Quote from: toknormal on December 10, 2013, 03:07:09 PM

Quote

I get the impression that it comes down to politics. Does a government control its central bank or vice versa? If you believe the first part, you can hope that your elected officials will support bitcoin because all of the good things *they* say about it. If you believe vice versa, the current president whose real boss is the Federal Reserve will see bitcoin as a problem to mitigate.

The technology behind cryptocurrencies and it's value as a financial tool to society has nothing to do with politics, tulips, its market price or any other of these arbitrary and ill-defined criteria constantly being trawled up in these debates.

In particular the comparison with tulips and constant obsession with it's market price is a total distraction from the technical innovation which cryptocurrencies bring to modern finance which is clear and unambigious.

That is that they facilitate direct asset transfers between peers *without the need for a counterparty*.

The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function.

For example, I cannot just "email" you electronically $1000. I need to go to a bank and ask them to do it. Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has. It has no intrinsic value of its own - if it was just a number I typed into a spreadsheet it would have no market value.

Gold on the other hand, has a market value whether it's sitting in a bank vault or buried in a mountain. It does not require counterparty endorsment - only market endorsement because it is a non-counterfeitible generic form of money.

Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty. It therefore performs a monetary function - the same one that gold does - and that is why it has market value, the same as gold did. Porc's nonsense about shiny metals and attractiveness are not the reason Gold can function as a store of value. The reason for that is that is has the right properties that enable it to perform a certain required function in a non-barter economy.

An electronic trading platform on the scale of the internet has a need for a form of money that can perform the same function that gold did in the pre-electronic era. Public-Private key cryptology is the obvious basis for such a technology and hence cryptocurrencies were born.

Again, cryptocurrency's viability has nothing to do with their market "value" - it has to do with their technical function. Markets later decide what that function is worth to the economy. Please drop all this nonsense about price, tulips, crashes and shininess of metals - the macro economic impact of cryptocurrencies on the future of finance goes way beyond any of that and will likely be felt for centuries.

I can assure you, the clocks will not be turning back now that this stuff has been invented.

1) "facilitate asset transfers between peers without the need of counterparty"

BTC is not an asset as it has no utility. That I can transfer it does not make it money. Because money has to actually be valuable itself, otherwise no value can change hands.

2) "The only "tool" that society has had up till now which can do this is Gold. It's not a question of value and whether or not Bitcoin / Gold etc have *value*. Its a question of *function*. Monetary function."

The function he described in 1) is not fulfilled by the Bitcoin network, as transfers and even between individuals without use of a bank (which is risky), but it transfers NOTHING. And that is the problem. BTC has no intrinsic value. Its transfer is not useful as nobody will accept it.

He basically is saying that money is anything that is scarce and can be transferred. That is totally incorrect. Money commodities themselves need to have value.

Also to function as a store of value, it needs to be predictable. BTC has no value and nobody knows if litecoin might be used tomorrow and something else the next day. All of the wealth people stored in bitcoin (for example your dad who worked hard his entire life) would vanish, once a new coin comes along.

3) "Even when the bank does it, they are not actually "transferring" anything of value - they are just changing a number in one account and incrementing it in another. The number that ends up in the receivers account only has "value" because of the counterparty endorsement it has."

No the bank transferred dollars. They have no intrinsic value but I can exchange them for something because government forces the shop owner into accepting nothing (dollar).
Counterparty endorsement of the bank does not give dollars "value".

4) "Bitcoin is likeways independent of counterparty endorsement. I *can* email you (or transfer to your "wallet") $1000 in Bitcoin without requiring a counterparty."

Yes we can exchange nothing directly I get it. But what we exchanged only has a price, because we agree to exchange nothing for something. However this agreement is artificial as NOBODY WANTS BITCOIN FOR ITSELF. GET IT IN YOUR HEAD. NOBODY WANTS A BITCOIN. THAT WE CAN TRANSFER NOTHINGS NOBODY WANTS between each other in a clever way does not CHANGE that fact.

And we HUMANS always WANTED GOLD FOR ITSELF. THIS IS THE GUARANTEE GOLD HAS: IT SAYS I WILL ALWAYS BE BEAUTIFUL AND PEOPLE WILL ALWAYS WANT ME.

BITCOIN HAD NOT SUCH GUARANTEE. Get it in your head. BITCOIN ONLY HAS A PRICE BECAUSE WE AGREE THAT NOTHING IS SOMETHING. Without this agreement BTC is useless and thus the network is useless. Because the entire value of the bitcoin network is dependent on an artificial agreement we cant compare it to gold, as our brains always loved gold for ITSELF. There is not artificial agreement.

You totally failed to see the real ENDORSEMENT that stands behind gold: REALITY! Reality that humans like shinny things thus will give you something they value for shinny things. Thus gold can be used as a store of value and medium of exchange. NO HUMAN wants A BITCOIN BTCBTCBTCBTCBTCBTCBTC