a certain part close to 50%. So Bitcoin kinda is like money, and kinda is not. So can we just stop the arguing and move on to figuring out ways to make use of it, or write code to improve it if you don't like the as-is state, given that it exists and won't go away? :)
trimbo 5y ago
Bitcoin is not a collectible any more than individual gold bars are collectibles. A collectible can be compared in value to another collectible of the same type. I might want a 1979 Dave Kingman card because I'm nostalgic for Dave "Kong" Kingman. Others will buy the Dave Kingman card to sell it to people like me, but we all give the card value based on its condition, the player, the year, etc. But a Steve Macko card and a Dave Kingman card are completely different in value. They are independently valued. Bitcoin is not.
- Ansil849 5y ago
  > Bitcoin is not a collectible any more than individual gold bars are collectibles. Some individual gold bars are collectibles.
- bruce511 5y ago
  You are equating different cards to different bitcoins. That's not the point of the article. In the context of the article there are a limited number of say babe Ruth cards. They are all the same. Bitcoin is the babe Ruth card. Other cards represent other coins. Arguing if bitcoin is money is like arguing if a ferrari testarosa is a car. It clearly is,but at the same time it's not a terribly useful car. Sure bitcoin is money, but it's not an especially useful form of money. Its main attribute is scarcity,not utility. A regular car will drive around 200 000 miles in its lifetime, the ferrari maybe 50 000, probably less. Bitcoin may be money, but its a pretty weak form of money in terms of what we need everyday.
  - Nevermark 5y ago
    Ah thanks for clearing that up for me. But comparing all the Babe Ruth cards to Bitcoin makes even less sense. 2,100 trillion satoshis is qualitatively different than something with only tens, hundreds or thousands of units. Not to mention that every Babe Ruth card is still judged individually on its relative value to other Babe Ruth cards. Differentiated by its condition for instance. I just don't see that comparison making any sense.
- kenjackson 5y ago
Ansil849 5y ago
As a casual observer I see the cryptocurrency space only seriously used by two groups of people: those who want to buy goods/services which are controlled in their or the seller's jurisdiction and so need a bit more anonymity than Paypal; and people who run ICO and more recently NFT swindles. I have yet to see a widespread other usage of cryptocurrency.
- throwaway81523 5y ago
  I don't use bitcoin but one attraction I see is that it lets you spend your money without anyone else's permission. If you buy something with it, the seller gets the money without your having to worry about automated fraud checks causing your credit card to be declined, check to be put on hold, etc. It's like cash that way. Wire transfers might be an alternative, but they are only practical for fairly large transactions and involve a lot of bureaucracy. Of course bitcoin (like cash) limits your recourse against the seller, so you have to take that into account. Sometimes though, that is to your advantage when the risk is low enough (small transaction, trusted seller) that the hassle avoidance outweighs the risk.
  - Ansil849 5y ago
    That's a potential use, one of many, but it is not a current widespread use of crypto. Why? Probably because Paypal (despite its many, many faults) works just fine for most people.
    - deleted 5y ago
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  - paxys 5y ago
    Every bitcoin transaction happening online today is brokered by the same payments processors who decide that your credit card is committing fraud.
    - chii 5y ago
      Not if you directly transfer bitcoin to the destination wallet address, without going through a broker or payment processor. This isn't possible with credit card or bank transfers.
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alwillis 5y ago
Of all of the bad articles about bitcoin, this is among the worst. Here’s the best short description of bitcoin I’ve seen: Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally. —@travis_kling
brbsix 5y ago
Even its strongest selling point, absolute privacy, is mostly a lie That only became a supposed selling point among the uninformed as a result of widespread misrepresentation in the media. At least from my perspective, nobody using it very early (i.e. 2011-12) was ever under any illusion that privacy or anonymity were a feature. People using it for illicit purposes have never been. Mixing services and informal brokers willing to exchange cash for BTC were widely available for that reason even then. Later of course BTC->XMR->BTC and then CoinJoin et al.
- herbst 5y ago
  This is the same timeline i remember. When Bitcoin was still new it did not seem a lot more practical for illegal/grey area things than other things that were already etablished (PaySafe, PerfectMoney or even PayPal for example). It's only when the media picked up that drug markets are starting to use Bitcoin (they've been there before, just not at that scale) when the sentiment changed.
nxpnsv 5y ago
Can I turn this around to understand why anyone would care about baseball cards?
- dehrmann 5y ago
  I think baseball card collecting has been in decline for a while. That said, a lot of baseball card collectors get started as kids (remember in Moneyball when it's called "the children's game?"), then when they're 30-50 and have money, they buy cards from their childhood they always wanted. The generational dynamic of bitcoin and baseball cards is different, but ideas like a fixed number of cards in existence, some get discovered, some lost, and how price is arbitrary and only tied to supply and demand match well.
paxys 5y ago
