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Gold was currency. Silver was currency. No central authority was required to back them. Your conclusions may be correct, but your argument is rubbish.

philwelch 13y ago
The gold and silver standards were established by central authorities. Where do you think they came from?
- Double_Cast 13y ago
  Give me one example where seigniorage preceded raw metal.
  - philwelch 13y ago
    Raw metal precedes the human race, but its use as currency was generally tied to a government's decision to collect taxes in it.
    - Double_Cast 13y ago
      I did some quick research. Nothing definitive, but that's not what my research suggests. TL;DR Gold-as-currency first used in Egypt 4,000 BCE; Egypt implements a commodity-tax somewhere between 3,500 - 20 BCE; Coinage first cited between in Lydia 700 - 550 BCE. Could you give me an example, like I originally asked? http://en.wikipedia.org/wiki/History_of_money#Early_usage http://en.wikipedia.org/wiki/History_of_money#Early_usage > It has long been assumed that metals, where available, were favored for use as proto-money over such commodities as cattle, cowry shells, or salt, because metals are at once durable, portable, and easily divisible.[45] The use of gold as proto-money has been traced back to the fourth millennium BC when the Egyptians used gold bars of a set weight as a medium of exchange,[citation needed] as had been done earlier in Mesopotamia with silver bars.[citation needed] http://en.wikipedia.org/wiki/Lydia http://en.wikipedia.org/wiki/Lydia > According to Herodotus, the Lydians were the first people to use gold and silver coins and the first to establish retail shops in permanent locations.[12] ... > The dating of these first stamped coins is one of the most frequently debated topics of ancient numismatics,[14] with dates ranging from 700 BC to 550 BC, but the most common opinion is that they were minted at or near the beginning of the reign of King Alyattes (sometimes referred to incorrectly as Alyattes II), who ruled Lydia c. 610-550 BC.[15] ... http://simple.wikipedia.org/wiki/Ancient_Egypt#Early_history http://simple.wikipedia.org/wiki/Ancient_Egypt#Early_history > Ancient Egypt, or the Egyptian Empire, was a society that began about 3500 BC and lasted until 20 BC when it was invaded by the Roman Empire. > Ancient Egypt had a lot of different taxes, but there was no real money, so people paid each other with goods or work. The person who watched the tax collection was a scribe, and every tax collector in Egypt had to tell him every day how many taxes they had collected. Each person paid different taxes based on the work that they did: craftsmen paid in goods, hunters and fishermen paid with food, and every single household in the country had to pay a labour tax every year by helping with work for the country like mining or for canals. A lot of rich Egyptians paid poorer people to do this for them.
      - philwelch 13y ago
        Fair enough. I guess "citation needed" passages from Wikipedia about "proto-money" in ancient Egyptian bartering are totally equivalent to the gold standard.
        Double_Cast 13y ago
        1. My citations are sketchy. Can you do better? 3rd time I've asked. 2. Does the article call the gold bars "proto-money"? Sure, but now we're just bickering over definitions. The same article says the Egyptians used gold bars as a medium of exchange, which I believe exactly fits what we've been discussing. If you define "currency" to mean something other than a "medium of exchange", then what is the distinction and how is it relevant to Bitcoin? 3. And this brings us back to the original point of contention ITT: Why do you believe a a successful currency (or successful medium of exchange) requires a centralized "standard" despite historical evidence of decentralized "commodity money"?
        philwelch 13y ago
        I'll concede that at many points in human history people used precious metals as currency without the involvement of a government, but for centuries--since the Roman Empire, to name one example--currencies have been established largely through government fiat even when based on some commodity. ("Render unto Caesar that which is Caesar's"). The "gold standard", in the US, was established by federal law in 1900, replacing bimetallism, the previous basis. Respectfully, I don't see how the use of precious metals in Ancient Egypt is relevant to the role of currency in a post-industrial world.
        Double_Cast 13y ago
