Slashdot Mirror
Steve Forbes: Bitcoin Not Money
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."
What what exactly is the value of the US dollar?
I guess his never heard of factional banking and money printing press call the federal reserve?
So... he doesn't use any money i guess?
...that the value of money changes all the time?
What fixed value does the dollar have?....
oh that's right it doesn't
too. For exactly the same reason.
How is the value of currency fixed? You can't buy hamburger for the exact same price, year after year, not even day-to-day.
Everybody knows that:
http://en.wikipedia.org/wiki/Scandinavian_mile
These measurements don’t 'float.'
then there is no money. it all floats.
What exactly is it fixed against?
The main premise in Judo is to use opponent's strength against them. Forbes knows he sounds snooty. Which is why he takes on a position contrary to the one he actually wants to advocate. Let's say he loaded up on Bitcoins and he wants them to go up. His choices are (1) stay silent; (2) promote it; (3) oppose it. Staying silent obviously will not help him cause. Promoting it will not help his cause because the kinds of people who would take him at his word are not the kinds of people to seek out an alternative currency (he is all about orthodoxy). But he can use the fact that anyone seeking to oppose orthodoxy would do the opposite of what he'd recommend (this is Judo). Oh, and if he really didn't think much of Bitcoin, he would simply not comment.
Any guest worker system is indistinguishable from indentured servitude.
*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?
One of my childhood friends does internal auditing for a large bank. One time I asked him what his biggest fears were (having been able to look at all the books) and he told me at the time it was actually price anarchy. This was around the 2008 time frame and he was trying to describe a situation where nobody knows how much money to charge for something. I later heard a This American Life episode that details life in Brazil when something like this happens.
... and you can go to the store management and they're looking at some graphs at the beginning of each day to set their prices but they're doing guesswork because the money fluctuates so quickly. So my friend's real fear was that there's some point where that swings wildly out of control and -- similar to the bank runs that happened before regulation -- weird swings cause people to act erratically and irrationally. And those actions cause the swings to get even wilder and suddenly you have price anarchy where nobody knows what anything is worth at a given point in time. The funny part is that on some days he would watch the terminals and freak out and go withdraw as much money as he could from the ATM to hedge into some liquid assets since he kept everything in the bank. That amused me because by using inside information he was performing what were erratic behavioral patterns ... but I guess that's another discussion.
... if you want some entertainment, keep this tab open throughout the day. So many people are gaming Bitcoin right now that it makes for an excellent show! Behold, the completely unregulated market!
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
My work here is dung.
Ever hear of a thing called "inflation"?
How about "Exchange Rates"?
Both fluctuate daily, if not hourly - especially, exchange rates.
Money in any form is an abstract concept. 16 ounces of beef is a physical measure. Abstract concepts vary by each user. A physical measure does not.
Why do you think gold has a constant real value, but a varying monetary value? Did the physical effort to mine the gold change? Nope. That is quite stable over time.
The only changes have been purely abstract "value" changes, and has no relationship to reality.
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/
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.
I have no love for bitcoins, as I believe the currency will suffer a huge collapse in value in the near future, but the whole "money must have a fixed value" bit is countered by example from every nation in the world. Sounds like a bunch of Ron Paul hocus-pocus.
I am LAUGHING MY HEAD OFF.
These measurements don’t 'float.' So too money best lubricates commerce when it has a fixed value.
Yeah, by fixed value, you mean diminishing value. Print off $50-$100B per MONTH and see what happens. You can call it dilution. You can call it inflation. This is only the money that we know about without a full audit which would tell us about what is really going on between the Federal Reserve and other states' central banks. The only reason that the dollar is still worth anything is that it has inertia. The US dollar was used for trade worldwide because the US imported AND exported great amounts of good. The US is fortunate that for the time being the petrodollar still exists. Once another currency or multiple currencies take its place, the dollar is doomed.
But my car is still a car.
This isn't news, unless you disengage your brain.
Right now BTC is, at best, an investment, and I use that term loosely.
Learning HOW to think is more important than learning WHAT to think.
