Steve Forbes: Bitcoin Not Money 692
MouseTheLuckyDog writes "A brief editorial by Steve Forbes, one of our moneymeisters, on why bitcoins are not money.. Hint: For those who are too lazy to read the opinion,. Bitcoins are too volatile to be money."
From the article: "Money is most optimal when it is fixed in value just as commerce is facilitated when we have fixed weights and measures. When you buy a pound of hamburger you expect to get 16 ounces of meat. An hour has 60 minutes. A mile has 5280 feet. These measurements don’t 'float.' So too money best lubricates commerce when it has a fixed value."
Fiat Currency (Score:5, Insightful)
Re:Fiat Currency (Score:5, Funny)
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It was that way, when it was still linked to the gold standard. It isn't anymore.
Re:Fiat Currency (Score:5, Insightful)
Money still fluctuates in value when you're on the gold standard. It just fluctuates in lockstep with the fluctuations in the value of gold. This means that it's unlikely to steadily decrease in value, but it doesn't mean it stops fluctuating.
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Unless, say, you discover either an unexpected new easily exploitable source of gold or a new mechanism of extracting gold efficiently
Re:Fiat Currency (Score:5, Interesting)
Steve Forbes is scared because Bitcoin takes the control away from existing institutions of wealth.
LOL
In as much as an ant picking up a grain of sand has taken over the US Federal Reserve or European Central Bank.
Bitcoins have contextual value - Steve never made it to president, so that should tell you he's not quite as clever as he thinks.
Re:Fiat Currency (Score:5, Funny)
" Steve never made it to president, so that should tell you he's not quite as clever as he thinks"
Because Republican primary voters nominate only the brightest intellectuals.
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Steve never made it to president, so that should tell you he's not quite as clever as he thinks.
Or maybe the American public is not as clever as we think, or just doesn't like clever people as much as we think.
True dat. California had Ahnold, not once, but twice for guv, Minnesota elected Jesse "The Mind" Ventura for guv and the people put mental lightweight and frat party boy W. into the Whitehouse for 8 years and several trillion dollars of debt, rampant business abuse of the public and two wars, one justified by cooked intelligence.
I'm horrified how easily people will vote against their own best interests in this country. Clearly we are not the great nation we think we are.
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... the bankers who caused the problems paid for BHO's election/relection rather then being prosecuted...
The "banker" (financial institution) money went very heavily for Romney, not Obama, 3-1 in Romney's favor in fact [opensecrets.org]. Obama did not prosecute the numerous (extremely rich) malefactors in the Bush Crash it is true, but their attitude is always: "Well, what are you going to do for me now?!".
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That's only the tip of the iceberg. When gold becomes the standard, powerful people and governments become interested in controlling the price of gold.
You end up with things like laws that prevent people from owning gold bullion in large amounts, for fear that they use it to manipulate currency. (This used to be a real law in the US - Why to do people forget about it?)
AFAIK that law is still in place. The US Government can still come confiscate your gold or jail you if you fail to turn it in on request. I could of course be wrong, going off of an article I read last year.
I agree with everything else you stated, but I'd be curious of the article was correct.
Re:Fiat Currency (Score:5, Interesting)
Yeah I heard that Intelligence Squared program. Steve Forbes wasn't very convincing. He said "A foot is twelve inches and that should never change. We need consistent measures so why do we allow the value of a dollar to change?" And I thought, uh, if a foot is twelve inches then a dollar is one hundred cents, you disingenuous asshole. Inflation doesn't mean that a dollar loses its mathematical soundness, like suddenly a dollar is ninety-eight cents. To say that a dollar should be pegged to an amount of gold is to say that we should use gold instead of dollars, which is fine, but the dollar then is redundant. To me it is obvious that a dollar is not an amount of gold, it is a different thing, so its value shouldn't be pegged to gold. Would he suggest pegging the price of gold to the price of a Big Mac? The price of his salary to the price of celery? Why would we do that, that would be nonsense.