The explanation I have seen works best for a non-technical audience is – Bitcoin is digital gold, and there is a global ledger which automatically tracks who owns how much of it. There is a finite amount of it out there, and it has to be "mined". There is nothing that makes it different from any other "coin" or really any other combination of bits (just like gold isn't unique among all the elements in any way), but it is simply what most people decided would be the one. No country or central government decides how much Bitcoin is worth. It is all up to people trading on many individual exchanges. Or you can buy/sell it directly without using an exchange, all same as gold. Is Bitcoin (or will Bitcoin ever be) a currency? This one is complicated, and goes into subjective discussions about what currency even means.
- fny 5y ago
  > No country or central government decides how much gold is worth This is true today. It was not true in the US 50 years ago. It does not need to be true tomorrow. The government can put ceilings and floors in the price of all things just as easily as Turkey banned crypto.
  - chii 5y ago
    > The government can put ceilings and floors in the price of all things and see how Venezuela fared when they tried to control their official currency exchange to the USD.
- skohan 5y ago
  The thing about this argument is, bitcoin used to be a lot more like money. In 2015 there were several Bitcoin ATMs in my city, and a handful of shops where I could pay directly from my wallet to buy a cup of coffee or computer parts. > No country or central government decides how much Bitcoin is worth. It is all up to people trading on many individual exchanges. You can also buy/sell it directly without using an exchange, all same as gold. It's a nice ambition, but is bitcoin really decentralized? The thing which made BTC less useful as a currency between 2015 and 2017 for example was that the core team refused to increase the block size, meaning transactions got much much slower and more expensive. To compare BTC to gold, our best physical manifestation of "intrinsic value" seems a bit off the mark for something which is vulnerable to being rendered useless if a hand-full of unaccountable individuals decide to make it so.
brutaltruth 5y ago
Congratulations to the author on missing that it's possible to swap tokens with DeFI, that bitcoin is one of the most liquid instruments in the world, and that Bitcoin isn't competing with cash: it's competing with a ledger entry at a bank that can go bust denominated in a currency that can be printed at will. (Leaving aside 3-10% fx conversion fees, ACH delays, wire deadlines, and more that prevent "dollars" from being a useful international or digitally transferable form of "money") But otherwise good take circa 2010 ;)
- herbst 5y ago
  People turning circles talking about how unstable crypto might is without even knowing about stablecoins (which might have their own downsides yes). You can have your whole net value in crypto but bound to the USD. Its not much different to traditional banking, except without all the issues brutalturth mentioned.
cyphertruck 5y ago
This article is knocking down a squadron of strawmen. First off, bitcoins key attribute is not “privacy” but censorship resistance. It’s why wikileaks has been able to keep operating all these years after being cancelled by the mainstream payments industry. Not to mention many smaller, politically oppressed activist organizations, and much of the marijuana industry. Secondly, the attributes of money are, according to Rothbard from memory: - hard to counterfeit: bitcoin has this better than anything else. - a store of value (not price stability.): It’s doing this great, just don’t buy late in the post halvining revaluation period. (Bitcoin haters don't seem to know the halvening exists. Bitcoiners are not worried about “price stability”.) - divisible: down to 1/100,000,000 of a bitcoin, further possible with lightning. This rnables micro transactions. - immune to spoilage: bitcoin can’t dissolve in water like salt (a previous form of money) and is quite robust, and can be backed up! - easy to transport: bitcoin can be stored in any number of ways, more portable than paper money even. - fungible: bitcoin is pretty fungible, but anti-freedom forces are trying to change that. - liquid: bitcoin is extremely liquid with a global exchange network and ATMs all over and multiple p2p exchange services like localbitcoins.com to serve even places like the Sudan. Is paypal easy to use in the Sudan? Bitcoin is a more liquid form if money than anything other than the US Dollar and is competitive even there. What bitcoin IS NOT, is a collectible like baseball cards. Baseball cards are absolutely not fungible— that is what makes them collectible! A babe ruth rookie card in mint is worth a lot more than last years random rookie card. The author of this piece doesn’t understand what money is, or why bitcoin is the way it is, which means they haven’t done basic research. I understand, certain people really hate bitcoin— and for good reason. Bitcoin will eventually obsolete the fiat inflation system which has created the wealth inequality in much of the world. The system that lets politicians buy power and escape responsibility for violating rights. Bitcoin destroys the number one tool of human oppression. A tool which, by the way, paid money to indoctrinate people into beliefs that result in them hating bitcoin. But bitcoin isn’t alive. The hate doesn't affect it. Bitcoin is a well constructed set of incentives. Embrace or ignore, your choice.
- novok 5y ago
  Inequality comes from power, and fiat inflation where power determines who gets the newly printed money is just one form of that. Inequality existed back when money was hard, and it will continue to exist even if another form of digital hard money replaces it. Money is a form of social organization of humans and an information system, and you always have to remember the humans is what keeps the entire thing running.
didibus 5y ago