So too money best lubricates commerce when it has a fixed value.
I had to blink, shake my head and read that a few times and it still doesn't make much sense. Is gold, the supposed basis for our money, money? It's value is fluid, changing several times a day, or is gold simply a commodity upon which the value of money is based?!? In either case isn't the value of money fluid?
What about inflation? I've heard it referred to as both the change in cost of an item or service and the decline in the value of money. We can also being loans into this and the idea of paying someone back in the future with money that is worth less than what we originally borrowed. Almost forgot currency exchanges...
Just thinking about how absurd Mr. Forbes statement sounds makes my head throb with contradiction.
Does Mister Forbes not know economics? All currencies can increase and decrease in value relative to one another. Within a country, a decrease in the value of money (and an increase in the price level) is called inflation.
Ironically, bitcoin production is similar to gold (it is "mined") and the quantity is fixed in the short term, similar to the gold standard, which Forbes thinks is a *great* idea. Steve Forbes thinks the "gold standard" is an okay model for currency but not bitcoin?
Finally, the spikes and volatility in the bitcoin values stems from:
* a lack of liquidity (it can be hard to trade bitcoins because trading sites are currently unreliable, subject to DoS attacks, etc.)
* the newness of bitcoins (as a relatively new currency, it doesn't have a track record)
* the lack of the perception that bitcoins have value (most people recognize precious metals as having value, but not an abstraction like a bitcoin).
If bitcoins became more widespread, and the market more liquid, it is quite possible the volatility would be reduced.
Mister Forbes should take an economics class before he talks about... economics.
Bitcoins aren't money in the same way that gift cards aren't money. That prepaid card at the gas station isn't for X gallons of gas, it's for some artificial amount called dollars that can later be traded for gas.
Inheritance is the sincerest form of nepotism.
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.
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.
...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!
So it might not be your definition of 'money'. But, it's something that has value and can be used to trade for other currencies, goods, and services. What is it?
and not a one of them favorable. I wonder why.
1) First they ignore you
2) Then the laugh at you
3) Then they fight you
4) Profit!
Not many people have bitcoins yet. So it is possible that as usage increases the volatility will come down. The values of all currencies change but because of the amount of currency in circulation, its value does not change much. The comparison with weights and measures is nonsense.
I'm sure the storm above this post has already pointed this out, but just because something is not the best form of it's kind does not automatically mean that it is not of that kind.
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...
Patience is a virtue, but haste is my life.
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.
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 think happened to prices of grain when there was a storm or a bad crop? Do you think it was less volatile? Did that mean people didn't use it as currency anymore?
Mr Forbes, with all due respect, your argument is simplistic. Currencies have value and exist because people believe in them. for any national currency, you are basically running credit risk against the national bank that they could ultimately refuse to exchange your Local Currency against another currency. With Bitcoin there is no central agency against which you have exposure to, you are exposed to each single individual using Bitcoins and all the people that are willing to buy them. Your risk is basically that no-one will buy your Bitcoin in exchange for a service or another currency/asset.
Artificial intelligence is no match for natural stupidity
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 bitcoin isn't backed by a government, then yes, it's not money.
If telephones are outlawed, then only outlaws will have telephones.
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.
* Winners compare their achievements to their goals, losers compare theirs to that of others.
Remember way back he was advising his readers buying real estate, at the same time he was secretly dumping it?
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 being turned on and off on a whim might not understand that concept though.
Maybe we should stick to the instruments that the people on *his* side designed so that *we* have absolutely no idea how they work in managing to bring the global economy to halt except at the very top.
Listen to my music.
There have been enough "millionaires" minted by BitCoin to ensure it has a place for some time as a purely speculative market, and a speculative market can be just about anything - goods, services, money, pork chops, anything that people want. Regardless of whether the fanboys think it will become a real currency or not - usually by asking retarded and self-explanatory questions like "What is the exact value of a U.S. Dollar?" - BitCoin has now drawn the attention of every get-rich-quick schemer and arm-chair investor on the planet, and rightly so - there is likely still some good money to make if you don't mind extreme risk. Unfortunately, all of this just adds to the volatility, which will ultimately keep sane, stable, financially-minded people out of the BitCoin market.