        > in a post-industrial world. It appears our disagreement lies in "post-industrial". My first thought was "I don't see how the use of precious metals in Ancient Egypt is any different from the role of currency in a post-industrial world." Now, asserting our myopia leaves us nowhere. But as long as this thread is already, I'd like to dig deeper. Given the Mt. Gox debacle, I'm assuming your line of reasoning is related to trust. E.g. "the purely electronic form of bitcoin allows it to be stolen on a scale not feasible with more tangible forms of money." But then, do banks prevent the laundering of USD electronically? Or perhaps "who will insure against theft if not the government?" But then, who insured against theft prior to Hamilton's creation of the U.S. National Bank? But at this point, I'm fully immersed in strawman land.
- lutusp 13y ago
  > The gold and silver standards were established by central authorities. No, this is false. Gold and silver had innate value long before anyone "in authority" declared this to be so. In fact, central authorities eventually recognized the value of gold and silver, they didn't declare it or bring it into being. The really remarkable event, that cements the role of modern government in economic matters, was the relatively recent unlinking of paper money from the backing of gold and/or silver. This step was taken for a number of excellent reasons, but it was predicated on the idea that the public will have faith in the stability of the economy, not on the innate representational value of paper money.
  - philwelch 13y ago
    So the 19th century political controversies about switching from a silver standard to a gold standard never happened?
    - Double_Cast 13y ago
      Currencies have existed since the neolithic revolution?
    - lutusp 13y ago
      Something like that happened -- in the 20th century, not the 19th. And the outcome was that the public accepted the unlinking of paper money from a specific standard of value.
      - philwelch 13y ago
        1896 was still technically in the 19th century. http://en.m.wikipedia.org/wiki/Cross_of_Gold_speech http://en.m.wikipedia.org/wiki/Cross_of_Gold_speech
        lutusp 13y ago
        Nevertheless, the public accepted the delinking of currency from precious metals, and modern economies would collapse if this were not true (too much economic value to be represented by existing stocks of precious metals).
- VikingCoder 13y ago
  The gold and silver standards BACKING CURRENCIES were established by central authorities. Meaning, you could convert your USD into an equivalent value of gold. Guaranteed by the US government. And the US government kept an equivalent stockpile of gold in vaults, to reassure everyone that their USD was as good as gold. Then the USD was decoupled from everything. Far before any of that, people actually used gold and silver coins and pieces of coins as currency.
acdha 13y ago
Commodities have intrinsic value. A fiat currency such as bitcoin lacks that intrinsic value and is valued based on consensus. In the case of a government-backed currency, there's at least some value based on that government's ability to mandate its use for taxes. Governments can manage that with varying degrees of success but any official currency has more intrinsic value that Bitcoin to the extent that the government has sovereign authority over a larger economy. This doesn't mean that Bitcoin can't be valued but it means that the community has to have a strategy to provide equivalent reassurances.
- ksrm 13y ago
  >A fiat currency such as bitcoin lacks that intrinsic value and is valued based on consensus. Just like a commodity then. Where does this "intrinsic value" that you think gold has come from?
  - Double_Cast 13y ago
    Uses for gold (besides trade): 1. Jewelry 2. Electronics 3. Dentistry ---- Uses for USD (besides trade): 1. Rolling in it
    - cobrausn 13y ago
      2. Making it Rain
  - acdha 13y ago
    > Just like a commodity then. Where does this "intrinsic value" that you think gold has come from? Your definition of commodity is incorrect. See http://en.wikipedia.org/wiki/Commodity http://en.wikipedia.org/wiki/Commodity: “In economics, a commodity is a marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services. The exact definition of the term commodity is specifically applied to goods. It is used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market.” Gold and silver meet this test because they have other uses (jewelry, industrial, dentistry, etc.) dating back throughout recorded human history. In contrast, bitcoin – like all fiat currencies – has no value except as a unit of exchange. There's nothing meaningful that you can do with them unless you find someone else willing to accept them – defunct paper currency could at least be used for kindling…

philwelch 13y ago

The gold and silver standards were established by central authorities. Where do you think they came from?