The reason Steve Forbes is pissed off about inflation is because inflation is good for people who work and bad for people who don't work, and Steve Forbes doesn't work. Like most ultra-rich people very little of his income is payment for "working", for making something. When inflation rises wages rise because they have to, but "savings" (what I charitably call Forbes' billions) loses value so Steve gets less rich. Boo hoo hoo.
Middle class people also have savings, ten thousand times smaller than Steve's, but even a middle class person derives most of his income from wages, compensation for work. In an inflation economy, people in debt get ahead, people who work keep apace, and people who coast on riches fall behind. And that is bad for Steve, so Steve opposes it.
Fuck that guy. Also I have a personal anecdote: when he ran for President he came to my school and ended up promising a keg to my fraternity. We never got that keg! Fuck that guy.
Re:Fiat Currency (Score:4, Insightful)
Only because Gold was defined in terms of U.S. Dollars. Specifically, the major nations of the world got together and said "1 ounce of pure gold is $21 U.S. Dollars".
A gold standard isn't magic, nor does is prevent inflation or deflation.
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gold be definition is deflationary
there is a set amount of gold on earth. as the population increases there is less gold per person available. hence as population increases you will have deflation because there will be less and less money available per person.
Re: Fiat Currency (Score:3, Insightful)
Go look up the definiton of gold in a dictionary. If the word deflationary doesn't appear, it's not "by definition".
Re:Fiat Currency (Score:4, Insightful)
gold be definition is deflationary
there is a set amount of gold on earth. as the population increases there is less gold per person available. hence as population increases you will have deflation because there will be less and less money available per person.
The population does not increase by definition.
Must disagree (Score:4, Funny)
Definition is something I look for when thinking about increasing the population.
Re:Fiat Currency (Score:5, Interesting)
Gold is, but a gold *standard* isn't. Or, rather, it doesn't have to be.
You just adjust the value assigned to the gold. Since there is no significant commerce valued in "ounces of pure gold", you adjust the value given to your medium of exchange.
See 1971, when Richard Nixon revalued gold from $21 to $35 per ounce, but only for non-American exchangers.
Re:Fiat Currency (Score:4, Insightful)
So instead of "printing money" they'll just revalue gold.
Re:Fiat Currency (Score:5, Insightful)
Yep, that's why keeping the gold standard was so asinine. It didn't do anything but obligate the U.S. government to hoard gold.
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There are plenty of examples in history of governments 'devaluing' gold or silver coin by sneakily issueing a new coin made of an alloy of lower precious metal content.
Re:Fiat Currency (Score:5, Interesting)
See 1971, when Richard Nixon revalued gold from $21 to $35 per ounce, but only for non-American exchangers.
Wrong. It wasn't Nixon who changed the exchange rate from US dollars to gold but the F.D.R. administration which changed the exchange rate from $20.67/oz to $35.00/oz. . Also it wasn't Nixon who stopped US citizens from exchanging gold to US dollars but again was the F.D.R. administration. To add further insult to injury the F.D.R. administration nationalized the gold holdings of the US and only allowed the private ownership of gold for industrial, jewelry, art, coins that had special collector status (not ones that would have them in the future), and foreign legal tender. This began the slow march to the end of the gold standard in the US. A good introductory piece on this period that I have found deals with the curious case of the 1933 gold Double Eagle [wikipedia.org] over on wikipedia. Granted it isn't expansive on the gold standard but provides a good background on what the F.D.R. administration did and is a good jumping off point for other topics on the subject on the US gold standard of the time.
What Nixon did was close the international gold windows that other countries were using to exchange US dollars for gold. This was being used by Charles de Gaulle to exchange France's dollar holdings for gold thus diminishing the US's economic power in the region. Add to it the deficit spending because Vietnam and it was necessary (from the Nixon administration's perspective) to remove the US dollar completely from the gold standard. What the Nixon administration did was put the final nail in the coffin of the US gold standard.