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.
...when you can pay your taxes with them.
http://www.oanda.com/lang/fr/currency/historical-rates/
http://bitcoin.clarkmoody.com
One of these changes more over the same time period than the other.
"We don’t really know how this coin is created. You can’t have a functional money without a basic transparency."
I remember when journalists actually learned about what they wrote about.
The biggest problem I can see with bitcoin is its value is directly related to its popularity. Where dividend yielding stocks will give you a return in a currency the government will always use, bitcoin's value is always tied into what you can get cashing it out. If it wasn't for bitcoin's strengths (as difficult to exploit, steal, and sieze) and the resilience of the Internet, it wouldn't be as successful as government backed currency.
A mildly amusing conclusion I inferred about bitcoin's design: the same conditions required to break the network (having over 50% of the mining performance) are the same conditions required to devalue the currency (excessive mining and dumping).
Economically illiterate libertoon nerd rage avalanche imminent.
On a recent Intelligence Squared US debate on NPR, Forbes made the exact same "feet in a mile, minutes in an hour, etc" argument against the dollar.
I don't feel like reading TFA; but Forbes probably means "reasonably stable". A truly fixed value is not possible, even with a gold standard. Yes, even gold can inflate due to new mines being discovered. It can easily deflate due to hoarding and temporarily inflate due to dumping. It's quite volatile.
If Forbes didn't explain it in his piece, what he should be groping for is, "reasonably stable store of value". The US dollar works as a reasonable store because if I sign a contract for $200,000/yr, I can reasonably expect that $200k is still a nice chunk of change at the end of the year. Inflation doesn't become a problem until it's so wild and unstable that the contract has to be written in something other than your nation's currency to ensure that it's still a "nice chunk of change" at the end of the year.
Within a generation of the Roman Empire collapsing, and hence the tax man no longer being a problem, people stopped using currency and reverted to barter. In the 19th century, the British engaged in all sorts of social engineering to get Africans to work for money.
Then the British must suck at education. Money is so simple a capuchin monkey could use it.
is the fact that bitcoins design explicitly resists things like command and control from a centralized banking institution. sure, it makes bitcoin far more volatile than other currencies, but the fact that one group of people cannot arbitrarily decide to revalue the currency means that risk inherent in bitcoin investment comes with it a monumentally more concrete level of consequence. The problem with the dollar, as we've seen, is that if ever we get too far in over our heads with irresponsible investment like 'credit default swaps' we can simply "hack" our way out of the free market by injecting a ton of extra cash and propping up institutions with lemon socialism (warren buffets choice of purchase price and terms for an auto maker, or a bank for example.) Bitcoin economies have the real potential to destroy houses of finance and investment that do not respect them. they also implicitly mandate a more even playing field for things like wealth and equality as free market capitalisms inefficiencies and dangers require not just tacid but overt acceptance and understanding. fairer prices for housing and the outright ban on deceptive lending would be nearly impossible to avoid, meaning many forms of credit might not continue to exist.
Good people go to bed earlier.
that we never had this tool and member of that lucky sperm soapbox club (my favorite reaction is best said in italian: "rimasta qua" while gripping the throat... 'he remains there'... meaning he is inedible.. POISON.) I MEAN THANK THE G-D THAT I HOPE EXISTS THAT WE NEVER HAD THIS YAHOO INTELLECTUAL HEAVY LEADBALOON AS A PRESIDENT. i bet he is still claiming tax deductions from the 'charitably' administered tax exempt loan and interest repayment capital gains on his election run from last millennium pax et bonum.... st robert ''13
...and which one it is, depends on the time period considered.
Maybe we deserve this world ?
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, 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.
Gold is not what is "fluctuating" every day. Gold increases when it is mined/refined and decreases when it is used for production or for jewelry. What is fluctuating every day is the amount of needed to buy an ounce of gold.
> 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.'
