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Money is a loosely-defined word that ends up being a huge sticking point in economic conversations because people end up using different definitions. One thing

Money is a loosely-defined word that ends up being a huge sticking point in economic conversations because people end up using different definitions. One thing Bitcoin is not is a unit of account; it is nobodies liability the way that dollars, treasuries or reserves are a liability of the issuer. When I think money, I think balance sheet; and by that criterion, Bitcoin is not money. It's a currency and an asset.

late2part 12y ago
This is a very concise point. Modern Federal Reserve Notes are debt instruments.
ahomescu1 12y ago
Germany seems to disagree with your point: http://www.spiegel.de/international/business/germany-declares-bitcoins-to-be-a-unit-of-account-a-917525.html http://www.spiegel.de/international/business/germany-declare... Edit: Wikipedia gives the following requirements for "unit of account": To function as a 'unit of account', whatever is being used as money must be: Divisible into smaller units without loss of value; precious metals can be coined from bars, or melted down into bars again. Fungible: that is, one unit or piece must be perceived as equivalent to any other, which is why diamonds, works of art or real estate are not suitable as money. A specific weight, or measure, or size to be verifiably countable. For instance, coins are often milled with a reeded edge, so that any removal of material from the coin (lowering its commodity value) will be easy to detect. Except for having a specific weight, Bitcoin has these: 1 Bitcoin is the same as any other, and it can be broken into 0.5, 0.1 and even 0.0001 Bitcoins.
- kaonashi 12y ago
  I think the sticking point there is differences in definition of 'unit of account'. My main point is that Bitcoin is nobodies liability; this is by design. The dollar is a liability of the issuer, which can be used to extinguish tax debt. This goes into a much larger point about the nature of money and how it evolved from ad-hoc credit arrangements. http://www.youtube.com/watch?v=9Tks7oJkFRg http://www.youtube.com/watch?v=9Tks7oJkFRg http://www.youtube.com/watch?v=0zEbo8PIPSc http://www.youtube.com/watch?v=0zEbo8PIPSc
  - Mandelbug 12y ago
    Regardless of its "technical" or "economic" definition, to the layman and all its users, Bitcoin is treated, traded, and consumed as money. The exact origins of Bitcoin do not change its utility, which is as a unit of exchange, which is what money is in its most general and flexible definition.
    - kaonashi 12y ago
      All true, but it does not diminish my point; that since the dawn of capitalism, money has been a balance sheet phenomenon: being simultaneously someone's asset and someone else's liability, and in this Bitcoin is different.
      - eru 12y ago
        What about gold coins?
      - lifeisstillgood 12y ago
        That seems odd - if A visits will road and buys drugs off B then A owes B one bitcoin - that is a human level contract that is clearly understood. A balance sheet accounting of this transaction would as easily be In bitcoins as dollars (A has a liability of 1 bitcoin, B has an asset) As long as B wishes to denominate their accounts in bitcoins this is quite reasonable. Or am I missing something ? (Interestingly the Indian mathematician who invented negative numbers did so using accounts and debt as an example (bhagravita? 500AD)
        kaonashi 12y ago
        >Or am I missing something ? Banking.
        lifeisstillgood 12y ago
        I don't understand - why is banking meaning that I owe someone 100 bitcoins a problem? It's an unstable currency yes but the same can be said for Zimbabwean dollar
gamblor956 12y ago
A unit of account is not a measure of liabilities; it is simply a measure of the relative value of different goods or properties, which usually include liabilities. By that definition, Bitcoin certainly is a unit of account. Though it is not the unit of account for any government, nothing prevents private companies from keeping their financial records in bitcoins (so long as they also prepare copies in the appropriate legal currency for tax or regulatory filing purposes as necessary).

late2part 12y ago

This is a very concise point. Modern Federal Reserve Notes are debt instruments.

ahomescu1 12y ago

Germany seems to disagree with your point: http://www.spiegel.de/international/business/germany-declares-bitcoins-to-be-a-unit-of-account-a-917525.html http://www.spiegel.de/international/business/germany-declare... Edit: Wikipedia gives the following requirements for "unit of account": To function as a 'unit of account', whatever is being used as money must be: Divisible into smaller units without loss of value; precious metals can be coined from bars, or melted down into bars again. Fungible: that is, one unit or piece must be perceived as equivalent to any other, which is why diamonds, works of art or real estate are not suitable as money. A specific weight, or measure, or size to be verifiably countable. For instance, coins are often milled with a reeded edge, so that any removal of material from the coin (lowering its commodity value) will be easy to detect. Except for having a specific weight, Bitcoin has these: 1 Bitcoin is the same as any other, and it can be broken into 0.5, 0.1 and even 0.0001 Bitcoins.

kaonashi 12y ago
I think the sticking point there is differences in definition of 'unit of account'. My main point is that Bitcoin is nobodies liability; this is by design. The dollar is a liability of the issuer, which can be used to extinguish tax debt. This goes into a much larger point about the nature of money and how it evolved from ad-hoc credit arrangements. http://www.youtube.com/watch?v=9Tks7oJkFRg http://www.youtube.com/watch?v=9Tks7oJkFRg http://www.youtube.com/watch?v=0zEbo8PIPSc http://www.youtube.com/watch?v=0zEbo8PIPSc
- Mandelbug 12y ago
  Regardless of its "technical" or "economic" definition, to the layman and all its users, Bitcoin is treated, traded, and consumed as money. The exact origins of Bitcoin do not change its utility, which is as a unit of exchange, which is what money is in its most general and flexible definition.
  - kaonashi 12y ago
    All true, but it does not diminish my point; that since the dawn of capitalism, money has been a balance sheet phenomenon: being simultaneously someone's asset and someone else's liability, and in this Bitcoin is different.
    - eru 12y ago
      What about gold coins?
    - lifeisstillgood 12y ago
      That seems odd - if A visits will road and buys drugs off B then A owes B one bitcoin - that is a human level contract that is clearly understood. A balance sheet accounting of this transaction would as easily be In bitcoins as dollars (A has a liability of 1 bitcoin, B has an asset) As long as B wishes to denominate their accounts in bitcoins this is quite reasonable. Or am I missing something ? (Interestingly the Indian mathematician who invented negative numbers did so using accounts and debt as an example (bhagravita? 500AD)
      - kaonashi 12y ago
        >Or am I missing something ? Banking.
        lifeisstillgood 12y ago
        I don't understand - why is banking meaning that I owe someone 100 bitcoins a problem? It's an unstable currency yes but the same can be said for Zimbabwean dollar

gamblor956 12y ago

A unit of account is not a measure of liabilities; it is simply a measure of the relative value of different goods or properties, which usually include liabilities. By that definition, Bitcoin certainly is a unit of account. Though it is not the unit of account for any government, nothing prevents private companies from keeping their financial records in bitcoins (so long as they also prepare copies in the appropriate legal currency for tax or regulatory filing purposes as necessary).