Just because Nixon put the final nail in the coffin for the US gold standard doesn't mean he was bad in this regard. All Nixon did was end the Bretton Woods Agreements [wikipedia.org], he didn't confiscate anyone's private property. His role was actually quite small and the abuse he committed in regards to this issue were small especially compared to those of F.D.R. There are plenty of things to beat up Nixon on but this really isn't one of them.
Re:Fiat Currency (Score:5, Interesting)
"Also it wasn't Nixon who stopped US citizens from exchanging gold to US dollars but again was the F.D.R. administration. To add further insult to injury the F.D.R. administration nationalized the gold holdings of the US and only allowed the private ownership of gold for industrial, jewelry, art, coins that had special collector status (not ones that would have them in the future), and foreign legal tender. "
This is a bit disingenuous. As you say, F.D.R. nationalized gold, in the sense that the Reserve banks had to turn their gold over to the treasury. However, he did not prohibit private ownership or sale of gold; only gold that was used as money.
It was indeed Nixon who halted just about all citizen gold trade. With pretty disastrous results.
By the way, just as an aside: by tossing out Bretton Woods, Nixon also effectively defaulted on U.S. debt. Quite intentionally. The people who said the "fiscal cliff" or not raising the debt limit would be the first time the U.S. defaulted on its debt are WAY off, by more than once.
YOU might not consider government defaulting on debt to be a bad thing. But other countries most definitely did.
"There are plenty of things to beat up Nixon on but this really isn't one of them."
That is VERY debatable.
Re:Fiat Currency (Score:4, Insightful)
there is a set amount of gold on earth.
True, but it's not all in humanity's possession, hence the interest in mining it (like you can do with BitCoin). And true, someday we will hit the limit (like we will do with BitCoin) and those who have it already will have power over those who desire it (ditto).
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By the time all the gold on Earth is mined, asteroid mining will be in full swing.
Perhaps even before then, at some point it may become cost-effective to synthesize gold [wikipedia.org].
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and if history is going to repeat itself, those without it will just come and kill you and take your gold or bitcoin or whatever limited currency you will have
Re:Fiat Currency (Score:5, Interesting)
True, but it's not all in humanity's possession, hence the interest in mining it (like you can do with BitCoin). And true, someday we will hit the limit (like we will do with BitCoin) and those who have it already will have power over those who desire it (ditto).
That's what's so odd to me about Steve Forbes' comments. He seems to be a proponent of the gold standard. Well, gold is very similar to bitcoins (i.e. a fixed total amount, people mining to get more, etc.) If anything, I view the wild fluctuations of bitcoin a function of it being new and people not knowing quite what to make of it yet, and to some extent the opposite of the natural fluctuation of fiat currencies like the dollar and the euro. There is a fixed amount of bitcoins. There isn't a fixed amount of fiat currencies. So if 1 bitcoin is worth $50 today and $100 tomorrow you could argue the bitcoin is the same value both days, but the dollar is worth LESS tomorrow.
But what do I know. I got Cs in Econ 22 years ago...
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There may be a set amount of gold on earth, but it is an unknown amount, and the amount of mined gold is constantly increasing. Also the population will (hopefully) not be constantly increasing - if we don't get that under control soon we are seriously screwed - it will either decrease slowly and voluntarily or dramatically and tragically.
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Not quite. When the money supply increases at a faster rate than the value of the economy, (or decreases at a slower rate than the decline in the economy) then you get inflation.
Re:Fiat Currency (Score:4, Insightful)
A gold standard isn't magic, nor does is prevent inflation or deflation.
Actually, it sort of is. Consider when inflation is high (that is: when the growth in the gold supply exceeds growth of the population), then gold isn't worth as much. That means that it isn't as valuable to people to mine and mint it. Marginal mines close down. CEOs decide not to produce minor veins. Workers move into other lines of business. The supply of gold falls. The inflation is reduced. Now consider when inflation is low. Gold becomes more valuable relative to the available goods and services. Wildcatters spring up. Chemists research more efficient ways to extract gold from tailings. People start using alternatives in electronic circuits. The supply of gold rises. The deflation is reduced.
