Quote from: molecular on July 16, 2013, 07:01:54 PM

Quote from: NewLiberty on July 16, 2013, 06:47:56 PM

Quote from: molecular on July 16, 2013, 10:10:17 AM

Quote from: Cashitter on July 16, 2013, 09:22:47 AM

Hi Everybody. I've got a question.
I have seen that the artist Kuno Goda (www.kunogoda.com) is selling a painting called "200 Bitcoin". It's inspired by Andy Warhol's "200 One Dollar Bills".
The Price of the painting is 200 BTC (surprise surprise).
Let's assume that the (art) world agrees on this value.
Wouldn't that effectively inflate the Bitcoin supply?

If you could send the painting through the internet for a very low fee and people used it as a "money substitute", then yes, it would increase the money supply. However: that's not the case, people don't use the painting as a substitute for bitcoins.

Having lots of "things" with a bitcoin value, or priced in bitcoin, is a good thing for bitcoin economy. The more things that can be bought with bitcoin, the more useful bitcoin becomes. This is not money supply.

For example, when I release fine gold and silver bullion pieces that are priced in Bitcoin (but do not contain any Bitcoin intrinsically), these can serve as a tangible asset with a Bitcoin value, but this does not increase the Bitcoin money supply. What it does do is provide a Bitcoin-compatible real-money currency, that can serve for instantaneous in-person transactions settled in Bitcoin, in a currency that is even more anonymous than any crypto-currency, finely minted precious metal.

true. I found a good definition of "money substitute":

Quote from: http://mises.org/daily/3958

Money Substitute
Claims to a definite amount of money, payable and redeemable on demand, against a debtor about whose solvency and willingness to pay there does not prevail the slightest doubt, render to the individual all the services money can render, provided that all parties with whom he could possibly transact business are perfectly familiar with these essential qualities of the claims concerned: daily maturity and undoubted solvency and willingness to pay on the part of the debtor.

Neither your finely minted precious metal nor the painting qualify under this definition, because neither is redeemable on demand against any debtor. Those things may have a market price measurable in BTC.

An example of a money substitute for Bitcoin might have been mtGox BTC codes (do they still exist?). However, 1.) people didn't use them widely and 2.) given mtGox was honest, those didn't inflate the bitcoin money supply because mtGox had the bitcoins represented by them in cold storage. Had mtGox entered into a "fractional reserve" scheme with these, it would have inflated the money supply.

Yes! Good example. The classic example is a "warehouse receipt" which are covered by the Uniform Commercial Code. MtGox codes operated in a way close to this and arguably would be governed the same way, though getting that protection could be problematic for other reasons.

http://legal-dictionary.thefreedictionary.com/Warehouse+Receipt