[besson3c]

Originally Posted by ghporter 

Currency has to be "based on" something with inherent value. That may be a precious metal, like the old "gold standard" (which has not legally or technically existed for a very long time), or something else, such as the binding promise of a government that the currency will be redeemable for something else of value, such as tax liabilities. Experiments in "un-based" currency, such as Bitcoin, have failed to expand beyond a few applications and are essentially failures in the broadest sense of "currency."

I disagree that it needs to be based on something with inherent value.

It has to be based on something with legally recognized value. Stock has no inherent value, and while it is not currency, it has legally recognized value and can be converted to traditional forms of currency effortlessly. Value can be represented by the abstract or tangible, and can be liquidated in a variety of means, but legally recognized value is legally recognized value. I can't legally steal your stock because it is protected by the law, which includes regulations.

Currency value doesn't just happen. Fiat currency has to have a mechanism to support it or it is waste paper. The reason Bitcoin isn't widely successful is not that it's a bad idea, but that there is no "dependable" authority/institution that promises that your Bitcoins will be redeemed for something else of value, no matter what. Bitcoins are essentially just digital IOUs without any mechanism to enforce the value of the repayment.

I disagree with this too. Bitcoin is not legally recognized by the government as a currency you can use to pay your taxes, but neither is Apple stock. Bitcoin failed for a host of reasons, and part of this is adoption which I think is a reflection of its other problems: accessibility, scalability, and being non-regulated.

[besson3c]

Originally Posted by Cap'n Tightpants 

Bitcoin has inherent value too, when I was mining them on utility power it took ~$350 worth of electricity to mine 1 BC using dedicated ASIC-based miners.

It has inherent value to those that consider Bitcoin an acceptable form of currency. It has no legally recognized value because it is not regulated, and therefore whether it has inherent value depends on how you define the word "inherent".

[Cap'n Tightpants]

Originally Posted by ghporter 

Bitcoins are essentially just digital IOUs without any mechanism to enforce the value of the repayment.

It's enforced by the people trading them, once that reaches a certain level of acceptance (like BC has) gov't enforcement of value is unnecessary.



(I'm still making up my mind about BCs, it's only been 4 years and that process can take a while.)

[ghporter]

Originally Posted by besson3c 

I disagree that it needs to be based on something with inherent value.

It has to be based on something with legally recognized value. Stock has no inherent value, and while it is not currency, it has legally recognized value and can be converted to traditional forms of currency effortlessly. Value can be represented by the abstract or tangible, and can be liquidated in a variety of means, but legally recognized value is legally recognized value. I can't legally steal your stock because it is protected by the law, which includes regulations.



I disagree with this too. Bitcoin is not legally recognized by the government as a currency you can use to pay your taxes, but neither is Apple stock. Bitcoin failed for a host of reasons, and part of this is adoption which I think is a reflection of its other problems: accessibility, scalability, and being non-regulated.

"Inherent value" may seem too concrete here. Stock has "inherent" value because it "inherits" its market value in terms of dollars. That makes it less "hard and fast" than my earlier statement may have implied, but no less "inherently valuable." Basically we're saying the same thing: recognized value. Where we differ is how widely that value must be recognized for a successful currency.

Bitcoin lacks support from any sort of broadly recognized clearinghouse, so any assigned value a Bitcoin has is only valid among those who agree on that value. If ANY strongly stable bank were to say "we'll take payments in Bitcoin at face value," that would change things. But that's not happened.

Regulation isn't what's needed. It's recognition.. Until some otherwise well recognized entity that handles other currency formally recognizes Bitcoin, it's still just an IOU.

[besson3c]

Agreed, but I would say that a lack of regulation is a big part of its lack of recognition. Who wants the liability of dealing with a currency that attracts shady transactions due to the government being unable to monitor for money laundering, terrorist activity, etc.? This might sound great to some consumers, but to merchants?

[ghporter]

Originally Posted by Cap'n Tightpants 

It's enforced by the people trading them, once that reaches a certain level of acceptance (like BC has) gov't enforcement of value is unnecessary.



(I'm still making up my mind about BCs, it's only been 4 years and that process can take a while.)

What mechanism can a Bitcoin user employ if someone fails to redeem the tendered Bitcoins for something other than more Bitcoins? They complain to Bitcoin's managers? Nope - they can't do anything. Bitcoin recommends mediation... but that requires both parties to agree to mediation, and mediation isn't built into the system.