It's a new technology, I don't think comparing it to collectible is totally accurate. As a collectible, it can choose to print more of itself if needed, all it takes is a majority to agree to it by altering its protocol (which could also result in a fork). As a collectible, it can also trade itself digitally, but cannot be copied. As a collectible, it keep tracks of all transactions between parties (even though the parties are anonymous). So I mean, it is what it is. It has resemblance with gold, with fiat currencies, and with collectibles, but it's also none of those. And similarly, different cryptocurrencies and blockchain based technologies have similarities with one another, and yet important differences. I think the question that matters more is: could it be used as money? The article says it needs to be usable to pay a central governments taxes, that's just a matter of policy, so it seems like it could. It also says it has to capture dept, well that's an interesting difference here, some other crypto could work as such, but Bitcoin has a fixed limit right now. I don't know if money needs to capture dept, that's what it does now, it didn't always. And so I think I won't agree with this articles definition of money, I recommend people read wikipedias take instead: https://en.m.wikipedia.org/wiki/Money#Functions https://en.m.wikipedia.org/wiki/Money#Functions > Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context Maybe you don't consider Bitcoin generally accepted quite yet, but it could be, and I think that could make it money if we wanted too. And that's because it has all the functions needed to do so: it can store value, it has a unit of relative measure, and it provides a medium for its exchange. Which leads us to the most important question: Why would we use it as money over the alternatives?
DubiousPusher 5y ago
I don't know why there's an article that makes the rounds once a month analogizing bitcoin to some other thing when.. 1 bitcoin is its own thing 2 bitcoin has a clear analog in the form of gold Collectibles are a terrible analogy because 1 they are not fungable and bitcoin is 2 they are not easily converted into currency whereas bitcoin is 3 they carry novelty and bitcoin does not (cryptocurrency may carry some novelty but each individual bitcoin does not). 4 their value is based on nostalgia turned speculation whereas bitcoins is more complex (though still speculative) 5 neither is really good for anything other than maybe as a value store (though both are questionable on that front too) I could go on. Gold is genuinely a pretty good analogy for bitcoin. People buy both believing they can be converted into money later or directly traded. Both have pools of true believers, spectators and novelty purchaers. The main difference is simply that bitcoin does not have the long history that gold does.
- skohan 5y ago
  > bitcoin does not have the track record that gold does. That's a heck of an understatement - Gold's track record dates back essentially to the beginning of civilization or earlier.
  - DubiousPusher 5y ago
    Agred. It is an important distinction.
  - lostmsu 5y ago
    I would argue, that the last 100 years had about the same amount of human history as millions years before them.
    - heckerhut 5y ago
      There’s something true to that.
- matheusmoreira 5y ago
  > they are not fungable and bitcoin is Bitcoin is not fungible. Bitcoins can be distinguished by their transaction history. Governments are blacklisting addresses and all bitcoins that have passed through them are now tainted. Exchanges already reject deposits containing coins tainted by association with blacklisted individuals or even coin mixing services.
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reasons 5y ago
Anyone else think Bitcoin is false hope hidden in layers of impressive technology? Like Q conspiracies targeting smart people. Heh, I was duped by both.
rjakobsson 5y ago
The reasons I buy Bitcoin is to have a SoV that is borderless, unconfiscatable, easy to carry with me and transfer, and which doesn't care about which group is currently running the national monetary policy. Time will tell if this is a good use for it, but so far it looks quite promising.
bitcoinmonger 5y ago
Are we just going to ignore the environmental impact of Bitcoin?
runeks 5y ago
> Roughly speaking, though, money is an accounting mechanism for keeping track of debt, with its value ultimately backed up by a central government's willingness to accept it for tax payments. This doesn’t make sense. Debt is money owed. So if money is “an accounting mechanism for keeping track of debt” then we have a circular definition. Money can be completely separated from debt. And until around a hundred years ago — where gold was and had been money for hundreds of years — it was. A silver or gold coin is not anyone’s debt, yet it was used as money for centuries. An excellent critique of the idea that money is created by governments was written by Carl Menger in his essay from 1892 entitled “On the Origin of Money”: https://is.muni.cz/el/1456/podzim2009/MPE_MOEK/um/8972262/menger1892.pdf https://is.muni.cz/el/1456/podzim2009/MPE_MOEK/um/8972262/me... Menger defines money as, simply, “the most liquid good” — where liquidity i, essentially, defined as “how much value you lose when you exchange to and from a certain good”. For example, if you have a hundred chickens and you sell them in exchange for wheat, after which you immediately buy back chickens with your wheat, you will lose more value (chickens) than if you were to use gold as an intermediate commodity. This gives rise to a “common” intermediate commodity, because everyone wants to lose as little value as possible when selling/buying, and this intermediate commodity is money. Of course, this has changed by now, since each country now issues their own currency and disincentivizes the use of competing monies/currencies through various means (primarily by defining their own currency as the “one true measure of value” by charging capital gains taxes on competing monies).
qwertox 5y ago
The feature of being able to sign a message in order to prove that you own a certain wallet is one which I never see discussed. It's a pretty useful one.