This guys world view is obviously based on what he learned in kindergarten.
Standard size for hamburgers? Who spun him that yarn?
A mean solar hour? Apparent solar hour? With or without leap seconds? a credit hour? a man-hour?
A survey mile? statute mile? nautical mile? scots mile?
None of his examples are anywhere near being static values, they float. I suspect he treats financial data as float as well. Ba-dum-tss.
The real problem with bitcoins is that they are dependent on Exchanges (just as dollars are dependent on banks.) At the end of the day, the value of the bitcoin is entirely dependent on our faith in (value of) the bitcoin exchanges, just as dollars are dependent on our faith in the banks. As you know, dollars are reserve notes, i.e. a loan from the bank. Yes, while today there is no official backing commodity like gold to the reserve note, there is an implicit one: if the dollar theoretically collapsed in value, the government via the fed would prop it up. So, as long as there is our government, the fed, and a banking system, we will have the dollar. Thus the dollar's fate is mostly tied to the world's faith in the US government (- understandably there is some risk here, reflected in the day to day changes in value.)
The concept of bitcoin was that it would create a currency that could be used without Exchanges (banks) through direct barter, a promising concept. But unfortunately, there will not be enough bitcoins to enable such a use. The cap of bitcoins means that eventually a fractional ownership model must be implemented, and such a model requires exchanges. At that point, your 1/100th share of a given bitcoin is really the domain of an Exchange, and thus the value of that share is tied to your (and the world's) faith in the institution that holds your account. But, unlike the dollar, that institution is not backed by a federal banking system or government. Thus, its value is entirely based on your faith in the institution alone.
Today, the value of bitcoins is very much tied to our faith in a handful of exchanges. When one exchange is disrupted, we see wild swings in the value of bitcoins.
So, all we've accomplished with bitcoins is to replace a central bank like the US Federal Reserve with a far far far far far far smaller collection of exchanges which could go away tomorrow when the guy running it decides he wants to go climb Mt. Everest instead.
The value of Bitcoins is that they cannot be issued and they really cannot be confiscated (well, it's much harder to confiscate your Bitcoins than your fiat currency you have in a bank).
Bitcoins also allow for almost instantaneous transactions over the Internet that cannot be reversed, so one Bitcoin is in exactly one location at any one time. There is no tax a government can levy on movement of Bitcoins from one wallet into another.
For these reasons Bitcoins have value of their own. They are a way to move money around. They are really not money in the traditional sense, they are not a good store of value because they have no intrinsic value, it really is based on the size of the network that uses them I think, but they are a good way to transfer purchasing power.
You can't handle the truth.
Does anybody else think that he might have shorted Bitcoin back when it hit 50 or 60 USD?
But once our government (like so many) decided they wanted more control of the peoples' money via Central banking, they and their comrades get richer and the middle class suffered from the loss in value of their currency. How many dollars to an ounce of gold (or anything else) now? The Federal Reserve Act of 1913 provides even today unlimited funding for gov programs via the Federal Reserve's printing presses. The FR makes sure their banker friends get a huge cut and then provides some back to the politicians to get them re-elected. This is a story covered in many other places on the internet.
To summarize, I'm not sure if Bitcoin is a good investment or not. After all, does it have any true item backing it that has value? But then again, does the dollar? Isn't it a Joke (and hypocrisy) to deride one currency and ignore the other's problem with a constantly downward spiraling value? At least with Bitcoin, it's heavily encrypted and not controlled by the same people that control the dollar. That alone gives it fascinating possibilities.
Pounds used to have 12 ounces, now the usually (but not always) have 16. But buying with Bitcoin or Dollar doesn't affect how many ounces are in a pound, so it's difficult to see what he's getting at.
Tell this to the gas companies...
Saying "we don't really know how this coin is created" displays the author's fundamental misunderstanding of the phenomenon. You don't need to know the exact technical details- and I don't either- to understand that the process of bitcoin production is clearly defined and entirely transparent (for those who *do* understand the technical details). (*)
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.