Now consider fiat money. Unless there are rigid controls on the creation of money, and who gets to spend it, then the guy who decides to make the money benefits from making it, and there is little limit to how fast he would want to.
~Loyal
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The amount of physical currency in circulation is largely irrelevant to the money supply. The total value of all money in all savings accounts and CDs is something like 20x the total physical currency in circulation.
Using gold coins instead of dollar bills might prevent inflation or deflation of that 5% of the money supply. It's just not significant.
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that tautology works just as well with bitcoin, though.
Re:Fiat Currency (Score:4, Interesting)
No, it doesn't. It's sort of like if I were paid in Euros and had all my expenses to be paid in USD, CAD or RMB, except that the relationship between the currencies were fluctuating by up to 50% on any given day with little or no predictability.
Bottom line is that the people who throw out fiat currency in relationship to the USD are being disingenuous when they suggest that USD is subject to the same level of instability. Sure it is slightly unstable, but we're not talking about hyperinflation or hyperdeflation, which is something that could definitely happen with BTC. And the amount of money you make tends to rise with inflation in general, assuming some sort of sane monetary policy.
What's more, since nobody is forced to take BTC for anything, you can very easily wind up in a situation where the BTC economy grinds to a halt because people think their money is going to be worth more the next day or in a month.
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Wait for it.... (Score:2, Insightful)
...here it comes. Legions of teenage and college Slashdotters, who think they are MBAs, Accountants and public policy experts, engaging in Fan Boy, Face Painting, Homer rants about how bitcoins are really money...really!
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The value doesn't change, how much you can buy with it however, does change.
How much you can exchange it for is what determines its value. The number written on it is its notional value (aka face value).
Re:Fiat Currency (Score:5, Insightful)
I think its useful to say that the value of a currency is really in how stable it is within an economy - once hyperinflation takes over, it doesn't matter how established the currency is, its value as money disappears (see Germany in the 1920's, Russia in the 1990's and Zimbabwe in the past decade) and people move to alternative means of payment.
$1 today will buy me a loaf of bread. That loaf of bread might cost $1.01 tomorrow, or even $0.99, but while that's an inconvenience its not disastrous. If that loaf of bread goes from $1 one day to $5 the next, and $20 the next, then its value as actual money is gone - theres no way to establish a stable economy on such a basis because there's no way to plan for the future.
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Some people in Zimbabwe indeed managed to pay off their mortgages for next to nothing because of hyperinflation. But all semblance of investment activity ceased. What banker is going to give anyone a mortgage in such an environment when the repayment will be worth far less than the initial loan. And guessing future inflation won't work either. Hyperinflation feeds on itself. The moment people expect inflation to be 1000%, they price their products with a built in 1100% inflation margin, so inflation becomes
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You can't buy anything with BTC without converting them between it and another currency. And few currencies see the level of instability that the BTC does. When you can see up to 50% fluctuations in the buying power, that's not a good thing for anybody other than fraudsters and speculators.
What's more, there is no government forcing people to take BTC which means that there isn't anything that's keeping the system stable and as far as I know you can't be paid in BTC unless you're a contractor, but you still
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Actually, you can.
Look up shops selling for bitcoins.
Government isn't forcing people to take bitcoins, the qualities of bitcoins (security, anonymity, lack of centralized control) is what forces people to use them.
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You can't buy anything with BTC without converting them between it and another currency.
You certainly can. In my case, I bought an ipad mini when the price spiked.
I can also be paid in almost any currency. In the US, I'm paid in dollars, food ('free' lunch at work), and I'm paid in college classes (tuition reimbursement).
Do you mean to tell me that my employer is not actually paying me when they give me things other than dollars? Please let the IRS know, because I'd love to not pay taxes on that if it wasn't actually compensation.
Re:Fiat Currency (Score:5, Insightful)
You can't buy anything with BTC without converting them between it and another currency.
This isn't true. Bitcoins are a medium of exchange. It is commonly used as a currency converter (IMHO it does a very good job in Foreign Exchange markets), but that isn't its only role.