93 points by iokevins 5y ago

One difference though is that all baseball cards were acquired for pennies originally, then grew in value. You don't have to spend a month of heavy-duty electrical bills or $50K to buy a fresh baseball card or a beanie baby or a pez dispenser.

john_alan 5y ago
you can’t use a beanie baby or baseball card as a permissionless, decentralised, censorship resistant global remittance tool. That said, BTC lacking the fungible property of sound money is a glaring issue. Though a money system like Monero may end up becoming very important global money for the internet age. I think the author is shortsighted.
- throwaway_kufu 5y ago
  So long as the internet is required to use Bitcoin it’s not exactly as permissionless or decentralized as it’s marketing buzzwords pretend. It is also pretty trivial to fork Bitcoin so there is no more inherent value in Bitcoin vs a clone or fork. Compare that to a USD I think the last attempted fork was the currency of the confederacy going to show it’s not so trivial to fork.
  - john_alan 5y ago
    It’s permissionless because you don’t need a home or other status to use it. It’s decentralised because the US can’t globally stop it.
    - jazzyjackson 5y ago
      I'm pretty sure we just haven't seen the war that would stop it. A few cut undersea cables and a dose of kessler syndrome would make all those burned cpu cycles for naught.
notRobot 5y ago
> You don't have to spend a month of heavy-duty electrical bills or $50K to buy a fresh baseball card You didn't have to do that to get bitcoin until recently either. And even today, you don't have to mine. You can purchase bitcoin for whatever amount in USD, and like baseball cards, it'll (probably) grow in value.
herbst 5y ago
I've spent like $200 for a graphics card (that i used for 6+ years after that) and $100 on power to mine about 3-5 Bitcoins within a few months until the summer heat did not allow me to proceed (plus back then it was literally not worth it). However your argument is invalid. Also you could have just bought the $0.1 bitcoin back then. You also are not buying machines to build your own baseball cards and complain about the electric bill.

jdnordy 5y ago

A key difference between collectibles and bitcoin/cryptocurrency is that collectibles don't claim to be money nor are they trying to replace current money systems. I'm no expert on money, how it works and how it gets value, but I would be interested to find an article discussing whether cryptocurrency has enough of the qualities of "money" to replace any current money system.

darksaints 5y ago
The Hitachi Magic Wand never claimed to be a sex toy, and yet it is almost universally recognized as one. It doesn't really matter what is claimed...there are some cryptocurrencies that are technically better suited to currency use cases than Bitcoin, but they aren't popular enough to be used as a currency, so Bitcoin is still more of a currency than they are. Even Tide detergent can be recognized as a currency if enough people use it like one [0]. Bitcoin and other cryptocurrencies certainly share a lot of the properties of money: cleanly divisible, readily accepted as a medium of exchange, and difficult to counterfeit. But as much as it is used as a currency, there doesn't appear to exist much of a lending market (a key property of money), and there are tons of people that are sitting on it like an investor might sit on gold stockpiles or land, which makes me think the baseball card analogy is still appropriate. [0] https://www.aei.org/carpe-diem/markets-in-everything-tide-laundry-soap-as-street-currency/ https://www.aei.org/carpe-diem/markets-in-everything-tide-la...

RcouF1uZ4gsC 5y ago

Addendum: Now imagine that these baseball cards, instead of featuring professional baseball players, instead featured people who had run on a giant hamster wheel for some time at some speed. Also, the more baseball cards that get made, the longer/faster the person has to run on the hamster wheel. Initially, you could run on the giant hamster wheel for a few minutes and make a baseball card. Now, because so many baseball cards have been made, you have to run for months on a giant hamster wheel. Eventually, professional athletes figure out that instead of using their athletic prowess to play sports, they can actually make more money by taking their athletic ability and running on giant hamster wheels. In addition, many metal shops have also figured out that instead of making other stuff, they can maximize their revenue by instead concentrating on making giant hamster wheels so people can run on them to make these cards.

graeme 5y ago

The funny thing is that Bitcoin will basically only have value as a collectible as long as substantial numbers of people believe this essay’s argument is false. People want to collect bitcoin at current valuations because they are convinced it will become a currency/store of value of the future and hence rise in value. If everyone suddenly switched to believing “Oh bitcoin doesn’t do anything but it is a fun collectible which also has mining costs to track ownership” its value would plummet.

danjac 5y ago
> The funny thing is that Bitcoin will basically only have value as a collectible as long as substantial numbers of people believe this essay’s argument is false. Is this the "greater fool" argument against Bitcoin?
paxys 5y ago
Bitcoin can be a collectible and a store of value without ever becoming a currency. Gold, art, baseball cards etc. all fall into that category.
- graeme 5y ago
  Those all have some kind of use value, and a story attached. Gold makes beautiful jewelry, collector’s cards remind people of childhood and baseball flory, art is lovely to look at and a way to flaunt wealth or feel a connection through the ages. You can look at all three and feel a fuzzy glow of happiness as you ponder the attached narrative. My point was that, if the author’s argument is true, bitcoin will only have value as a pure collectible if people maintain some wider narrative that opposes the argument in the essay. No one would collect a sterile piece of cardboard devoid of any story, just as no one would collect “Digital token #385839, definitively devoid of use”. I’m not saying Bitcoin needs to become a useful currency to maintain a value. I’m saying it needs to have people believe it will, or to believe some other narrative about it which makes them consider it as more than a collectible.
  - zbraniecki 5y ago

purplecabbage77 5y ago

Something this article misses though is that Bitcoin, unlike stamps and Beanie Babies, is digital, which I'd argue makes a huge difference. Imagine if you could exchange Beanie Babies with anyone in the world with an internet (or satellite) connection. That seems...at least a little more useful?