Double_Cast 13y ago
Give me one example where seigniorage preceded raw metal.
- philwelch 13y ago
  Raw metal precedes the human race, but its use as currency was generally tied to a government's decision to collect taxes in it.
  - Double_Cast 13y ago
    I did some quick research. Nothing definitive, but that's not what my research suggests. TL;DR Gold-as-currency first used in Egypt 4,000 BCE; Egypt implements a commodity-tax somewhere between 3,500 - 20 BCE; Coinage first cited between in Lydia 700 - 550 BCE. Could you give me an example, like I originally asked? http://en.wikipedia.org/wiki/History_of_money#Early_usage http://en.wikipedia.org/wiki/History_of_money#Early_usage > It has long been assumed that metals, where available, were favored for use as proto-money over such commodities as cattle, cowry shells, or salt, because metals are at once durable, portable, and easily divisible.[45] The use of gold as proto-money has been traced back to the fourth millennium BC when the Egyptians used gold bars of a set weight as a medium of exchange,[citation needed] as had been done earlier in Mesopotamia with silver bars.[citation needed] http://en.wikipedia.org/wiki/Lydia http://en.wikipedia.org/wiki/Lydia > According to Herodotus, the Lydians were the first people to use gold and silver coins and the first to establish retail shops in permanent locations.[12] ... > The dating of these first stamped coins is one of the most frequently debated topics of ancient numismatics,[14] with dates ranging from 700 BC to 550 BC, but the most common opinion is that they were minted at or near the beginning of the reign of King Alyattes (sometimes referred to incorrectly as Alyattes II), who ruled Lydia c. 610-550 BC.[15] ... http://simple.wikipedia.org/wiki/Ancient_Egypt#Early_history http://simple.wikipedia.org/wiki/Ancient_Egypt#Early_history > Ancient Egypt, or the Egyptian Empire, was a society that began about 3500 BC and lasted until 20 BC when it was invaded by the Roman Empire. > Ancient Egypt had a lot of different taxes, but there was no real money, so people paid each other with goods or work. The person who watched the tax collection was a scribe, and every tax collector in Egypt had to tell him every day how many taxes they had collected. Each person paid different taxes based on the work that they did: craftsmen paid in goods, hunters and fishermen paid with food, and every single household in the country had to pay a labour tax every year by helping with work for the country like mining or for canals. A lot of rich Egyptians paid poorer people to do this for them.
    - philwelch 13y ago
      Fair enough. I guess "citation needed" passages from Wikipedia about "proto-money" in ancient Egyptian bartering are totally equivalent to the gold standard.
      - Double_Cast 13y ago
        1. My citations are sketchy. Can you do better? 3rd time I've asked. 2. Does the article call the gold bars "proto-money"? Sure, but now we're just bickering over definitions. The same article says the Egyptians used gold bars as a medium of exchange, which I believe exactly fits what we've been discussing. If you define "currency" to mean something other than a "medium of exchange", then what is the distinction and how is it relevant to Bitcoin? 3. And this brings us back to the original point of contention ITT: Why do you believe a a successful currency (or successful medium of exchange) requires a centralized "standard" despite historical evidence of decentralized "commodity money"?
        philwelch 13y ago
        I'll concede that at many points in human history people used precious metals as currency without the involvement of a government, but for centuries--since the Roman Empire, to name one example--currencies have been established largely through government fiat even when based on some commodity. ("Render unto Caesar that which is Caesar's"). The "gold standard", in the US, was established by federal law in 1900, replacing bimetallism, the previous basis. Respectfully, I don't see how the use of precious metals in Ancient Egypt is relevant to the role of currency in a post-industrial world.
        Double_Cast 13y ago
        > in a post-industrial world. It appears our disagreement lies in "post-industrial". My first thought was "I don't see how the use of precious metals in Ancient Egypt is any different from the role of currency in a post-industrial world." Now, asserting our myopia leaves us nowhere. But as long as this thread is already, I'd like to dig deeper. Given the Mt. Gox debacle, I'm assuming your line of reasoning is related to trust. E.g. "the purely electronic form of bitcoin allows it to be stolen on a scale not feasible with more tangible forms of money." But then, do banks prevent the laundering of USD electronically? Or perhaps "who will insure against theft if not the government?" But then, who insured against theft prior to Hamilton's creation of the U.S. National Bank? But at this point, I'm fully immersed in strawman land.
lutusp 13y ago
> The gold and silver standards were established by central authorities. No, this is false. Gold and silver had innate value long before anyone "in authority" declared this to be so. In fact, central authorities eventually recognized the value of gold and silver, they didn't declare it or bring it into being. The really remarkable event, that cements the role of modern government in economic matters, was the relatively recent unlinking of paper money from the backing of gold and/or silver. This step was taken for a number of excellent reasons, but it was predicated on the idea that the public will have faith in the stability of the economy, not on the innate representational value of paper money.
- philwelch 13y ago
  So the 19th century political controversies about switching from a silver standard to a gold standard never happened?
  - Double_Cast 13y ago
    Currencies have existed since the neolithic revolution?
  - lutusp 13y ago
    Something like that happened -- in the 20th century, not the 19th. And the outcome was that the public accepted the unlinking of paper money from a specific standard of value.
    - philwelch 13y ago
      1896 was still technically in the 19th century. http://en.m.wikipedia.org/wiki/Cross_of_Gold_speech http://en.m.wikipedia.org/wiki/Cross_of_Gold_speech
      - lutusp 13y ago
        Nevertheless, the public accepted the delinking of currency from precious metals, and modern economies would collapse if this were not true (too much economic value to be represented by existing stocks of precious metals).
VikingCoder 13y ago
The gold and silver standards BACKING CURRENCIES were established by central authorities. Meaning, you could convert your USD into an equivalent value of gold. Guaranteed by the US government. And the US government kept an equivalent stockpile of gold in vaults, to reassure everyone that their USD was as good as gold. Then the USD was decoupled from everything. Far before any of that, people actually used gold and silver coins and pieces of coins as currency.