It is possible to pay salaries in bitcoins and other currencies. Look up Ithaca Hours [wikipedia.org] for an example of how alternate currencies can and have been used in the past to pay for labor. You can also purchase items and services directly in Bitcoins (some webhosting services are currently offered directly in Bitcoins) and it is commonly used for voluntary donations to many organizations as well.
The one thing that is difficult to do with Bitcoins though is to pay taxes, and that unfortunately is something that needs to be in the "legal tender". Also, if you sue somebody in a courtroom those debts will be settled in whatever form of payment acceptable by the judges involved, and that will likely be something like a Euro or U.S. Dollar and Bitcoins will not be likely recognized. This isn't to say Bitcoins could not be used in this fashion, but it takes a deliberate government act to recognize Bitcoins as a valid legal tender.
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Dont forget WoW Gold. Accepted by millions worldwide! AND, its a precious metal, supply naturally constrained by how fast dwarves can dig it up!
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That's like saying that Canadian Tire Money [wikipedia.org] is money because there are shops (and not just Canadian Tire) that will accept it as currency.
Actually, an economist would say that Canadian Tire Money (learned something new today) is money. Economists define money as "anything that separates the act of buying from the act of selling." For example, in post-WW2 Germany, currency restrictions made cigarettes and Cognac money. People would exchange what they wanted to buy, in one case gasoline, fo
Re:Fiat Currency (Score:4, Interesting)
To be money, a thing must 1. be a unit of account, 2. a store of value and 3. a means of exchange.
Forbes is arguing that BitCoin (today) kind of satisfies the “means of exchange” but not the other 2 because it's value fluctuates so wildly. So, currently, it is more of a speculative asset bubble then money. If you have hyperinflation of 100% a year you can kind of make it work – you know the direction and rough speed of inflation. With BitCoin it could be up 100% in one year and down 50% the next month.
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I was using the generic definition of money. However, Forbes believes in all 3. Now, he says that all other functions of money flows from being a means of exchange explicitly. However, 2 paragraphs down he starts talking about using money to invest and make long term decisions - that would encompass the other 2 parts.
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That very much depends on what your definition of fluctuate is. The dollar's value changes against other currencies constantly, and it changes against the cost of goods and services as well. According to the CPI, a dollar on average buys 3% less every year. Or according to the prices of consumer goods and utilities, a dollar on average buys about 20% less every year. That's pretty significant.
Of course, bitcoin fluctuates m
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His issue is with bitcoin's volatitilty (Score:5, Insightful)
not that their value changes, but that the changes are to volatile to make it a worthwhile currency. Its more like a commodity than anything else.
Comment removed (Score:4, Insightful)
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Significantly more stable?
Re:Fiat Currency (Score:4, Interesting)
A few bits of actual value:
1. If you're a US citizen, you can use US dollars to pay your legally required taxes to the US government (and probably the government of your town, county, and state). If you don't have US dollars, you can't, and the IRS can and will seize your other assets, sell them for US dollars, and use that to pay your taxes. And if you try to stop the IRS from doing this, the police and courts will if necessary use force to make that happen.
2. On your US dollar bill, you'll see "This Note Is Legal Tender For All Debts, Public and Private". If you go to a restaurant, order a meal, and offer the appropriate amount of cash to pay for your meal, the restaurant owner cannot legally refuse to accept your cash and then have you arrested for not paying your debt to them. Again, this is enforced by the police and court system.
3. Because of points (1) and (2), most everyone in the US has US dollars to pay for things, so a business that doesn't accept US dollars is going to be at a severe competitive disadvantage.
None of this stops you from exchanging your RAM sticks for someone else's kumquats if you and the kumquat-seller both agree to it.
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I think the difference is the terms of the "contract" --
If I go to the movies and the box office says "Nothing larger than $20" they can refuse to sell me a ticket if I only have a $100 because the size of the currency is part of the "contract" for admission to the movie. They can refuse to enter into a contract with me for a seat at the movie unless I meet their terms, and one of their terms is payment in a suitably small denomination.