travisgriggs 5y ago
I'll bite. Isn't that essentially what eBay and the like are? Among other things, a beanie baby exchange? I'm curious why you feel that being digital "makes a huge difference"? Sure it's different. And coincident with a current popular disruption (digitization of everything we can think of), but does that make it transcendentally different? Or just different because times are different? Honestly curious.
- purplecabbage77 5y ago
  I would say transcendentally different. Unlike eBay, with Bitcoin I can transact nearly instantly and without going through any middle men like PayPal and the like. This is huge. I can also store 1bitcoin and 1million bitcoin on the same USB drive, and know that also unlike beanie babies, they won't deteriorate at all ever.

syllable_studio 5y ago

I don't agree with this assessment at all. I think the immense value of bitcoin and other technologically advanced, secure, decentralized networks comes from the detailed network communications which they enable. They allow global financial transactions through a powerful medium in a way that has never existed before. This has nothing to do with baseball cards. The fact that decentralized networks enable NFTs and collectibles is a small subset of the value and power of decentralized networks. The network is the value. To me, this is what bitcoin is. https://medium.com/the-capital/the-network-is-the-value-an-essay-about-the-value-of-a-bitcoin-c49fec8c3d1b https://medium.com/the-capital/the-network-is-the-value-an-e...

dehrmann 5y ago
You're conflating the value of blockchains with the value of bitcoin. A bet on bitcoin is a bet that more people will want bitcoins, so the price goes up. This trades a lot like baseball cards that random drug dealers also accept. A bet on blockchain tech is that someone finds a use case for it that isn't a solution in search of a problem.
agumonkey 5y ago
what if decentralized monetary network ends up having the same effect on communication and social relationship as internet did ? are we becoming degen gig economists ?
yourabstraction 5y ago
Exactly, cryptocurrency is a powerful human coordination tool that allows us to build networks that contain real monetary value on top of legacy infrastructure. I'm not surprised to see this on the front page, hacker news has taken misrepresenting Bitcoin to a professional level.

sMarsIntruder 5y ago

I really don't care getting downvoted, but I really think this is the worst explanation of what bitcoin is. There's a book that I strongly recommend to the author of this article: the bitcoin standard. The book gives also some fundamentals of what money is, and what bitcoin solves and can solve. (talking also about bitcoin layers) I understand this is a divisive topic, but there's really nothing to with the baseball cards here.

Closi 5y ago
You’ve not countered any of their arguments. Of course there isn’t anything directly to do with baseball cards, but there are probably more similarities than with fiat currency, which is their argument.

thesausageking 5y ago

This doesn't make any sense. That's a poor definitely of money. And Bitcoin does not have "all of the elements of a collectible". Collectibles have cultural, artistic, or other value on their own and are limited numbers of a set ("non-fungible"). Bitcoin is very fungible. If you own 2 BTC, there aren't specific Bitcoins that are marked for you.

brbsix 5y ago
If you own 2 BTC, there aren't specific Bitcoins that are marked for you. If you mine 2 BTC, you posses the private keys to two very specific BTC (unspent outputs) on the blockchain. No one else may spend them without the private keys. If you own 2 BTC in an exchange then it is true that you are unlikely to own any specific 2 BTC but that's an entirely different subject. At that point you don't really own them.
- beefield 5y ago
  Out of curiosity, as I do not know enough details: 1. Alice owns one BTC 2. Bob owns one BTC 3. Both send their BTC to Charlie 4. Charlie sends one BTC to David Question: Is there unambiguous way to define whether David got the BTC originally owned by Alice or the one owned by Bob? If yes, how? If no, doesn't that mean that there exist no specific bitcoins anywhere?
  - john_alan 5y ago
    > Is there unambiguous way to define whether David got the BTC originally owned by Alice or the one owned by Bob? Yes. BTC is completely traceable. You can follow the TXOs
  - cesarb 5y ago
    Yes. What you think of as a "specific Bitcoin" doesn't actually exist; what exists is an "unspent transaction output", which can be used as an input for a new transaction if certain conditions are met. So what really happens in your example scenario is: 1. Alice knows the private keys corresponding to one or more unspent outputs of transactions, with a total value of 1 BTC; 2. Bob knows the private keys corresponding to one or more unspent outputs of transactions, with a total value of 1 BTC; 3. Both create new transactions, specifying one or more of their formerly unspent outputs as inputs to the new transaction, and Charlie's address (which is a hash of a public key) as one of the outputs of the new transaction, that output having the value of 1 BTC; 4. Charlie creates a new transaction, with David's address as one of the outputs, having the value of 1 BTC. Note that, at this point, Charlie can chose which of the unspent outputs will be used as the input for the new transaction. It can be the output from Alice's transaction, it can be the output from Bob's transaction, it can be the output from some other transaction, or it can even be a combination of them: the transaction could have both Alice's and Bob's outputs as inputs, and have two outputs, one going to David, the other going to a new address (which can be a "change address" on the same wallet, or an address belonging to someone else).

