Quote from: Impaler on December 11, 2013, 11:40:19 PM

Quote from: deisik on December 08, 2013, 09:08:36 PM

Ok, let's start again. A currency in the gold standard is backed up by gold, right? Gold has some value, but this value is subjective in nature as well as for all other goods. This means that it is not determined by some property of gold (or amount of labor required to produce it, for that matter), but is determined by the importance an individual places on it for the achievement of his aims. Without this subjective valuation shared by the majority of people gold would be worth next to nothing. Now, if you agree that security of Bitcoin has value in the eyes of the individual as it does, you inevitably come with logical necessity to the conclusion that security IS backing up Bitcoin. Actually, anything inherent to a store of value that has subjective value will be backing it up, and the more people share this attitude, the more strength the store of value gets

It's a pity really that you went on a path of obfuscating and confusing matters here...

Yes all value is subjective including that of gold, even the many industrial uses that we now have for gold ultimately fulfill desires that are subjective (like having a cell-phone). Heck even FOOD can be considered to have subjective value, we might all desire to be Anorexic Yogi ascetic tomorrow and the value of food would plummet though probably not to zero unless everyone were really planning to starve to death.

But security and backing are still two different things. Security is a guarantee of ownership, backing is a guarantee of value. In the case of a commodity backed currency the guarantee rests upon the value of another commodity, it won't ever be less valuable then a set quantity of said commodity, but obviously the underlying commodity could still collapse. Also states can enforce legal-tender laws and accept only their currency in payment of taxes, this is a very strong backing if the state is strong but it is still dependent on something that can ultimately fail just like a commodity. Perfect backing is an impossibility, as is perfect security, but it's wrong to confuse of substitute them.

Saying that people have some personal subjective valuation of the security in BTC is a meaningless statement, it can not be quantified into value per unit of BTC. Security is best expressed in a degree of confidence, the percentage probability that I will successfully retain ownership in the face of the random theft/loss chance, over a period of time. I am equally secure regardless of how many BTC I own so why is a larger quantity worth more then a smaller quantity? Lets suppose my confidence level is 99% per year, how do I turn that number ALONE into a valuation? I would need to multiply it by a value derived from backing and take into account the risks that are inherent in any backing. The only thing BTC enthusiasts can point to to back the UNIT of BTC having value is the ability to sell them to the greater fool in the future, aka they are not backed.

Great post.