acdha 13y ago

Commodities have intrinsic value. A fiat currency such as bitcoin lacks that intrinsic value and is valued based on consensus. In the case of a government-backed currency, there's at least some value based on that government's ability to mandate its use for taxes. Governments can manage that with varying degrees of success but any official currency has more intrinsic value that Bitcoin to the extent that the government has sovereign authority over a larger economy. This doesn't mean that Bitcoin can't be valued but it means that the community has to have a strategy to provide equivalent reassurances.

ksrm 13y ago
>A fiat currency such as bitcoin lacks that intrinsic value and is valued based on consensus. Just like a commodity then. Where does this "intrinsic value" that you think gold has come from?
- Double_Cast 13y ago
  Uses for gold (besides trade): 1. Jewelry 2. Electronics 3. Dentistry ---- Uses for USD (besides trade): 1. Rolling in it
  - cobrausn 13y ago
    2. Making it Rain
- acdha 13y ago
  > Just like a commodity then. Where does this "intrinsic value" that you think gold has come from? Your definition of commodity is incorrect. See http://en.wikipedia.org/wiki/Commodity http://en.wikipedia.org/wiki/Commodity: “In economics, a commodity is a marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services. The exact definition of the term commodity is specifically applied to goods. It is used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market.” Gold and silver meet this test because they have other uses (jewelry, industrial, dentistry, etc.) dating back throughout recorded human history. In contrast, bitcoin – like all fiat currencies – has no value except as a unit of exchange. There's nothing meaningful that you can do with them unless you find someone else willing to accept them – defunct paper currency could at least be used for kindling…