eMGm4D0zgUAVXc7 5y ago

Whenever people argue as strongly about something as they do with "is Bitcoin a currency?", I think there's a heuristic which can be applied: If people argue very much about if X applies or not, then X probably applies to a certain part close to 50%. So Bitcoin kinda is like money, and kinda is not. So can we just stop the arguing and move on to figuring out ways to make use of it, or write code to improve it if you don't like the as-is state, given that it exists and won't go away? :)

trimbo 5y ago

Bitcoin is not a collectible any more than individual gold bars are collectibles. A collectible can be compared in value to another collectible of the same type. I might want a 1979 Dave Kingman card because I'm nostalgic for Dave "Kong" Kingman. Others will buy the Dave Kingman card to sell it to people like me, but we all give the card value based on its condition, the player, the year, etc. But a Steve Macko card and a Dave Kingman card are completely different in value. They are independently valued. Bitcoin is not.

Ansil849 5y ago
> Bitcoin is not a collectible any more than individual gold bars are collectibles. Some individual gold bars are collectibles.
bruce511 5y ago
You are equating different cards to different bitcoins. That's not the point of the article. In the context of the article there are a limited number of say babe Ruth cards. They are all the same. Bitcoin is the babe Ruth card. Other cards represent other coins. Arguing if bitcoin is money is like arguing if a ferrari testarosa is a car. It clearly is,but at the same time it's not a terribly useful car. Sure bitcoin is money, but it's not an especially useful form of money. Its main attribute is scarcity,not utility. A regular car will drive around 200 000 miles in its lifetime, the ferrari maybe 50 000, probably less. Bitcoin may be money, but its a pretty weak form of money in terms of what we need everyday.
- Nevermark 5y ago
  Ah thanks for clearing that up for me. But comparing all the Babe Ruth cards to Bitcoin makes even less sense. 2,100 trillion satoshis is qualitatively different than something with only tens, hundreds or thousands of units. Not to mention that every Babe Ruth card is still judged individually on its relative value to other Babe Ruth cards. Differentiated by its condition for instance. I just don't see that comparison making any sense.
kenjackson 5y ago

Ansil849 5y ago

As a casual observer I see the cryptocurrency space only seriously used by two groups of people: those who want to buy goods/services which are controlled in their or the seller's jurisdiction and so need a bit more anonymity than Paypal; and people who run ICO and more recently NFT swindles. I have yet to see a widespread other usage of cryptocurrency.

throwaway81523 5y ago
I don't use bitcoin but one attraction I see is that it lets you spend your money without anyone else's permission. If you buy something with it, the seller gets the money without your having to worry about automated fraud checks causing your credit card to be declined, check to be put on hold, etc. It's like cash that way. Wire transfers might be an alternative, but they are only practical for fairly large transactions and involve a lot of bureaucracy. Of course bitcoin (like cash) limits your recourse against the seller, so you have to take that into account. Sometimes though, that is to your advantage when the risk is low enough (small transaction, trusted seller) that the hassle avoidance outweighs the risk.
- Ansil849 5y ago
  That's a potential use, one of many, but it is not a current widespread use of crypto. Why? Probably because Paypal (despite its many, many faults) works just fine for most people.
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- paxys 5y ago
  Every bitcoin transaction happening online today is brokered by the same payments processors who decide that your credit card is committing fraud.
  - chii 5y ago
    Not if you directly transfer bitcoin to the destination wallet address, without going through a broker or payment processor. This isn't possible with credit card or bank transfers.

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alwillis 5y ago

Of all of the bad articles about bitcoin, this is among the worst. Here’s the best short description of bitcoin I’ve seen: Bitcoin is a non-sovereign, hard-capped supply, global, immutable, decentralized digital store of value. It’s an insurance policy against monetary and fiscal policy irresponsibility from central banks and governments globally. —@travis_kling

brbsix 5y ago

Even its strongest selling point, absolute privacy, is mostly a lie That only became a supposed selling point among the uninformed as a result of widespread misrepresentation in the media. At least from my perspective, nobody using it very early (i.e. 2011-12) was ever under any illusion that privacy or anonymity were a feature. People using it for illicit purposes have never been. Mixing services and informal brokers willing to exchange cash for BTC were widely available for that reason even then. Later of course BTC->XMR->BTC and then CoinJoin et al.

herbst 5y ago
This is the same timeline i remember. When Bitcoin was still new it did not seem a lot more practical for illegal/grey area things than other things that were already etablished (PaySafe, PerfectMoney or even PayPal for example). It's only when the media picked up that drug markets are starting to use Bitcoin (they've been there before, just not at that scale) when the sentiment changed.

nxpnsv 5y ago

Can I turn this around to understand why anyone would care about baseball cards?

dehrmann 5y ago
I think baseball card collecting has been in decline for a while. That said, a lot of baseball card collectors get started as kids (remember in Moneyball when it's called "the children's game?"), then when they're 30-50 and have money, they buy cards from their childhood they always wanted. The generational dynamic of bitcoin and baseball cards is different, but ideas like a fixed number of cards in existence, some get discovered, some lost, and how price is arbitrary and only tied to supply and demand match well.

