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> Bitcoin is a fiduciary currency > Fiduciary currencies—in contrast with commodity-based currencies (such as gold coins or bank notes redeemable in gold)—have

by aric 13y ago

> Bitcoin is a fiduciary currency > Fiduciary currencies—in contrast with commodity-based currencies (such as gold coins or bank notes redeemable in gold)—have no intrinsic value, and derive their value in exchange either from government fiat or from the belief that they may be accepted by someone else. They are inherently fragile; government orders can be ignored or doubted, and a currency that has value only because of the belief that it will have value may have no value at all (for instance, if I believe that no one will accept it, I will not accept it either). -------------------------------- This article displays a lack of understanding of bitcoin, gold, and other market-driven assets. Quantifying bitcoin in terms of computing power and electricity is a clueless perspective. Conversely, the author doesn't attempt to quantify gold by the same standards of its minimum measurable cost to produce and mere industrial scope. Gold, in his mind, I suspect, is long established and therefore above the same logic. Bitcoin and gold are each greater than the sum of their cost to produce, obviously. Demand drives this. Stability drives this. Intrinsic value is contained in bitcoin and gold for varying reasons. If the author doesn't appreciate (or understand) the intrinsic worth and applications of a peer-to-peer, cryptographically-secure, fungible transactional system that's becoming increasingly hard to defeat by any central authority and increasingly used in the real world -- then so be it. Many people won't value that. Hell, some people don't value the internet. Not valuing something doesn't mean it's not valued. To me, gold is a pretty element and good for electronics. I don't seek it out for fashion. Yet, I can fully appreciate why others do and why it's a stable way to store value. Bitcoin has intrinsic value. It is not a "fiduciary currency." The "currency" of it is far removed from any guarantee of value and far separate from its functionality.

FellowTraveler 13y ago
Regarding Bitcoins and gold, it’s important to keep in mind that neither has “intrinsic” value. Rather, both are valued by men for their unique properties. Gold is: Divisible. Fungible. Value dense. (Scarce.) Recognizable. Durable. Zero counter-party risk. Stable in supply, yet minable. Liquid. International. Non-manipulatable. (Non-centralized.) By comparison: Diamonds, while valuable, are NOT divisible, nor are they fungible. Water, while valuable and divisible, is not value-dense enough to compete with gold as a form of money, on the free market. Food, while valuable, is not durable. Dollars, while liquid, do not represent zero-counter-party-risk (rather, they are debt-based.) Dollars, while recognizable, are not stable in supply (inflation is a worry). Dollars are also not minable. (Production is available only to a monopoly cartel, versus gold, which anyone can produce.) Food, which anyone can produce, is not liquid, especially in comparison to dollars or gold. Dollars, while you can hold them in your pocket, a board of bankers still has the power to reach into your pocket and manipulate its value. (This is not the case with gold.) Soon it becomes very clear that gold was never “declared” to be a form of money by any “authorities” but rather, became money due to natural market forces. If gold became money strictly due to natural market forces (as a result of its unique properties) then clearly the only reason it has been supplanted by dollars is due to artificial restraints imposed on the market by government force. (Such as legal tender “laws”, tax “laws”, money laundering “laws”, etc.) Such forces must be constantly active, otherwise, natural market forces would immediately resolve back to gold again as they have for thousands of years. Now let’s consider Bitcoin’s unique properties: Divisible. Fungible. Value dense. Recognizable. Durable. Zero counter-party risk. Stable in supply, yet minable. Liquid. International. Non-manipulatable. (Non-centralized.) AS WELL AS: Non-confiscatable. Accounts cannot be frozen. Anonymity is possible. Electronically transferrable. As you can see, Bitcoin’s unique properties are similar to those of gold, although it adds new properties due to its ethereal nature. Those new properties (non-confiscatable, non-freezable, pseudonymous, transferrable electronically) all serve to route-around the artificial forces that are currently being used to supplant gold with the dollar. After all, the various immoral, legal-tender legislation in place today uses the force of a gun to impose fiat money onto an economy that would otherwise resolve to gold by natural forces. That artificial force depends on the government’s collusion with banks and their collective monopoly on the ability to issue, store, freeze, confiscate, track, and transfer dollars.
- aric 13y ago
  FellowTraveler, I love your work throughout the years, btw. Yeah, as I noted, bitcoin is no less rational or irrational than gold for what it is (or rather for what it's becoming). The whole "intrinsic value" debate is a moot, endless point because both sides are equally arguable. Anything clearly valued by others holds intrinsic value, I could argue. I could also conversely say that its value is not derived intrinsically. However, in an argument where gold is given the status of having intrinsic value, I'll gladly argue that so too should bitcoin be given that status.
  - simonebrunozzi 13y ago
    Curious: what the work is about?
    - aric 13y ago
      Open Transactions, among other things.
      - simonebrunozzi 13y ago
        Nice. Can you add some links?
        aric 13y ago
        Sure. I doubt he'd mind the praise. :) https://github.com/FellowTraveler https://github.com/FellowTraveler
        FellowTraveler 13y ago
        If you are interested in Open-Transactions then I suggest you check out the wiki: http://opentransactions.org/ http://opentransactions.org/ Quote: The Open-Transactions project is a collaborative effort to develop a robust, commercial-grade, fully-featured, free-software toolkit implementing the OTX protocol as well as a full-strength financial cryptography library, API, CLI, and prototype server. Open-Transactions democratizes financial and monetary actions. You can use it for issuing currencies/stock, paying dividends, creating asset accounts, sending/receiving digital cash, writing/depositing cheques, cashier's cheques, creating basket currencies, trading on markets, scripting custom agreements, recurring payments, escrow, etc. Open-Transactions uses strong crypto. The balances are unchangeable (even by a malicious server.) The receipts are destructible and redundant. The transactions are unforgeable. The cash is unlinkable. The cheques are non-repudiable. Etc.
maxerickson 13y ago
There is quite some chance that in the future, the total value of the worlds gold will be less than it cost to dig it up (especially if you are willing to calculate the cost in terms of labor and material inputs).
- aric 13y ago
  That's likely. Gold treads that line occasionally in certain parts of the world; and it depends on whether future technologies disrupt the high demand for it. I mean 'greater' in the philosophical sense. Attributing worth by components alone is narrow. Animals, we are: greater than the sum of our parts. It's greatness not in terms of expense but in terms of people valuing the worth and utility of an idea and its embodiment. For instance, many people spent and spend money on bitcoin and mining, at a net loss, not out of a certainty of return. Rather, they love the idea. They want to support the cause.

