Bitcoin soon to enter early adopter phase

[c1ue]

Re: Bitcoin soon to enter early adopter phase

In regards to bitcoin, the protocol includes its own built-in money transmitting system which means it will not rely on any 3rd parties or systems like SWIFT to transmit bitcoins.

That's not true. Bitcoin has a built-in bitcoin transmitting system; the definition of money still lies in the hands of various governments.

If you think this sounds a lot like money laundering, it is, but not necessarily.

The ultimate problem is the transfer of bitcoin to spending money. Anonymizing the ownership/transfer of bitcoins is certainly possible, but the transfer of bitcoins to cash is not. The transfer of bitcoins for goods is not. You could, for example, make any imaginary object freely and anonymously transferrable between different people, but the moment said object starts interacting with the real world - the anonymity becomes very hard to maintain. With cash, the anonymity exists primarily because it is so ubiquitous, and even then much of the anonymity is illusory.

Arguably this is the exact oposite of anonymous since it is technically possible to trace the amount of every single transaction and the "from" and "to" all the way back to the very first bitcoin transaction, it's just that you won't find people's names in the transactions but rather ugly looking transaction that look something like this :
In bitcoin block#324, "Sfjkf929jf9jsfkJSFKjSSLfj8s8f2jkfFF" sent 0.949 Bitcoins to "OSJFkSNFisffi2f2ifKFNHKCNccchfddD"'.

The bitchain above contains machine names which aren't directly traceable, but once again, if you have stored all the email/social media/chat traffic - or all bitcoin tagged IP packets - I still don't see how this matters.

Today, I would agree. However in 5 years from now I am not so sure. There's only so many Krug's you can carry.

200 Krugerrands is $260K even at today's prices. That's more than enough for most people to carry all their liquid wealth and get a decent start somewhere else.

If you have $5M of liquid wealth or more, you would be flying your own plane.

Bitcoins can and do get destroyed also. What if someone deliberately went around sabotaging bitchains, for example?

The key point which you did not discuss, however, is that you can buy stuff with gold anywhere. You cannot buy stuff with bitcoins anywhere.

Actually bitcoins would have no value to techies if the value of bitcoin goes to zero

I'm not so sure about that. As I noted before, if you treat bitcoins as collectible items as opposed to currency, the dynamics of bitcoin value becomes much more understandable.

[radon]

Re: Bitcoin soon to enter early adopter phase

That's not true. Bitcoin has a built-in bitcoin transmitting system; the definition of money still lies in the hands of various governments.

This depends on your definition of money. Bitcoin is already being used as a medium of exchange in limited circles whether or not it is sanctioned by any government.

The ultimate problem is the transfer of bitcoin to spending money. Anonymizing the ownership/transfer of bitcoins is certainly possible, but the transfer of bitcoins to cash is not. The transfer of bitcoins for goods is not. You could, for example, make any imaginary object freely and anonymously transferrable between different people, but the moment said object starts interacting with the real world - the anonymity becomes very hard to maintain. With cash, the anonymity exists primarily because it is so ubiquitous, and even then much of the anonymity is illusory.

The bitchain above contains machine names which aren't directly traceable, but once again, if you have stored all the email/social media/chat traffic - or all bitcoin tagged IP packets - I still don't see how this matters.

Sure, buying things anonymously is difficult, on the other hand, how do you know if the packet contains bitcoin info? If you control all the routers you can figure out who is speaking to who, but it is another matter entirely to find out what they are saying - tunnels through unfriendly jurisdictions can make it harder.

Bitcoins can and do get destroyed also. What if someone deliberately went around sabotaging bitchains, for example?

Theft also: https://bitcointalk.org/index.php?topic=83794.0

The key point which you did not discuss, however, is that you can buy stuff with gold anywhere. You cannot buy stuff with bitcoins anywhere.

All you need is someplace that is willing to trade bitcoin for gold.
http://www.coinabul.com/

[c1ue]

Re: Bitcoin soon to enter early adopter phase

This depends on your definition of money. Bitcoin is already being used as a medium of exchange in limited circles whether or not it is sanctioned by any government.

The definition of money - specifically what is legally defined as being usable for repayment of all debts public or private - is made by governments.

Anyone can exchange anything for anything else, but the legal definition of money is quite clear.

Sure, buying things anonymously is difficult, on the other hand, how do you know if the packet contains bitcoin info? If you control all the routers you can figure out who is speaking to who, but it is another matter entirely to find out what they are saying - tunnels through unfriendly jurisdictions can make it harder.