paxys 5y ago

The explanation I have seen works best for a non-technical audience is – Bitcoin is digital gold, and there is a global ledger which automatically tracks who owns how much of it. There is a finite amount of it out there, and it has to be "mined". There is nothing that makes it different from any other "coin" or really any other combination of bits (just like gold isn't unique among all the elements in any way), but it is simply what most people decided would be the one. No country or central government decides how much Bitcoin is worth. It is all up to people trading on many individual exchanges. Or you can buy/sell it directly without using an exchange, all same as gold. Is Bitcoin (or will Bitcoin ever be) a currency? This one is complicated, and goes into subjective discussions about what currency even means.

fny 5y ago
> No country or central government decides how much gold is worth This is true today. It was not true in the US 50 years ago. It does not need to be true tomorrow. The government can put ceilings and floors in the price of all things just as easily as Turkey banned crypto.
- chii 5y ago
  > The government can put ceilings and floors in the price of all things and see how Venezuela fared when they tried to control their official currency exchange to the USD.
skohan 5y ago
The thing about this argument is, bitcoin used to be a lot more like money. In 2015 there were several Bitcoin ATMs in my city, and a handful of shops where I could pay directly from my wallet to buy a cup of coffee or computer parts. > No country or central government decides how much Bitcoin is worth. It is all up to people trading on many individual exchanges. You can also buy/sell it directly without using an exchange, all same as gold. It's a nice ambition, but is bitcoin really decentralized? The thing which made BTC less useful as a currency between 2015 and 2017 for example was that the core team refused to increase the block size, meaning transactions got much much slower and more expensive. To compare BTC to gold, our best physical manifestation of "intrinsic value" seems a bit off the mark for something which is vulnerable to being rendered useless if a hand-full of unaccountable individuals decide to make it so.

brutaltruth 5y ago

Congratulations to the author on missing that it's possible to swap tokens with DeFI, that bitcoin is one of the most liquid instruments in the world, and that Bitcoin isn't competing with cash: it's competing with a ledger entry at a bank that can go bust denominated in a currency that can be printed at will. (Leaving aside 3-10% fx conversion fees, ACH delays, wire deadlines, and more that prevent "dollars" from being a useful international or digitally transferable form of "money") But otherwise good take circa 2010 ;)

herbst 5y ago
People turning circles talking about how unstable crypto might is without even knowing about stablecoins (which might have their own downsides yes). You can have your whole net value in crypto but bound to the USD. Its not much different to traditional banking, except without all the issues brutalturth mentioned.

cyphertruck 5y ago

This article is knocking down a squadron of strawmen. First off, bitcoins key attribute is not “privacy” but censorship resistance. It’s why wikileaks has been able to keep operating all these years after being cancelled by the mainstream payments industry. Not to mention many smaller, politically oppressed activist organizations, and much of the marijuana industry. Secondly, the attributes of money are, according to Rothbard from memory: - hard to counterfeit: bitcoin has this better than anything else. - a store of value (not price stability.): It’s doing this great, just don’t buy late in the post halvining revaluation period. (Bitcoin haters don't seem to know the halvening exists. Bitcoiners are not worried about “price stability”.) - divisible: down to 1/100,000,000 of a bitcoin, further possible with lightning. This rnables micro transactions. - immune to spoilage: bitcoin can’t dissolve in water like salt (a previous form of money) and is quite robust, and can be backed up! - easy to transport: bitcoin can be stored in any number of ways, more portable than paper money even. - fungible: bitcoin is pretty fungible, but anti-freedom forces are trying to change that. - liquid: bitcoin is extremely liquid with a global exchange network and ATMs all over and multiple p2p exchange services like localbitcoins.com to serve even places like the Sudan. Is paypal easy to use in the Sudan? Bitcoin is a more liquid form if money than anything other than the US Dollar and is competitive even there. What bitcoin IS NOT, is a collectible like baseball cards. Baseball cards are absolutely not fungible— that is what makes them collectible! A babe ruth rookie card in mint is worth a lot more than last years random rookie card. The author of this piece doesn’t understand what money is, or why bitcoin is the way it is, which means they haven’t done basic research. I understand, certain people really hate bitcoin— and for good reason. Bitcoin will eventually obsolete the fiat inflation system which has created the wealth inequality in much of the world. The system that lets politicians buy power and escape responsibility for violating rights. Bitcoin destroys the number one tool of human oppression. A tool which, by the way, paid money to indoctrinate people into beliefs that result in them hating bitcoin. But bitcoin isn’t alive. The hate doesn't affect it. Bitcoin is a well constructed set of incentives. Embrace or ignore, your choice.

novok 5y ago
Inequality comes from power, and fiat inflation where power determines who gets the newly printed money is just one form of that. Inequality existed back when money was hard, and it will continue to exist even if another form of digital hard money replaces it. Money is a form of social organization of humans and an information system, and you always have to remember the humans is what keeps the entire thing running.