by aric 13y ago

FellowTraveler 13y ago

Regarding Bitcoins and gold, it’s important to keep in mind that neither has “intrinsic” value. Rather, both are valued by men for their unique properties. Gold is: Divisible. Fungible. Value dense. (Scarce.) Recognizable. Durable. Zero counter-party risk. Stable in supply, yet minable. Liquid. International. Non-manipulatable. (Non-centralized.) By comparison: Diamonds, while valuable, are NOT divisible, nor are they fungible. Water, while valuable and divisible, is not value-dense enough to compete with gold as a form of money, on the free market. Food, while valuable, is not durable. Dollars, while liquid, do not represent zero-counter-party-risk (rather, they are debt-based.) Dollars, while recognizable, are not stable in supply (inflation is a worry). Dollars are also not minable. (Production is available only to a monopoly cartel, versus gold, which anyone can produce.) Food, which anyone can produce, is not liquid, especially in comparison to dollars or gold. Dollars, while you can hold them in your pocket, a board of bankers still has the power to reach into your pocket and manipulate its value. (This is not the case with gold.) Soon it becomes very clear that gold was never “declared” to be a form of money by any “authorities” but rather, became money due to natural market forces. If gold became money strictly due to natural market forces (as a result of its unique properties) then clearly the only reason it has been supplanted by dollars is due to artificial restraints imposed on the market by government force. (Such as legal tender “laws”, tax “laws”, money laundering “laws”, etc.) Such forces must be constantly active, otherwise, natural market forces would immediately resolve back to gold again as they have for thousands of years. Now let’s consider Bitcoin’s unique properties: Divisible. Fungible. Value dense. Recognizable. Durable. Zero counter-party risk. Stable in supply, yet minable. Liquid. International. Non-manipulatable. (Non-centralized.) AS WELL AS: Non-confiscatable. Accounts cannot be frozen. Anonymity is possible. Electronically transferrable. As you can see, Bitcoin’s unique properties are similar to those of gold, although it adds new properties due to its ethereal nature. Those new properties (non-confiscatable, non-freezable, pseudonymous, transferrable electronically) all serve to route-around the artificial forces that are currently being used to supplant gold with the dollar. After all, the various immoral, legal-tender legislation in place today uses the force of a gun to impose fiat money onto an economy that would otherwise resolve to gold by natural forces. That artificial force depends on the government’s collusion with banks and their collective monopoly on the ability to issue, store, freeze, confiscate, track, and transfer dollars.

aric 13y ago
FellowTraveler, I love your work throughout the years, btw. Yeah, as I noted, bitcoin is no less rational or irrational than gold for what it is (or rather for what it's becoming). The whole "intrinsic value" debate is a moot, endless point because both sides are equally arguable. Anything clearly valued by others holds intrinsic value, I could argue. I could also conversely say that its value is not derived intrinsically. However, in an argument where gold is given the status of having intrinsic value, I'll gladly argue that so too should bitcoin be given that status.
- simonebrunozzi 13y ago
  Curious: what the work is about?
  - aric 13y ago
    Open Transactions, among other things.
    - simonebrunozzi 13y ago
      Nice. Can you add some links?
      - aric 13y ago
        Sure. I doubt he'd mind the praise. :) https://github.com/FellowTraveler https://github.com/FellowTraveler
      - FellowTraveler 13y ago
        If you are interested in Open-Transactions then I suggest you check out the wiki: http://opentransactions.org/ http://opentransactions.org/ Quote: The Open-Transactions project is a collaborative effort to develop a robust, commercial-grade, fully-featured, free-software toolkit implementing the OTX protocol as well as a full-strength financial cryptography library, API, CLI, and prototype server. Open-Transactions democratizes financial and monetary actions. You can use it for issuing currencies/stock, paying dividends, creating asset accounts, sending/receiving digital cash, writing/depositing cheques, cashier's cheques, creating basket currencies, trading on markets, scripting custom agreements, recurring payments, escrow, etc. Open-Transactions uses strong crypto. The balances are unchangeable (even by a malicious server.) The receipts are destructible and redundant. The transactions are unforgeable. The cash is unlinkable. The cheques are non-repudiable. Etc.

maxerickson 13y ago

There is quite some chance that in the future, the total value of the worlds gold will be less than it cost to dig it up (especially if you are willing to calculate the cost in terms of labor and material inputs).

aric 13y ago
That's likely. Gold treads that line occasionally in certain parts of the world; and it depends on whether future technologies disrupt the high demand for it. I mean 'greater' in the philosophical sense. Attributing worth by components alone is narrow. Animals, we are: greater than the sum of our parts. It's greatness not in terms of expense but in terms of people valuing the worth and utility of an idea and its embodiment. For instance, many people spent and spend money on bitcoin and mining, at a net loss, not out of a certainty of return. Rather, they love the idea. They want to support the cause.