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
Despite the name "bitcoin" I thought the intention was that they were to be a traded commodity not a monetary currency. The name I assumed was in reference to video games, where you "earn" coins using your bits (mining etc...)...
The fact that they have fluctuations would be in line with commodity speculation compounded by design limited scarcity and centralized holdings. They fact that you can in some contexts actually use them as "money" is something that is still premature as many will point out.
Forbes' comment is rather silly. There is no known item or possession that has a "fixed value". Prices are set by a complex social interaction. If he'd said bitcoin's value fluctuates more than other currencies, then that would make some sense.
Kythe
Money is an odd concept, really- it's a matter of shared belief in its value. As others have pointed out, in the age of fiat money, currency has no inherent worth. 1 US dollar represents, quite literally $1 worth of full faith and credit in the US government. Were people to, en masse, decide that this was worthless, and to refuse to accept US dollars, then all the dollars in your wallet- or bank account- would be literally worthless. Money has value specifically- and only- because people doing business agree that it has value, and will therefore accept money in exchange for goods or services, rather than demanding barter- that is, exchanging goods and services for other goods and services.
Bitcoins work in exactly the same way. They have value specifically- and only- because people agree that they have value, and will therefore accept Bitcoins in exchange for goods and services. Were people to, en masse, decide that Bitcoins were worthless, then they would be worthless.
Forbes shows his clueless with his comparison of money to measurements that "don't float." If he had a clue, he'd realize that, under the Bretton Woods system, national currencies *continually* float relative to each other in their value.
-Z
Ask and you shall receive: http://www2.egovlink.com/press-release-bitcoin.cfm
Definition is something I look for when thinking about increasing the population.
I think what most people don't understand is that Bitcoins don't have to "be money" to fulfill the role that they are used for. As they become more and more mainstream, the value of a Bitcoin will become absolutely unimportant. The only thing which will be important is that the operation money --> Bitcoins --> money happen as fast as possible. That is the usefulness of Bitcoins. Transfer money securely from A to B as fast as possible and with as little hassle as possible. If enough transactions take place continually (which will be the case as it becomes more and more popular), the price fluctuations of Bitcoins will be negligible for normal users who will be holding Bitcoins for a very short time.
The value of a Bitcoin does not matter except to hoarders and speculators, and by repeatedly talking about them we are giving way too much attention to something which is not the point of the thing. If the volume of transactions happening continually is high enough, Bitcoins can probably exist with little/no hoarders/speculators and no effect on users, as most of the coins will be constantly transacting and not sitting around in someone's account, gaining/losing 50% value in a day.
We don’t really know how this coin is created.
Translation: I don't have a clue about how it works, so it is bad.
There is a very clear explanation of how Bitcoins are created and the system that creates them, for anyone who cares to look for it and read the explanation, but why would Mr Forbes do that before writing about the subject?
"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.
Stop-Prism.org: Opt Out of Surveillance
BitCoin is not a currency but a commodity and behaves like one; a very volatile one at that. Money's function is to act as a means of storing value; I can do 1 dollar of work, get a bill and keep that to buy 1 dollar's worth of food and be assured it will be still roughly the same amount in the future. There is little volatility, especially short term, in prices and thus people have faith in Dollars or Euros as a means to store value. BitCoin's volatility make sit suspect as a means of stored value since you do not know what it will be worth tomorrow or even the next hour. You may take it on speculation it will go up (and many people buying it are doing that) but that is a standard commodity strategy; not a monetary one.
To add to the problem BitCoin faces is there is not assurance you can sell as much as you want at a quoted price; no one makes the market so if you put in a sell order for 100000 BitCoins at $250 who ensures you actually get that price? Exchanges close when faced with too much volume; not a good thing to build trust especially when that volume is a tiny fraction of other commodity exchanges. In addition, there appears to be no derivative market for BitCoin; no futures, no short sells, etc. It's more like buying the actual grain than a futures contract.
People like to compare BitCoin to gold but BitCoin is more like Dutch Tulips - a pure speculative play. Despite controls on production there is no way to prevent someone from creating ByteCoins to compete in the market as a substitute which could lessen demand for (and value of) BitCoins.