They aren't refusing payment for a debt because no debt has been creat
Re:Fiat Currency (Score:5, Funny)
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There is zero evidence that the Economics lie of efficiency every occurred.
Seriously??
There is no way Western Civilization would be where it is today if we only had barter as a means of trade. Currencies were essential.
However, Forbes is still wrong. Bitcoin is a currency. There's nothing about currencies that says they have to not be volatile.
Re: Fiat Currency (Score:3)
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But that's not the point of what Forbes said. (Or the summary is wrong).
As I understood it, he said that Bitcoins are no real money. He didn't say anything about Bitcoins not being stable money, usefull money, or a bad or good idea in general.
every other currency is volatile, too. And IMHO the difference between "real" money and "not real" money should be a qualitative one and not only a quantitive one.
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Why should I buy a car today for $20 000 if tomorrow I expect that the real cost of the car will be only $18 000 in today's dollars?
Ummm...it will. You'll have a used car tomorrow.
Re: Fiat Currency (Score:3)
Chartal theory and Canadian Tire money (Score:3)
When a country collapses, so too does its currency. A sovereign is only as powerful as his ability to force people to use state currency, which is usually done through taxes.
That's called the "chartal theory", and last time I mentioned it in a comment to a Bitcoin article on Slashdot [slashdot.org], not everyone agreed. The Somali shilling and Canadian Tire gift certificates are not acceptable for tax payment, but they are money because they can be used to buy necessities of life.
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Actually, mild/low inflation is important to the economy. It provides an incentive to invest or spend, rather than horde - these keep the economy moving. The key is mild/low - if it is too high, then there is uncertainty in how much is appropriate for compensation.
That's where the problem comes with bitcoin, what was being described above. It fluctuates too much. Backing it is a problem. Of course, in a few years, when we are more comfortable with it, it might well become a viable form of currency, but for
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But that is in no way inheritant to the BitCoins.
Of course it effects the overall usability of Bitcoins, But it would happen to any currency that doubles trade volume just because someone buys a second pizza. So it's not really a useful criteria if something is "real" money.
Floating money (Score:2)
Re:Floating money (Score:4, Funny)
He said "too volatile." Not that it doesn't change but it doesn't swing in value as much.
Oh, who am I fooling? This is Slashdot. The morons here are either super-literal or undeniably obtuse... to the point that they're a mockery of themselves. And they wonder why people in the real world find them awkward to deal with.
36000 foot in a mile? (Score:2)
Everybody knows that:
http://en.wikipedia.org/wiki/Scandinavian_mile [wikipedia.org]
Judo (Score:5, Interesting)
Re:Judo (Score:4, Funny)
I'm all for martial arts metaphors when possible, but this is fucking ridiculous.
Re:Judo (Score:5, Funny)
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Maybe (just.. maybe) he says he doesn't think Bitcoin is money because he doesn't think Bitcoin is money?
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That is some seriously inane bullshit there. I realize that in your fantasy world bitcoin is going to be a huge success and all that money you sunk into this at best zero-sum game/ponzi scheme is going to be worth millions, but back here in reality, we're all laughing at your antics. Look at me go: ha.
Say what, Steve? (Score:5, Insightful)
*All* money fluctuates in value. Yes, even if you run on the gold standard (which I know you favor). Money that fluctuates too much isn't very good for money's intended purpose (as a means of exchange and a store of value, particularly the latter), but you can't say that something isn't money because it fluctuates. Was the Deutschmark not money during the hyperinflation of the 1920s?
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Was the Deutschmark not money during the hyperinflation of the 1920s?
Apparently they were more useful as building blocks [wordpress.com]
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Re:Say what, Steve? (Score:5, Insightful)
Re-read the article. His point is that once a currency becomes *too* volatile it ceases being money. He doesn't say money *has* to be fixed to be useful, just that it is OPTIMAL when fixed. The *less* it fluctuates the more useful it is as a standard medium for exchange.