didibus 5y ago

It's a new technology, I don't think comparing it to collectible is totally accurate. As a collectible, it can choose to print more of itself if needed, all it takes is a majority to agree to it by altering its protocol (which could also result in a fork). As a collectible, it can also trade itself digitally, but cannot be copied. As a collectible, it keep tracks of all transactions between parties (even though the parties are anonymous). So I mean, it is what it is. It has resemblance with gold, with fiat currencies, and with collectibles, but it's also none of those. And similarly, different cryptocurrencies and blockchain based technologies have similarities with one another, and yet important differences. I think the question that matters more is: could it be used as money? The article says it needs to be usable to pay a central governments taxes, that's just a matter of policy, so it seems like it could. It also says it has to capture dept, well that's an interesting difference here, some other crypto could work as such, but Bitcoin has a fixed limit right now. I don't know if money needs to capture dept, that's what it does now, it didn't always. And so I think I won't agree with this articles definition of money, I recommend people read wikipedias take instead: https://en.m.wikipedia.org/wiki/Money#Functions https://en.m.wikipedia.org/wiki/Money#Functions > Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context Maybe you don't consider Bitcoin generally accepted quite yet, but it could be, and I think that could make it money if we wanted too. And that's because it has all the functions needed to do so: it can store value, it has a unit of relative measure, and it provides a medium for its exchange. Which leads us to the most important question: Why would we use it as money over the alternatives?

DubiousPusher 5y ago

I don't know why there's an article that makes the rounds once a month analogizing bitcoin to some other thing when.. 1 bitcoin is its own thing 2 bitcoin has a clear analog in the form of gold Collectibles are a terrible analogy because 1 they are not fungable and bitcoin is 2 they are not easily converted into currency whereas bitcoin is 3 they carry novelty and bitcoin does not (cryptocurrency may carry some novelty but each individual bitcoin does not). 4 their value is based on nostalgia turned speculation whereas bitcoins is more complex (though still speculative) 5 neither is really good for anything other than maybe as a value store (though both are questionable on that front too) I could go on. Gold is genuinely a pretty good analogy for bitcoin. People buy both believing they can be converted into money later or directly traded. Both have pools of true believers, spectators and novelty purchaers. The main difference is simply that bitcoin does not have the long history that gold does.

skohan 5y ago
> bitcoin does not have the track record that gold does. That's a heck of an understatement - Gold's track record dates back essentially to the beginning of civilization or earlier.
- DubiousPusher 5y ago
  Agred. It is an important distinction.
- lostmsu 5y ago
  I would argue, that the last 100 years had about the same amount of human history as millions years before them.
  - heckerhut 5y ago
    There’s something true to that.
matheusmoreira 5y ago
> they are not fungable and bitcoin is Bitcoin is not fungible. Bitcoins can be distinguished by their transaction history. Governments are blacklisting addresses and all bitcoins that have passed through them are now tainted. Exchanges already reject deposits containing coins tainted by association with blacklisted individuals or even coin mixing services.

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reasons 5y ago

Anyone else think Bitcoin is false hope hidden in layers of impressive technology? Like Q conspiracies targeting smart people. Heh, I was duped by both.

rjakobsson 5y ago

The reasons I buy Bitcoin is to have a SoV that is borderless, unconfiscatable, easy to carry with me and transfer, and which doesn't care about which group is currently running the national monetary policy. Time will tell if this is a good use for it, but so far it looks quite promising.

bitcoinmonger 5y ago

Are we just going to ignore the environmental impact of Bitcoin?

runeks 5y ago

> Roughly speaking, though, money is an accounting mechanism for keeping track of debt, with its value ultimately backed up by a central government's willingness to accept it for tax payments. This doesn’t make sense. Debt is money owed. So if money is “an accounting mechanism for keeping track of debt” then we have a circular definition. Money can be completely separated from debt. And until around a hundred years ago — where gold was and had been money for hundreds of years — it was. A silver or gold coin is not anyone’s debt, yet it was used as money for centuries. An excellent critique of the idea that money is created by governments was written by Carl Menger in his essay from 1892 entitled “On the Origin of Money”: https://is.muni.cz/el/1456/podzim2009/MPE_MOEK/um/8972262/menger1892.pdf https://is.muni.cz/el/1456/podzim2009/MPE_MOEK/um/8972262/me... Menger defines money as, simply, “the most liquid good” — where liquidity i, essentially, defined as “how much value you lose when you exchange to and from a certain good”. For example, if you have a hundred chickens and you sell them in exchange for wheat, after which you immediately buy back chickens with your wheat, you will lose more value (chickens) than if you were to use gold as an intermediate commodity. This gives rise to a “common” intermediate commodity, because everyone wants to lose as little value as possible when selling/buying, and this intermediate commodity is money. Of course, this has changed by now, since each country now issues their own currency and disincentivizes the use of competing monies/currencies through various means (primarily by defining their own currency as the “one true measure of value” by charging capital gains taxes on competing monies).

qwertox 5y ago

The feature of being able to sign a message in order to prove that you own a certain wallet is one which I never see discussed. It's a pretty useful one.