I'm a consultant - I convert gibberish into cash-flow.
It's disappointing to see articles like this, because it doesn't separate out two completely disjoint concepts: where Bitcoin is, versus where Bitcoin going. Bitcoin has the potential to behave very much like a stable currency system, and at a certain threshold it will. But that threshold is very high. Probably at the $2,000/BTC range (which corresponds to about $25 billion market cap). Once it reaches that level through legitimate growth, then the depth of market exists to absorb all this insanity. Right now, any gambler with a million dollars can swing the market around (and manipulate it) because even the biggest exchange (Mt. Gox) doesn't have enough volume to swallow those gamblers into the noise.
So what Forbes should've said was "it's too volatile, right now, to be used as a stable currency/barter system." For individuals and businesses to actually hold BTC for more than a few days, the volatility has to come down. But he missed the point that depth of market solves that problem. So there is a bit of a chicken&egg problem here, but it's one I think Bitcoin will overcome -- it's virtues are still highly-valued, and lots of people still take on that volatility risk to help grow the system and benefit themselves (such as merchants enjoying the absence of chargeback possibility).
If you plot $ vs bitcoins you will see that dollar change as much as bitcoin in a bitcoin vs $ plot.
As demonstrated recently, the price of gold can fluctuate wildly over a few days, so it's not optimal as money. Oh, wait. He's talking about bitcoin, not gold or the many floating currencies that are traded, which fluctuate up and down too. *Completely* different things, apparently.
What the hell is he talking about? More volatile, sure, but so much so that bitcoin can't be used as money? Hard to say. There's certainly nothing here in principle that prevents it from being used as such.
About the only downside to bitcoin is that you can't bonk someone on the head with a heavy bar of it (gold), and you can't burn it in a fire to keep warm (paper money). All three share the feature that you can't eat them when you're starving, and people may not be interested in trading them for food when supply is short.
..when you can pay your taxes with them.
Bollocks !
Read about the the Iraqi Swiss Dinar during the inter-war period.
http://en.wikipedia.org/wiki/Iraqi_Swiss_dinar
http://people.ischool.berkeley.edu/~hal/people/hal/NYTimes/2004-01-15.html
The Kurds used the notes as currency despite the central banks no longer accepting them, not being able to pay taxes with them, and new notes no longer being printed so that the existing ones were all falling apart.
By that logic, Forbes must also say dollars are not money. I'm all for bitcoin criticisms and still don't use it myself, but why do all the arguments against it always have to be so STUPID and usually equally applicable to "conventional" currencies? It leaves the impression that these people are all PRO-bitcoin, trying to persuade the rest of us with strawman arguments. If bitcoin easily overcomes 99% of its criticisms, we might overlook the remaining 1% and who knows? Maybe somewhere in that 1%, there is a real thing to be concerned about.
I found last week's article in The Atlantic more informative: http://www.theatlantic.com/business/archive/2013/04/bitcoin-is-no-longer-a-currency/274859/
I really do think that Mr. Forbes is ... overrated. In this case, I would like to ask, what currency has ever been fixed in value? (If he answered, "gold," sorry, but not true at all, never has been, never will be.) I believe that he actually means, fixed in exchange rate, but that is not at all the same as value.
Having said that, it is amazing to me that Bitcoin apparently learned nothing from 5000 years of economic history, but that is off-topic here.
Bitcoin is what I trust, certainly not funny money made up by fucking suits followed by fucktards.
... one could argue that Steve Forbes has less insight into the value of a dollar than the kid flipping burgers at Mickey D's. When I even listen to Forbes, I take everything he says with a huge grain of salt because whatever stand he takes on an issue or policy is based, primarily, on it making him more money. Once he figures out how to exploit bitcoin to his advantage, he'll be singing a different tune.
CUR ALLOC 20195.....5804M
The basic reason: it has no fixed value. It trades like a stock or commodity. In recent days it has been crashing after a spectacular rise in terms of dollars.
