6 ms·

Serious question: Is that really a fair criticism of BTC? Because afterall, our beloved US currency is fiat based, and often subject to whims of geopolitical ga

by clicks 14y ago

Serious question: Is that really a fair criticism of BTC? Because afterall, our beloved US currency is fiat based, and often subject to whims of geopolitical games.

sliverstorm 14y ago
US currency isn't backed by gold- it is in a sense backed by the US government. BTC is wholly unbacked.
- jacquesm 14y ago
  US currency is backed by the land the US is built on and the means to defend that land, as well as the ability of US citizens to expend their time in a productive way. And to some extent it is currently based on the ability of the United States to protect its interests overseas, the trading of oil in the US dollar and significant trade partners accepting the US dollar as a means of exchange for goods shipped to the US. And that works as long as significant portion of the world continues to believe in all of the above, if that should ever stop I hope I won't be there to watch the carnage. That's the kind of 'interesting times' that one would hope to avoid.
  - camus 14y ago
    when Europe falls things will change eventually.
  - sliverstorm 14y ago
    I'd like to point out that this is the same for just about every country.
    - encoderer 14y ago
      Not really. The USD benefits greatly from being the global reserve currency.
      - chii 14y ago
        Yes. THis is true because the Fed reserve can print more USD, and an overseas oil vendor would actually sell the goods in exchange for the said USD. However, you noticed that the Fed reserve hasn't actually produced any actual value/productivity - they merely printed some pieces of paper. There for, the US gov't (or more correctly, the Fed reserve) can print their way out of debt that they owe to third parties, until those third parties all wise up. But then you got 11 air craft carriers paroling the world, untold number of submarines and missiles, massive air force etc, and if the US gets a whiff that you are no longer denominating your goods (e.g., oil) in USD, you might find yourself being called the axis of evil.
- bjcubsfan 14y ago
  Bitcoin is backed by a faith in the algorithms that enable Bitcoin.
slg 14y ago
The same geopolitical games also back the US currency. So it is no longer gold back but ICBM backed.
richardwhiuk 14y ago
USD are backed by the fact that US citizens have to pay in USD to pay their taxes. Bitcoins have no such imperative.
- jessriedel 14y ago
  My Econ 101 understanding is that the value of USD is not primarily due to taxes, i.e. if the government stopped collecting taxes (or started forcing people to pay taxes in gold or Euros) the value of the dollar would not tank. Instead, we're in a Nash equilibrium where we're all accepting dollars as a means of exchange and it would be costly and have little benefit for individuals to defect. The intrinsic value of the dollar is roughly set by the value of all good and services exchanged in a given time period divided by the number of dollars in circulation. That said, the tax part does add a bit of stability in the form of an additional friction to any hypothetical plan for everyone in the US to coordinate to start exchanging gold or Euros in lieu of dollars.
  - crapshoot101 14y ago
    correct in a sense- the US dollar is backed by the full faith and credit of the US Government, nothing more. Would I still have that faith in the US $ if the government did not collect taxes / did not seem like a stable entity? Probably not, but your point is still valid
    - jessriedel 14y ago
      > the US dollar is backed by the full faith and credit of the US Government Huh? What does this mean? This phrase can be applied to government bond ("The US gov't promises to pay you back") or to FDIC insurance ("The US gov't promises to refund your money if your bank closes"). But it doesn't have any meaning for dollars, unless it were to mean that the gov't would exchange it for gold, which of course is false.
      - encoderer 14y ago
        Not true. The fact that you're somewhat informed on these matters is working against you here. If the US Gov't stopped collecting taxes -- or had some other substantial liquidity crisis -- the very real issue is debt service. Since the USD is the global reserve currency, we are in the rather unique situation of having our debt denominated in our own currency under control of our own central bank. This is where the "full faith and credit" of the USA enters the discussion of our currency. If we had issues servicing our public debt, the government has the option of devaluing our currency. In other words, inflating away our debt. In such a scenario, the value of USD plunges against foreign currencies, and there would be a massive effort by everybody with substantial USD holdings to sell. This, among other reasons, is why Keynes envisioned a super-national reserve currency traded among central banks. If the US public debt was denominated in Bancor, the option of inflating it away wouldn't exist.
deleted 14y ago
[deleted]
- hcho 14y ago
  And what's the backing of US citizens paying taxes? If all of the population decided to not pay taxes tomorrow, what power US government has to make them pay up? Government itself operates on the backing of people's consent. That's not too different from Bitcoin users' consent.
  - dragonwriter 14y ago
    > If all of the population decided to not pay taxes tomorrow, what power US government has to make them pay up? If all the population did that, that would mean the government had decided that. The population and the government aren't disjoint sets.
    - hcho 14y ago
      So you too are saying government is there by populations consent. Taxes and USD are by products of that consent. So is bitcoin, or any other medium of exchange really.
      - tomkarlo 14y ago
        Yes, but the implications of not consenting are grossly different. If folks don't consent to taxes and USD, they're essentially giving up on things like Social Security, the value of their homes (both in terms of security and transaction value), the value of their income, etc. ... all kinds of secondary effects. If they give up on Bitcoin, they might lose the value of their holdings (which could be zero) but they don't have those secondary losses.
        khuey 14y ago
        No, if you don't consent to taxes you get put in a cage. If you don't consent to bitcoin you don't get caught up in a speculative bubble.
bdr 14y ago
Actually, you can set a price floor on Bitcoin. It's the dollar value of the transaction float at The Silk Road.