No, you don't need to trace bitcoin bitchains in order to identify who is converting bitcoins into dollars. You just have to force the exchange to get this information. No acceptable ID, no transaction permitted by law.

Theft also: https://bitcointalk.org/index.php?topic=83794.0

Nice list. It was in reference to the Android random generator exploit that I was mentally referring to, but I look forward to seeing all the other inventive ways the bitchain, exchange, or other means have been exploited.

All you need is someplace that is willing to trade bitcoin for gold.
http://www.coinabul.com/

Coinabul is a legal entity incorporated in Wyoming. If you have any questions, comments, or concerns, please don't hesistate to call or email us.

This seems like a non-ideal option given the doomer scenarios outlined above...

[radon]

Re: Bitcoin soon to enter early adopter phase

Why is dollar convertibility a necessary feature?

[c1ue]

Re: Bitcoin soon to enter early adopter phase

Why is dollar convertibility a necessary feature?

A form of money which cannot be freely exchanged into dollars - isn't money.

Rare stamps are worth money, but no one calls them money, because in order to convert them into dollars - you have to sell them as the collectible items they are.

[radon]

Re: Bitcoin soon to enter early adopter phase

A form of money which cannot be freely exchanged into dollars - isn't money.

Rare stamps are worth money, but no one calls them money, because in order to convert them into dollars - you have to sell them as the collectible items they are.

But I can use bitcoin to buy things without converting them into dollars. The idea of "Lawful Money", which is what you seem to be alluding to, seems less useful than the broader definition of money as a medium of exchange/unit of account/store of value when dealing with bitcoin. The people using bitcoin to buy things, aka silk road, only really care about what they can exchange them for and not whether they are legal tender.

[c1ue]

Re: Bitcoin soon to enter early adopter phase

But I can use bitcoin to buy things without converting them into dollars. The idea of "Lawful Money", which is what you seem to be alluding to, seems less useful than the broader definition of money as a medium of exchange/unit of account/store of value when dealing with bitcoin. The people using bitcoin to buy things, aka silk road, only really care about what they can exchange them for and not whether they are legal tender.

If you believe that bitcoin will take care of all your needs for money - then I'd suggest trying to live for a month without recourse to using dollars. Or try paying your taxes with bitcoin.

Sure, you can absolutely get by in the present status quo situation because there aren't limitations on bitcoin transfers to dollars, but these limitations are coming. The government just hasn't decided how exactly these are going to occur just yet.

In Vietnam, in World War II, in any number of fight/flight situations in the past, the differences between cash, gold, and collectibles became very stark. Cash in the form of money issued by about to be conquered nations was largely without value, but cash in the form of money issued by other nations was just fine. Collectibles generally got either stashed or trashed, while gold and jewelry retained at least some value.

[radon]

Re: Bitcoin soon to enter early adopter phase

If you believe that bitcoin will take care of all your needs for money - then I'd suggest trying to live for a month without recourse to using dollars.

Who said anything like that?

Or try paying your taxes with bitcoin.

Right, taxes and tort, bitcoin is obviously not legal tender, and thus not a dollar replacement, but it doesn't need to be in order to fulfill all the functions of money and so to be considered money.

Sure, you can absolutely get by in the present status quo situation because there aren't limitations on bitcoin transfers to dollars, but these limitations are coming. The government just hasn't decided how exactly these are going to occur just yet.

In Vietnam, in World War II, in any number of fight/flight situations in the past, the differences between cash, gold, and collectibles became very stark. Cash in the form of money issued by about to be conquered nations was largely without value, but cash in the form of money issued by other nations was just fine. Collectibles generally got either stashed or trashed, while gold and jewelry retained at least some value.

Im of the opinion that, so long as they can be exchanged for goods, there will be a demand for bitcoins whether or not they are convertible. Sure, once the novelty wears off they may be driven underground by governments, but they will have to act in concert in order to prevent shops from being driven into other jurisdictions.

I'm rather looking forward to the messy political fallout of a new "war on drugs" style bitcoin policy. Watching them waste millions of dollars playing whack a mole through tor and a dozen unfriendly jurisdictions in order to bust someone selling a couple of pirated movies will entertaining to say the least.

[c1ue]

Re: Bitcoin soon to enter early adopter phase

Who said anything like that?

I guess I am then unclear on what you are trying to say.