Has the man never heard of FX markets? Currencies trade exactly like stocks or commodities. They don't have a fixed value either.
no taxation without representation!
The ability for governments to print money is a key weakness in current fiat currencies. This has acquired a new euphemism in recent times in the form of 'quantative easing'. The idea of a gold standard is to back the currency on a fixed resource. It is, however, too tempting in the world of fiat currencies for governments to fiddle currencies to their own interests. Backing things on a process of computational difficulty and complexity presents us with a method of internally regulating the value of a currency so that it is impossible to just print money. Of course, bitcoin can't recycle lost bitcoins, so there is a problem there to be fixed. But having systems of underlying financial rules backed by computational complexity so that it is just infeasible to play financial silly-buggers as happens in the financial worlds of today is, IMO, the way of the future and Bitcoin is but an early example.
-- The Grand Teddy Bear has Spoken: "Windows 8 Source Code Available NOW! more disgusting than your pr..."
The United States can't be trusted by anyone, because they feel entitled; they believe their dollar, and those who manipulate it, to be impervious to error and to be of the highest moral fiber, their every bullet to be destined by God, every border passed, a new imperial victory. I wouldn't trade a penny with those, but would live with the > %60 of Americans who also stand against the criminals of governance.
What ever the money is, it's not your country, for sure.
because thats exactly what most bitcoin "get rich quick" people are going to need in time, maybe they can purchase some on silkroad
In related news, 99.9999% of American billionaires named Steve Forbes don't have a grasp on basic economics.
Though as I pointed out earlier, using computational complexity and hard limits to prevent money-printing is an approach that needs to be explored. Bitcoin is but the first example.
I has an easily calculated fixed value : 1BTC = 1/#BTC, i.e. a bitcoin's value is determined as a fraction of the total available BTC (which you should take to be the asymptotic limit that the total number of BTC in circulation tends to.
The problem is a problem with world currency and money systems where there is no absolute value of units such as dollars. One cannot resort to a simple calculation to work out what an individual dollar is worth, nor the amount of total value once one adds the worldwide base of GBP, EUR etc. Thus there is no reliable way to calculate exchange rates. Bitcoin's internal regulation by cryptographic hashing processes means that the number of BTC available worldwide is more stable, but of course what happens if one devises BTC2. What if we have ten thousand equivalent BTC-like currencies all with the same asymptotic total. We have the real world problem that we see with intellectual property where once something becomes copyrightable or patentable or otherwise 'rightable', the total amount of stuff that can be bought and sold magically increases. The addition of BTC to the base of what can be traded in transactions just adds to the complication, but the underlying problem doesn't go away if you remove BTC.
And this is the source of money's problems. It makes acquiring power through accumulated wealth too easy and reduces the measure of value of an object to a single dimensional quantity. What I mean is that with a money system, if I can sell objects A and B for $100, I can by anything that can be bought freely for $100, say C or D. In a more complex barter system, it may be that I can dispense with A and B and acquire C, but not D. Personally what I think is needed is a global universal barter system with well thought out systems of valuation and value regulation, which are enforced by laws of mathematical complexity. Anything less is too open to abuse by selfish governments and greedy bankers.
That is why the second is determined by atomic clocks, and the metre determined by the speed of light relative to said second. The kilogram is slightly less precisely defined, but isn't subject to ready modification to hide overspending by the current or previous government. We need a system like fixed weights and measures for money, and a BTC-like system using computational work and mathematical complexity as the foundation is the only real way to do it, just as the second ultimately needs to be determined not by governmental whim but by laws of nature that we cannot change.
But how much hamburger I get for a dollar does change, and changes regularly, and varies depending on the quality of the hamburger and where I go. A second is defined relative to precise physical quantities and we cannot order the Federal
-- The Grand Teddy Bear has Spoken: "Windows 8 Source Code Available NOW! more disgusting than your pr..."
I work for Euro and convert to GBP, I have done for years. The values of both of these 'float'.