by clicks 14y ago

Serious question: Is that really a fair criticism of BTC? Because afterall, our beloved US currency is fiat based, and often subject to whims of geopolitical games.

sliverstorm 14y ago

US currency isn't backed by gold- it is in a sense backed by the US government. BTC is wholly unbacked.

jacquesm 14y ago
US currency is backed by the land the US is built on and the means to defend that land, as well as the ability of US citizens to expend their time in a productive way. And to some extent it is currently based on the ability of the United States to protect its interests overseas, the trading of oil in the US dollar and significant trade partners accepting the US dollar as a means of exchange for goods shipped to the US. And that works as long as significant portion of the world continues to believe in all of the above, if that should ever stop I hope I won't be there to watch the carnage. That's the kind of 'interesting times' that one would hope to avoid.
- camus 14y ago
  when Europe falls things will change eventually.
- sliverstorm 14y ago
  I'd like to point out that this is the same for just about every country.
  - encoderer 14y ago
    Not really. The USD benefits greatly from being the global reserve currency.
    - chii 14y ago
      Yes. THis is true because the Fed reserve can print more USD, and an overseas oil vendor would actually sell the goods in exchange for the said USD. However, you noticed that the Fed reserve hasn't actually produced any actual value/productivity - they merely printed some pieces of paper. There for, the US gov't (or more correctly, the Fed reserve) can print their way out of debt that they owe to third parties, until those third parties all wise up. But then you got 11 air craft carriers paroling the world, untold number of submarines and missiles, massive air force etc, and if the US gets a whiff that you are no longer denominating your goods (e.g., oil) in USD, you might find yourself being called the axis of evil.
bjcubsfan 14y ago
Bitcoin is backed by a faith in the algorithms that enable Bitcoin.

slg 14y ago

The same geopolitical games also back the US currency. So it is no longer gold back but ICBM backed.

richardwhiuk 14y ago

USD are backed by the fact that US citizens have to pay in USD to pay their taxes. Bitcoins have no such imperative.

jessriedel 14y ago
My Econ 101 understanding is that the value of USD is not primarily due to taxes, i.e. if the government stopped collecting taxes (or started forcing people to pay taxes in gold or Euros) the value of the dollar would not tank. Instead, we're in a Nash equilibrium where we're all accepting dollars as a means of exchange and it would be costly and have little benefit for individuals to defect. The intrinsic value of the dollar is roughly set by the value of all good and services exchanged in a given time period divided by the number of dollars in circulation. That said, the tax part does add a bit of stability in the form of an additional friction to any hypothetical plan for everyone in the US to coordinate to start exchanging gold or Euros in lieu of dollars.
- crapshoot101 14y ago
  correct in a sense- the US dollar is backed by the full faith and credit of the US Government, nothing more. Would I still have that faith in the US $ if the government did not collect taxes / did not seem like a stable entity? Probably not, but your point is still valid
  - jessriedel 14y ago
    > the US dollar is backed by the full faith and credit of the US Government Huh? What does this mean? This phrase can be applied to government bond ("The US gov't promises to pay you back") or to FDIC insurance ("The US gov't promises to refund your money if your bank closes"). But it doesn't have any meaning for dollars, unless it were to mean that the gov't would exchange it for gold, which of course is false.
    - encoderer 14y ago
      Not true. The fact that you're somewhat informed on these matters is working against you here. If the US Gov't stopped collecting taxes -- or had some other substantial liquidity crisis -- the very real issue is debt service. Since the USD is the global reserve currency, we are in the rather unique situation of having our debt denominated in our own currency under control of our own central bank. This is where the "full faith and credit" of the USA enters the discussion of our currency. If we had issues servicing our public debt, the government has the option of devaluing our currency. In other words, inflating away our debt. In such a scenario, the value of USD plunges against foreign currencies, and there would be a massive effort by everybody with substantial USD holdings to sell. This, among other reasons, is why Keynes envisioned a super-national reserve currency traded among central banks. If the US public debt was denominated in Bancor, the option of inflating it away wouldn't exist.

deleted 14y ago

[deleted]

hcho 14y ago
And what's the backing of US citizens paying taxes? If all of the population decided to not pay taxes tomorrow, what power US government has to make them pay up? Government itself operates on the backing of people's consent. That's not too different from Bitcoin users' consent.
- dragonwriter 14y ago
  > If all of the population decided to not pay taxes tomorrow, what power US government has to make them pay up? If all the population did that, that would mean the government had decided that. The population and the government aren't disjoint sets.
  - hcho 14y ago
    So you too are saying government is there by populations consent. Taxes and USD are by products of that consent. So is bitcoin, or any other medium of exchange really.
    - tomkarlo 14y ago
      Yes, but the implications of not consenting are grossly different. If folks don't consent to taxes and USD, they're essentially giving up on things like Social Security, the value of their homes (both in terms of security and transaction value), the value of their income, etc. ... all kinds of secondary effects. If they give up on Bitcoin, they might lose the value of their holdings (which could be zero) but they don't have those secondary losses.
      - khuey 14y ago
        No, if you don't consent to taxes you get put in a cage. If you don't consent to bitcoin you don't get caught up in a speculative bubble.

bdr 14y ago

Actually, you can set a price floor on Bitcoin. It's the dollar value of the transaction float at The Silk Road.