Too much subjectivism and religion for me

There's no such thing as opt-out tyranny.


Exactly.

Gold does not have to be backed by a commodity, because it is a commodity.

I don't agree that it's useless.

I don't agree that perception is reality. Reality is what is is. regardless of what people believe it is.

Adam’s Smith’s greatest student, J. B. Say, wrote two centuries ago: “money is indebted for its currency . . . to its being a commodity bearing a peculiar and intrinsic value.”

Very good point, but is it really a win-win scenario? What if people want a dictatorship? People have voted themselves into dictatorship many times. Why not in America? America is not what it used to be. It's starting to look more and more like Europe.

After reading this article, I'm worried that the government will succeed in destroying Bitcoin. What do you think?

(Please read the article and address the author's points.)

http://www.forbes.com/sites/harrybinswanger/2013/06/04/dont-be-silly-the-entitlement-state-wont-allow-bitcoin/

I'm not out to defend fiat currencies.


Because it's not allowed. But in a free market you would be able to pay with gold and silver. Maybe not physical gold and silver, but with redeemable paper notes.


Because the government forces people to accept them. If the government forced you to accept squirrel snot, that would be useful too. But it doesn't mean it would survive as money in a free market.


But the point is, when people start accepting other cryptocurrencies, the value of the existing ones will drop.


There are degrees of fluctuation. It's a big problem if I save bitcoins over several years, and then it's value is decreases by maybe 90 percent because it's not backed by physical commodities.

The fact that people believe in it doesn't make it true. Most Bitcoin buyers have little knowledge of economics.

The technology is rock solid, but the value is not backed by other commodities. One must compare Bitcoin to something, otherwise prices will be arbitrary.

If one wants to have a stable currency and thereby avoid inflation and deflation, it must be stable in value against something else. Value is always relational.

That being said, you guys have made some valid points, and I'll actually buy 10 Bitcoin today. Hope they will increase in value. What do you think?

That's like saying "Imagine that one day someone finds a way to make Bitcoin insecure?" This is highly speculative. No reason to believe that it's even possible.

The fact that I don't accept your arguments doesn't make me "wish to remain ignorant".

Good point about confiscation (e-gold). What about stability? Without being backed by a commodity, how do we keep the value of Bitcoin stable? Under a gold standard, the stability of the money is pegged to the value of gold.


Of course it doesn't. Central banks and fiat money have nothing to do with a free market. In a free market there's a complete separation between state and economics.

Since the number of Bitcoins is constant, the value will be determined by the demand. But the demand can change, and then there are no mechanisms to correct it.

Pure force only. But I'm not here to defend the dollar. Paper money wouldn't exist in a free market either. Only paper currency, backed by gold (or other commodities).



Nobody would use paper money in a free market. The dollar is backed by force. Bitcoin is backed by fear. That's my view until I'm convinced otherwise.


But WHY can you exchange paper money for goods at Dell? Because the store is forced to accept it! No way they would accept worthless paper notes backed by nothing in a free market.


If everybody started using Bitcoin, it would have a huge impact on the dollar.

I don't doubt the technology. It's genius. I just doubt that it would be valued as a currency in a free market when it's not backed by a commodity.

I have to admit that I'm sceptical about Bitcoin. I'll give you my reasons, then please convince me!

Bitcoin is not backed by anything. It would probably not exist in a free market. Money in a free market has always been some kind of commodity. Something that has value beyond its use as a currency. The problem with Bitcoin is that it has no value beyond its use as a currency. Why should it then be regarded as money? Money came into being as a medium of exchange, so that if you got stuck with it it was useful in some way. It wasn't just a piece of paper. It was something that was useful in and of itself. Like gold. Like silver. Bitcoin has none of that. It's just a string of 0s and 1s. Where does it get its value from? I don't think in a free market it would be valued.

Something like Bitcoin could be used as a currency if it was backed by some commodity to do anonymous/quick transactions, but there would be a standard, ultimately, for exchange. It would always be exchangeable into e.g. gold. So that the banks who issued the Bitcoins were contractually obligated to redeem them into gold. Then Bitcoin would serve as a currency, but the money would be the gold.  

There's also the problem with Bitcoin of inflation. Yes, there's a fixed amount of Bitcoins qua Bitcoin, but anyone can create alternative cryptocurrencies. I don't see why Bitcoin has any unique features that cannot be replicated by others, and therefore you will create massive inflation in a digital coin space.

So why do I think Bitcoin is still valued today? I think it is because people are fearful of the dollar. They think it's gonna get useless, and they're looking for alternatives. Bitcoin is a product of this fear. Also, I think people are worrying about their privacy. And with good reason, given the growing government intrusion in our lives. People are looking for ways in which to remain private. In which to remain outside the government's abitily to monitor them. Bitcoin provides that. So right now it's providing a value. The value as privacy. The value that it's not paper money. But in a fre market, which we are all working to realize, I do not believe Bitcoin would exist.