"Money is most optimal when it is fixed in value..." (Emphasis mine.)
Price Anarchy (Score:5, Interesting)
So my friend told me that his biggest fears are when you go into a market one day and eggs are 68 cents a dozen and you go in the next day and they're $5.92 a dozen
Anyway, yeah, back to Bitcoin
Re:Price Anarchy (Score:5, Interesting)
.... Anyway, yeah, back to Bitcoin ... if you want some entertainment, keep this tab open throughout the day [clarkmoody.com]. So many people are gaming Bitcoin right now that it makes for an excellent show! Behold, the completely unregulated market!
The thing I noticed a couple weeks ago when I first looked at bitcoin price graphs is that the different currencies are not trading at the level which would be indicated by the actual bank exchange rates. Doesn't this indicate that there is not enough volume or FX traders in the system?
It crossed my mind that the differences were due to fees which may apply when converting different currencies. But if this were true, then the graphs of different currencies would at least trend each other. They don't.
If I had the time and motivation, it would be worth investigating opening many international accounts and trading between the currencies using bitcoin as an intermediary.
Odd thing to come from Forbes... (Score:4, Interesting)
Considering that one of their freelance journalists (Tim Lee) on forbes.com is one of the biggest supporters of Bitcoin.
Check out all of the articles he's written about how great Bitcoin is:
http://www.forbes.com/sites/timothylee/ [forbes.com]
I find it amusing that they let this one freelance writer attempt to pump up his personal Bitcoin stash on such a popular financial site.
Of course, this is Forbes... They'll post anything for page views and ad impressions. I still remember the crap they posted about the merits of SCO's pathetic Linux patent infringement case against IBM back in the day, mostly because they loved the negative attention from the Microsoft and Linux fanboys.
No kidding? (Score:2)
This isn't news, unless you disengage your brain.
Right now BTC is, at best, an investment, and I use that term loosely.
Car analogy (Score:2)
so... (Score:2)
Since Steve Forbes is against it, Bitcoin has its first ringing endorsement.
Forbes doesn't seem to be capable enough to run a hot dog stand. Of course I am just a plebeian.
Well then it's a shame. (Score:2)
That inflation exists. Or did he miss out that vital piece of information during his little rant?
Unfortunately for Steve Forbes, the value of things are relative.
Ok. (Score:2)
so we are at stage 3 then (Score:4, Funny)
1) First they ignore you
2) Then the laugh at you
3) Then they fight you
4) Profit!
Not Money != Best Form Of Money (Score:4, Interesting)
Gold, while extremely useful in many ways, is less useful for everyday transactions than our fiat dollar. That doesn't make it any less of a monetary base though for transactions. Bitcoin is no different.
Some people really can't get over the hump of intangible objects. You'd think with thousands of years of intangible religious experience behind humanity that virtual property wouldn't be that much harder either...
Bitcoins = tulip bulbs (Score:2, Interesting)
Relative stability in value is a necessary property of any real currency to remain effective. This is true whether you tie supply to amounts of a particular type of dirt extracted (varies with mining of said dirt - which will kill the bitcoin ultimately just as it killed the gold standard) or determined by human thinking. Bitcoin has none of the properties of a currency - it's just a classic market bubble in a worthless commodity.
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The analogy is sounds, but not at all for the reasons you try to expose.
Bulb tulips were a popular way for investors to save their welth from massive devaluation caused by the practice of clipping gold coins, combined with the special rules of the dutch banking system (free coinage) and the massive influx of precious metals from newly discovered America: gold would flow into the dutch banks, get deposited at facial value in exchange for full(er) coins - or certificates of value which end up buying bullion f
Too volatile compared to what? (Score:2)
When measured against USD, maybe it seems to be. The reality is that it isn't the denomination currency for many goods and services, yet.
Once a piece of bread starts being listed for 0.01 Bitcoin no matter the exchange rate, then where is the volatility you refer to?
What happens when people start getting paid for a set amount of work or services in Bitcoins? Would that seem volatile to you then?
