Quote from: amencon on December 11, 2013, 05:07:06 AM

Quote from: porc on December 10, 2013, 09:12:05 AM

1) You already assume that the person holding something will accept nothing in return and thus say that nothing is something because it can be exchanged for something...

No I reject your premise that bitcoin is "nothing". The problem I have with your argument is that you begin it with the assumption that for money to be something (have "value") it must have useful, valued traits outside of being money. It's this assumption I'd like to debate, not all the conclusions you arrive at after that assumption is made.

As I said, as I understand it, the regression theorem requires any potential thing to have value to people outside of being money for it to become valued as money in the future. This would be a great argument, pre-bitcoin adoption, as to why bitcoin would never grow to function as money. Now that bitcoin exists and has grown to be used as money at least in some limited capacity, we have some empirical evidence that contradicts the deductions made by Mises to create this theorem.

So let's step back the discussion and hear anything you have that explains why money must have be valued for traits outside of being money to have value as money. The best I've heard you come up with so far is that you trust the longevity of physical traits more than you do virtual ones, but that sounds like more your problem than a problem with bitcoin itself. Others with your line of thinking have and will likely continue to slow Bitcoin's rate of adoption and growth (by not adopting it due this dogmatic belief), but I don't see it invalidating all the value placed on it by others.

It appears to come down to you feeling more comfortable with a money that possesses a long-standing physical trait that is valued that you believe should give your money a psuedo floor price in case of speculative value collapse. You are free to value an oz of Gold that has a fraction of it's price very unlikely to go away due to a "utility" value trait more than an amount of bitcoin with equal exchange price, but that doesn't mean they are fundamentally different actors as money to those that use them.

Isn't the assertion that, bitcoin has no value because money must have value outside of being money to have value and bitcoin doesn't have value outside of being money, circular reasoning?

No its not circular reasoning. Remember: Intrinsic value is one of the essential properties of money, that allows it to fulfill its functions. Without intrinsic value, gold could not fulfill its monetary role. You want to seperate golds intrinsic value from its monetary value, however that is impossible, as without intrinsic value gold has NO monetary value. The reason you insist on seperating these two aspects of gold, is because you want to believe that bitcoin can function as money despite its lack of intrinsic value.

Now lets look at the functions of money, in order to appreciate, why it HAS to have intrinsic value.

1) Store of value.

To act as a store of value, these forms must be able to be saved and retrieved at a later time, and be predictably useful when retrieved. WIKI

Now what would happen, if in future nobody would accept my gold as payment for goods and services. Well, I could make jewelry out of it and wear that jewelry or I could decorate my house with it.

What happens when nobody accepts my BTCs? Well, I could do ABSOLUTELY NOTHING with my BTCs in this case. So already we see, that bitcoin actually has enormous counterparty risk, as it is only worth what somebody is willing to pay for it. If nobody wants my BTCs I am left with ABSOLUTELY NOTHING (i.e. bitcoin).

Now obviously I want to have a high degree of certainty, that somebody will want to exchange my store of value with other valuable things, as otherwise I would have an excess of one resource, that I would be stuck with.

What is golds guarantee in this regard? Well, it says: I am beautiful, people have loved my look since dawn of man, and have thus always been willing to accept me as payment for other valuable goods and services. Thats REAL backing.

What is BTC guarantee in this regard? Well it says: I am worth nothing, but people have agreed to exchange me for something, because they want to save transaction costs, and because they like exchanging me peer to peer (no third party or bank). Now without reading futher how convincing does that sound to you (pretend like you have never heard of BTC, or that BTC has collapsed in price)? Lets continue: In future people might not accept nothing for something. In future they might switch to a different coin, that is technologically superior (thus my wealth is stored in myspace and suddenly facebook comes along). In future the transaction costs might explode due to prohibitive regulation, so that the artificial agreement to exchange something for nothing collapses. In future, maybe people will prefer real backing over backed by nothing, especially if real backing can be transferred electronically (digital gold). In future people might think that it was crazy to accept nothing as payment, just to safe on transaction costs. In future there might be reputable trustees, and people might regain trust with third parties. In future maybe people decide that instant payment is not that important to them, as money is fungible. In future people might realize that bitcoin is not anonymous and that it is not internet or gold 2.0. Bitcoin might stay highly volatile as the believe in an artificial agreement (with huge counterpary risk) is extremly volatile.

Now from my perspective the situation is even worse: Right now people are ONLY accepting nothing for something, because they strongly believe that nothing will go up in price (after all it has been going up in price in the past, so it must be true for the future Wink

). Eventually some early adopter will want to cash out, and if there is nobody there to take his position, the price will fall through the floor.

So I believe, that bitcoin because it does not have value, cant be relied upon as a store of value. It is entirely dependent on the counterparty honoring an pseudo agreement. So bitcoin actually has enormous counterparty risk. Gold is a great store of value, as people will always accept it because it is beautiful. It is burnt into our brain. It has no counterparty risk, because the counterparty cant help but love and accept it (like with food and water).

Thus intrinsic value is ESSENTIAL for one of moneys core functions: store of value. Money value cant be seperated from intrinsic value, as it is DEPENDENT on it.

2) Medium of exchange

Same arguments apply. Right now people exchange something for nothing, due to an artificial pseudo agreement (transaction costs, peer to peer if you ask bitcoiners). I believe its even worse: Right now people ONLY accept it because it is going up in price. As soon as it crashes, people will stop accepting it, as it is irrational to agree to exchange something of utility for something of no utility in order to save transaction costs.