If you're saying bitcoin is money because you can buy stuff with it - the same can be said for day labor, for barter, or for any number of other activities where you can gain something in return for something else.

My view is that if you can't freely exchange nor you can you pay off legal debts, then it isn't money.

Right, taxes and tort, bitcoin is obviously not legal tender, and thus not a dollar replacement, but it doesn't need to be in order to fulfill all the functions of money and thus to be considered money.

mon·ey

/ˈmənē/
Noun

1. A current medium of exchange in the form of coins and banknotes; coins and banknotes collectively.
2. Sums of money.

Im of the opinion that, so long as they can be exchanged for goods, there will be a demand for bitcoins whether or not they are convertible. Sure, once the novelty wears off they may be driven underground by governments, but they will have to act in concert in order to prevent shops from being driven into other jurisdictions.

I'm rather looking forward to the messy political fallout of a new "war on drugs" style bitcoin policy. Watching them waste millions of dollars playing whack a mole through tor and a dozen unfriendly jurisdictions in order to bust someone selling a couple of pirated movies will entertaining to say the least.

You're still refusing to acknowledge that bitcoins can as easily be valuable as a collectible item without actually being of any use whatsoever as money.

You're also continuing to refuse to acknowledge that anything of value is not the same thing as that item of value being money. A bitcoin transaction at present is no different than trading a limited edition comic book for a ride to the airport. Both items in this transaction are valuable - and both items can be converted to money - but neither item is money.

If in fact bitcoin is allowed to become money - as its proponents want it to be - I have no objection to that. I have simply been noting that this means bitcoins will then be regulated like money - which unfortunately removes much of the attraction of bitcoins to start with.

The reality is - there are already items of value which function like bitcoins. They're called postage stamps. They can be traded for cash or goods, and each stamp represents a unique bit of value. Rare stamps increase in value over time and their supply is untamperable. They're even perfectly anonymous.

They are not, however, money.

[radon]

Re: Bitcoin soon to enter early adopter phase

I guess I am then unclear on what you are trying to say.

If you're saying bitcoin is money because you can buy stuff with it - the same can be said for day labor, for barter, or for any number of other activities where you can gain something in return for something else.

My view is that if you can't freely exchange nor you can you pay off legal debts, then it isn't money.


You're still refusing to acknowledge that bitcoins can as easily be valuable as a collectible item without actually being of any use whatsoever as money.

You're also continuing to refuse to acknowledge that anything of value is not the same thing as that item of value being money. A bitcoin transaction at present is no different than trading a limited edition comic book for a ride to the airport. Both items in this transaction are valuable - and both items can be converted to money - but neither item is money.

If in fact bitcoin is allowed to become money - as its proponents want it to be - I have no objection to that. I have simply been noting that this means bitcoins will then be regulated like money - which unfortunately removes much of the attraction of bitcoins to start with.

The reality is - there are already items of value which function like bitcoins. They're called postage stamps. They can be traded for cash or goods, and each stamp represents a unique bit of value. Rare stamps increase in value over time and their supply is untamperable. They're even perfectly anonymous.

They are not, however, money.

No, exchanging bitcoins for goods and services is only one facet. What I'm saying is that bitcoin is money because it fullfills all the primary functions of money.

That is:
The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment.

In other words it seems to fit the economic definition so I'm calling a duck a duck.

If comic books and postage stamps had a unit of account and were being used as a medium of exchange they would also qualify as money. As far as collectibility goes I can imagine that if bitcoins ever became collectible they would be a lot like rare coins with both face and numismatic value. But it is not the numismatic value that make bitcoins money, and they can be money without being legal tender. Just about anything can be money provided it is used as such.

This is what I meant when I said that it depends on how you define money. If the definition of money is fiat money represented by banknotes or coins then, yes, bitcoin doesn't fit.

[c1ue]

Re: Bitcoin soon to enter early adopter phase

No, exchanging bitcoins for goods and services is only one facet. What I'm saying is that bitcoin is money because it fullfills all the primary functions of money.

That is:
The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment.

Every single one of the above applies to stamps. In fact, the Liberty stamps even ignore future stamp price increases (A Liberty Stamp standard?).

If comic books and postage stamps had a unit of account and were being used as a medium of exchange they would also qualify as money.

Stamps already have a unit of account - the price of sending a first class letter. As the above Liberty stamp example illustrates - this is a far more concrete measure of value than anything else.

Stamps also are used as a medium of exchange every single day - far more than bitcoins are. The services exchanged for are postage, but there is nothing which bars them from being used for other purposes.