Exchange rates have always existed and always will. People used to pay with grain in ancient times. What do you th
Gold goes up, gold goes down... (Score:2)
Therefore, Gold is too volatile to be money... Sorry all those gold speculators. (and for those of you who do want to get technical, Gold is a commodity, not money, but in almost every corner of the globe gold can be used to buy stuff, so therefore it can be used as money, although again, technically, that's barter.)
I mean yes, if you want to get very technical, "money" is a bartering system put in place by a government, who guarantees that these debt slips can be traded for goods and services. And since bi
Technical Ignorance (Score:2)
From the last paragraph of the article:
We know exactly how this coin is created! At least those of us that know how to read the technical specs and source code of the implementations. It is a strictly designed mathematical implementation that will release a certain number of bitcoins at a certain rate over a set period of time. Maybe to a guy that is used to the money supply tap
He's not wrong... (Score:3)
Remember, kids, the markets tied to the real-world are based on investments - the idea of buying into something which will generate a return for you in the long run, usually a corporation beholden to the shareholders which must prove they have used your money to generate value every quarter. This stability draws more and more investors, which in turn builds confidence and ensures that you will have a buyer when you actually want to cash-out. You could have a million BTC today, but without a buyer, you don't have a penny - and judging from the news, the only way to attract buyers is by constantly screaming "Look at us! You're going to be rich!" over and over until you attract someone willing to accept greater risk than you by purchasing your BTC.
TL;DR - go ahead and play hot potato with your money if you want to, but the rest of us will play in markets that won't lose 50% of their value overnight.
Bitcoins will be money... (Score:4, Insightful)
Comment removed (Score:4, Interesting)
"We don't really know how this coin is created" (Score:5, Insightful)
Of course, you *should* understand the principles of what has to be done, the nature of Bitcoin and the factors involved in it in general (such as the fact there will only ever be a finite number of Bitcoins). But saying that "we" (i.e. humanity) don't understand how it's created is nonsense; what he means is that *he* doesn't understand. "We" created the damn thing entirely ourselves along arbitrary lines!
IMHO, the real question is the philosophical one of whether Bitcoin's creation is an arbitrary, Sisyphian task and whether this makes any sense.
Also, the Bitcoin's value *is* fixed- a Bitcoin is worth 1 Bitcoin, just as a US Dollar is worth 1 US Dollar. Granted, in the real world the dollar is almost certainly a better measure of "absolute" value than the Bitcoin is at present. Still, this doesn't change the fact that in principle it has no more inherent value and stability than Bitcoin, only what it's worth against other currencies- and of course, the dollar is always going to be stable if you choose the dollar as your "stable" currency to measure it against.
(*) I was going to post this on the Forbes site too, but I notice the *first* comment there already made *exactly* the same point.
Re: (Score:3)
I think that you DO need to know exactly how they are created. A big problem for bitcoin in my mind is that they give the early adopters and proponents a huge advantage over than latecomers. I want to know if the person who invented this is sitting on a fortune versus being just a guy who donated the idea gratis without any monetary compensation for it.
In some ways it is like someone finding a big mine of worthless kryptonite. They spend a year mining the kryptonite and getting a horde stored away. Then
Cyprus Would Disagree (Score:3)
"Money is most optimal when it is fixed in value"
While it may be true that currency can be too volatile, Cyprus would disagree that a fixed value is ideal. Cyprus is on the Euro, whose value is based on something more stable than Cypriot econmics (ie: the economics of the entire EU). The debt in Cyprus got too big to be supported by the modest production of the island nation.
That is a bad thing in itself, and governments should not let such things happen, but what happened next is worse. Normally a country would devalue its currency in this situation. That's bad, because it generally leads to further devaluation of the currency, and in extreme cases can lead to hyperinflation. But when the currency can't be devalued, and the country doesn't have the money to service its debt, things get really unpleasant.
In the end, the EU wound up bailing Cyprus out, but things were getting really nasty. The Economist has a good article. [economist.com]
Comment removed (Score:5, Interesting)