Some government issued currencies have been poor value instruments, such as the USSR's ruble. It had no value except what was assigned by the USSR's government, and was not redeemable for anything. The USSR did much of its international business in dollars, because nobody would deal with them for rubles. Just having a government issue something does NOT make it valuable. The value comes from being able to trade the currency for something else on a consistent basis, and with multiple other parties. In turn, in order for those multiple parties to accept the currency as having a value, they must also be able to exchange it for something else of value.

I don't mean to knock the concept of Bitcoin. I'm unimpressed by the implementation. Just saying "we'll all trade this among ourselves for real value" doesn't mean "this" has a real value. There still has to be something, somewhere, that everybody can agree the currency can be exchanged for.

[turtle777]

Originally Posted by Cap'n Tightpants 

Bitcoin has inherent value too, when I was mining them on utility power it took ~$350 worth of electricity to mine 1 BC using dedicated ASIC-based miners.

It might sound nit-picky, but I don't agree it has VALUE. It has COST associated with it.

Bitcoin can NOT be used for anything else other than "trading" it for goods / services, always dependent on what valuation someone else gives it. It doesn't have intrinsic value.

Gold is different. It does have industrial, medical , electronic etc... uses, so there is true inherent value.

The COST associated with Bitcoin (electricity) are real, for sure.

But it's not much different than someone creating a new electronic currency, and burning paper dollar notes for every unit of new electronic currency created. This electronic currency would have COST, but no intrinsic value, because the dollar notes were burnt.

And, back to gold - after thousands of years of use as true money, there is no question it has value.
Only an idiot would say it has no value. I'd offer said idiot $100 per gold oz. That's much more than they say it's worth.

-t

[besson3c]

I think we are getting hung up on definitions.

It sounds like "inherent value" means "is useful" and "is also rare", as per some definitions?

I think the idea of value being tied to minerals and natural resources is a concept that need not persist, because digital currency does not need to be tied to physical things that exist in our world for the same reasons why this made sense in the pre-digital world.

[turtle777]

Originally Posted by besson3c 

I think we are getting hung up on definitions.

It sounds like "inherent value" means "is useful" and "is also rare", as per some definitions?

If it's not rare at all, it can't be very valuable.
Dirt, sand, rocks, all of these are rightfully so not valuable. (Or only valuable if you apply a lot of work, time, resources etc... to it). There is a logical connection that you chose to ignore.

Originally Posted by besson3c 

I think the idea of value being tied to minerals and natural resources is a concept that need not persist, because digital currency does not need to be tied to physical things that exist in our world for the same reasons why this made sense in the pre-digital world.

*faceplam*

The inherent value obviously comes from its usefulness. It's NOT useful because it's a mineral or natural resource par se, it's valuable because it's a USEFUL mineral or natural resource. You need to stop your intellectual masturbation, and just apply a little common sense.

You can not "tie" electronic currencies to something non-physical, because then, they are by definition, NOT tied.

I really don't understand why that's so hard to understand.

-t

[besson3c]

You absolutely can, and I've given examples, but we'll leave it at that...

[turtle777]

Originally Posted by besson3c 

You absolutely can, and I've given examples, but we'll leave it at that...

Well, you're the expert, apparently.
Judging by your wisdom, you have also studied monetary history, and come to the right conclusions about fiat currencies.



-t

[besson3c]

Originally Posted by turtle777 

Well, you're the expert, apparently.
Judging by your wisdom, you have also studied monetary history, and come to the right conclusions about fiat currencies.



-t

Read the thread. My arguments have nothing to do with the history about fiat currencies, but about the technology behind digital currencies which are only now emerging.

[turtle777]

Originally Posted by besson3c 

Read the thread. My arguments have nothing to do with the history about fiat currencies, but about the technology behind digital currencies which are only now emerging.

There. Only a fool thinks history doesn't matter. This time it's different, because it's digital.
This time it's different - the new fiat digital currency will not join the ranks of all other fiat currencies before, eventually going to 0.



-t

[besson3c]

Originally Posted by turtle777 

There. Only a fool thinks history doesn't matter. This time it's different, because it's digital.
This time it's different - the new fiat digital currency will not join the ranks of all other fiat currencies before, eventually going to 0.



-t

Dude, read the ****ing thread.

If you had, you'd see that I've said 2304209348 times that there would not be a single currency involved, you would have the ability to use multiple digital currencies held in both the public and private sector, and have complete flexibility in terms of transferring value between digital currencies.

All of your concerns about a dependence on a single fiat currency are completely missing the mark in terms of everything I've said.

[turtle777]

My post went over your head. Sorry for that.

I'm done here with you.

-t

[besson3c]

Classic Turtle. I hope our fight made your day a little better.

[subego]

I'm confused.

Isn't "the future is digital currency" now?

I don't use cash.


Exception: breaking the law.