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This is a very common misunderstanding of how monetization works. The actual value of Bitcoin comes from demonetizing other currently monetary assets (dollars,

by wyager 5y ago

This is a very common misunderstanding of how monetization works. The actual value of Bitcoin comes from demonetizing other currently monetary assets (dollars, gold, real estate, etc.), plus some additional (partially externalized) value from increased efficiency as a monetary mechanism. People who are long those assets and not adequately hedged with Bitcoin are losing money to people who are long Bitcoin (assuming Bitcoin people are correct and it works out).

arcticbull 5y ago
Well it dramatically decreases the efficiency of the monetary system (requiring 60 days of electricity and 1 iPad of e-waste to scribble a few bytes into the ledger every 10 minutes), and only one of the other assets you pointed out create value, the others are unproductive. Real estate is not a monetary asset, it's a productive asset - because people need a place to live and you can either live in a house yourself or you can rent it to others. This demand doesn't go away through the introduction of Bitcoin. Gold is a commodity, not a monetary asset. While a large amount of its value is attributable to speculation it has myriad industrial uses, and jewelry use. Some of this demand may go away as there's a large overlap between goldbuggery and bitcoin maxis. Dollars have no intrinsic value, but instead their value is derived from demand which is created for them when they enter circulation. They're created via fractional reserve lending meaning that when a loan is issued, new dollars are created but also a debt is recorded - creating demand for those same dollars. That means dollars are 100% backed by demand for those dollars. This demand doesn't go away through the introduction of Bitcoin. Bitcoin is nothing. It has no intrinsic value, it has no demand, it's simply a speculative number-go-up machine. It's not money, that's for sure. You could try and use it as money but that would be an utter disaster from a macroeconomic perspective. So yeah, parent is right, its roughly a pyramid shaped MLM with a negative-sum component - the $60,000,000 per day you have to pay to miners to keep the music playing. [edit] Also note that gold and real estate are not classically defined as "monetary assets" - those are for instance cash, bank deposits, investments in debt capital markets and lease investments. Monetary assets need to have a prescribed value in exact dollar terms.
- wyager 5y ago
  This post is riddled with misconceptions, but I’m just going to focus on these because they’re probably the most productive places for you to start: > Real estate is not a monetary asset, it's a productive asset… Gold is a commodity, not a monetary asset. This is wrong. Any asset with monetary properties can (and will, in the right environments) be monetized. When the primary medium of exchange is inflationary, people will use whatever non-inflationary value stores they can find with sufficient liquidity. Most of the value of gold, and much of the value of real estate, lie in their capacity as a wealth storage mechanism. They are monetized. Bitcoin does a better job of this and will likely subsume their monetization value. > It has no intrinsic value Invocation of “intrinsic value” is a 100% surefire sign of a dysfunctional economic mental model.
  - arcticbull 5y ago
    > This is wrong. Any asset with monetary properties can (and will, in the right environments) be monetized. That is not the definition of a monetary asset. "A monetary item is an asset or liability carrying a value in dollars that will not change in the future. These items have a fixed numerical value in dollars, and a dollar is always worth a dollar. The numbers do not change even though the purchasing power of a dollar can potentially change." [1] Words have meaning, so I guess I'm not 100% sure what you're talking about. > Invocation of “intrinsic value” is a 100% surefire sign of a dysfunctional economic mental model. [citation needed] [1] https://www.investopedia.com/terms/m/monetary-item.asp https://www.investopedia.com/terms/m/monetary-item.asp
    - deleted 5y ago
      [deleted]
    - wyager 5y ago
      I used the phrase “monetary asset” once to mean “an asset which behaves and is treated like money”, but it would have been less ambiguous for me to use the phrase “monetized asset”. > citation needed Give me a minute to find a copy of the Official Rules of Economic Epistemology. If you’d like to put forward any particular theory that assigns “intrinsic value” to objects I could address it specifically.

by wyager 5y ago

arcticbull 5y ago

Well it dramatically decreases the efficiency of the monetary system (requiring 60 days of electricity and 1 iPad of e-waste to scribble a few bytes into the ledger every 10 minutes), and only one of the other assets you pointed out create value, the others are unproductive. Real estate is not a monetary asset, it's a productive asset - because people need a place to live and you can either live in a house yourself or you can rent it to others. This demand doesn't go away through the introduction of Bitcoin. Gold is a commodity, not a monetary asset. While a large amount of its value is attributable to speculation it has myriad industrial uses, and jewelry use. Some of this demand may go away as there's a large overlap between goldbuggery and bitcoin maxis. Dollars have no intrinsic value, but instead their value is derived from demand which is created for them when they enter circulation. They're created via fractional reserve lending meaning that when a loan is issued, new dollars are created but also a debt is recorded - creating demand for those same dollars. That means dollars are 100% backed by demand for those dollars. This demand doesn't go away through the introduction of Bitcoin. Bitcoin is nothing. It has no intrinsic value, it has no demand, it's simply a speculative number-go-up machine. It's not money, that's for sure. You could try and use it as money but that would be an utter disaster from a macroeconomic perspective. So yeah, parent is right, its roughly a pyramid shaped MLM with a negative-sum component - the $60,000,000 per day you have to pay to miners to keep the music playing. [edit] Also note that gold and real estate are not classically defined as "monetary assets" - those are for instance cash, bank deposits, investments in debt capital markets and lease investments. Monetary assets need to have a prescribed value in exact dollar terms.

wyager 5y ago
This post is riddled with misconceptions, but I’m just going to focus on these because they’re probably the most productive places for you to start: > Real estate is not a monetary asset, it's a productive asset… Gold is a commodity, not a monetary asset. This is wrong. Any asset with monetary properties can (and will, in the right environments) be monetized. When the primary medium of exchange is inflationary, people will use whatever non-inflationary value stores they can find with sufficient liquidity. Most of the value of gold, and much of the value of real estate, lie in their capacity as a wealth storage mechanism. They are monetized. Bitcoin does a better job of this and will likely subsume their monetization value. > It has no intrinsic value Invocation of “intrinsic value” is a 100% surefire sign of a dysfunctional economic mental model.
- arcticbull 5y ago
  > This is wrong. Any asset with monetary properties can (and will, in the right environments) be monetized. That is not the definition of a monetary asset. "A monetary item is an asset or liability carrying a value in dollars that will not change in the future. These items have a fixed numerical value in dollars, and a dollar is always worth a dollar. The numbers do not change even though the purchasing power of a dollar can potentially change." [1] Words have meaning, so I guess I'm not 100% sure what you're talking about. > Invocation of “intrinsic value” is a 100% surefire sign of a dysfunctional economic mental model. [citation needed] [1] https://www.investopedia.com/terms/m/monetary-item.asp https://www.investopedia.com/terms/m/monetary-item.asp
  - deleted 5y ago
    [deleted]
  - wyager 5y ago
    I used the phrase “monetary asset” once to mean “an asset which behaves and is treated like money”, but it would have been less ambiguous for me to use the phrase “monetized asset”. > citation needed Give me a minute to find a copy of the Official Rules of Economic Epistemology. If you’d like to put forward any particular theory that assigns “intrinsic value” to objects I could address it specifically.