As far as collectibility goes I can imagine that if bitcoins ever became collectible they would be a lot like rare coins with both face and numismatic value.

Bitcoins are already collectibles. What else do you call bitcoin mining?

This is what I meant when I said that it depends on how you define money. If the definition of money is fiat money represented by banknotes or coins then, yes, bitcoin doesn't fit.

The definition of money isn't arbitrary - it is posted above.

The only arbitrary definitions here are the ones you have been applying to make bitcoin money - i.e. that it is used to buy stuff. As I've shown, that definition applies to all sorts of other collectibles.

Value isn't money.

[radon]

Re: Bitcoin soon to enter early adopter phase

Every single one of the above applies to stamps. In fact, the Liberty stamps even ignore future stamp price increases (A Liberty Stamp standard?).



Stamps already have a unit of account - the price of sending a first class letter. As the above Liberty stamp example illustrates - this is a far more concrete measure of value than anything else.

Stamps also are used as a medium of exchange every single day - far more than bitcoins are. The services exchanged for are postage, but there is nothing which bars them from being used for other purposes.



Bitcoins are already collectibles. What else do you call bitcoin mining?



The definition of money isn't arbitrary - it is posted above.

The only arbitrary definitions here are the ones you have been applying to make bitcoin money - i.e. that it is used to buy stuff. As I've shown, that definition applies to all sorts of other collectibles.

Value isn't money.

I posted a generally accepted definition of money above, it is one you will become familiar with if you read economic textbooks. Since this website is at least in part about economics I prefer that definition to the one you posted. Which, if we are going to be pedantic, is technically incorrect since the vast majority of money is in the form of electronic banking records not in banknotes or coins and the definition you posted makes no allowance for anything else.

The reality is that any object or record can be money if it fills that role, and it doesn't it doesn't matter whether they are beads or electrons. Intrinsic value, collectibility, or legal tender status are not required.

At any rate bitcoin is currently being used as money as evidenced on various shops and exchanges. Items are priced in bitcoin, and commerce is facilitated by its exchange. Bitcoins are circulating. I find this interesting because if you are right and convertibility is removed the demand for bitcoins will lie in their value as a monetary entity. I think this is a fascinating experiment, buying and selling goods in a parallel economy. A chance to study the the last bastion of free enterprise if you will.

Wikipedia has a short primer on money : http://en.wikipedia.org/wiki/Money . It is a starting point if anyone is interested in why I hold this position.

[c1ue]

Re: Bitcoin soon to enter early adopter phase

I posted a generally accepted definition of money above, it is one you will become familiar with if you read economic textbooks. Since this website is at least in part about economics I prefer that definition to the one you posted. Which, if we are going to be pedantic, is technically incorrect since the vast majority of money is in the form of electronic banking records not in banknotes or coins and the definition you posted makes no allowance for anything else.

The electronic format of most legal currencies is irrelevant since each and every electronic dollar is freely convertible into cash. Economists thus term both physical cash and electronic cash as money.

Simply because bitcoins are electronic does not make them money.

Simply because bitcoins have value, does not make them money.

Simply because you can buy stuff with bitcoins, does not make them money.

I've already shown clearly that there are all sorts of other forms which can be used as a medium of exchange, a store of value, or a unit of accounting - but these other forms aren't money. Why then are bitcoins different?

[radon]

Re: Bitcoin soon to enter early adopter phase

The electronic format of most legal currencies is irrelevant since each and every electronic dollar is freely convertible into cash. Economists thus term both physical cash and electronic cash as money.

So you now believe the dictionary definition you quoted is incorrect also?

Simply because bitcoins are electronic does not make them money.

Simply because bitcoins have value, does not make them money.

Simply because you can buy stuff with bitcoins, does not make them money.

I never implied any of these things. Bitcoins are money because they fullfill all the primary functions of money

The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past, a standard of deferred payment. Any kind of object or secure verifiable record that fulfills these functions can be considered money.

We will have to simply agree to disagree at this point.

[verdo]

Re: Bitcoin soon to enter early adopter phase

to me, the bitcoin price is too unstable for it to be considered seriously as money. I shouldn't be afraid to hold sizable amounts of my net worth into something that is considered "money." Today, I don't even think I would be comfortable holding $500 - $1000 in bitcoin. As evil as the dollar (or any other major currency for that matter) may be, I still could hold $20 000+ in it and sleep comfortably.