"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.”" The value of money changed [is manipulated] all the time. The only way to prevent that would be to have it's value fixed to a tangible asset like Gold. However, the last few days have shown that even paper gold isn't necessarily backed by real gold, so how would we ever know if the gold behind a "gold backed" dollar ever existed? Protip: We wouldn't.
Forbes' comment is right on the money (no pun intended). I'm a proponent of the Bitcoin project, but what we've seen in recent months is ridiculous. What Bitcoin community needs is for BTC to be accepted as a form of payment. The volatility that was created by the speculators is discouraging acceptance of the BTC by the business oweners. I personally think the value of BTC is in it's convinience and anonymity, not in its exchange rate to the dollar.
First of all, US currency is not issued by the government. Pull out a dollar bill and look at it, read the markings. Dollars come from the Federal Reserve, which is not actually part of the government but rather a consortium of banks. If you knew half as much about economics, finance, money, math, or government as you claim, you would know this. Why on earth you were moderated up for that kind of outright lie is anyone's guess.
It likely just shows that either you still have active fellow cult members here, or you have a sock puppet with moderator points. Either way it's the same game from you, you seek to increase power for the wealthy and deliver fascism for the people.
but they are a good way to transfer purchasing power.
In a number of aspects, no they aren't. Black-market money has no real protection.
A pound of coffee = 12 ounces now. Go ahead look at the bag of starbucks coffee and see how it's not a pound, but you still pay the "pound" price... Most other coffee packages have also started scamming consumers that way.
Do not look at laser with remaining good eye.
So... Steve Forbes doesn't believe in the stock market either? I mean, you can't make money that way, it's too volatile! When it crashes, it takes trillions in wealth and just EVAPORATES!!!
OMG. Forbes might actually have to work for a living!!! Seriously, has this guy ever even wiped his own mouth with a napkin or does he always pay someone else to do it?
If telephones are outlawed, then only outlaws will have telephones.
If a city created money and surprisingly people actually used it, it would have trouble fluctuating against other money as well. BTC has to get much larger to help stabilize it. The only thing it lacks that all other money has had is a location that requires it's acceptance. That provides some grounded stability. BTC has no "home" but that doesn't make it not money.
Other than the Swiss Franc, is any other money really traditionally money anymore? They represent debt since the gold standard died off; its all academic now (except the swiss.)
Ask and you shall receive: http://www2.egovlink.com/press-release-bitcoin.cfm
"Integration with a backend payment processor provides the municipality with US Dollars that they expect."
In other words, you're actually paying in dollars. You sell a commodity for money and then transfer that money to the municipality. Bitcoins are no different than any other commodity here. In particular, you cannot predict how many bitcoins the bill represents until you sell them.
"They laughed at Columbus, they laughed at Fulton, they laughed at the Wright brothers. But they also laughed at Bozo the Clown."
The establishment is afraid. That is why you are seeing the negative anti-intellectual arguments. BitCoin could upset the current system of the world. The people at the top of that system are afraid of that happening.
bothering, not bothinging. Typo, before anyone jumps on me
How is the value of currency fixed? You can't buy hamburger for the exact same price, year after year, not even day-to-day.
The dollar is a lot closer to fixed than the bitcoin. I went to Arby's and bought a junior roast beef sandwich for $1.07 including tax. This price hasn't changed for a year.
In the article Forbes regurgitates two neoclassical myths - first, that money evolved naturally out of barter systems, and second that money is an expression of fixed material values grounded in processes of production.
On the first point, there is no evidence in history that money evolved out of barter systems, and a great deal of evidence that it did not. As the anthropologist Caroline Humphrey says:
David Graeber adds to this:
On the second point, Forbes' asserts that money is "optimal when fixed in value", that "money has only one purpose ... buying and selling products", and that it is a fixed unit on the same order as material units (ala "hamburgers"). Here he is recanting the whole neoclassical bible, which states that economics and politics are separable, that government should stay out of economics or (our future standard of living will suffer), and that money is a natural expression of processes of production grounded in material value.
The castle of neoclassical theory is, however, far from complete, as the 2008 crash so clearly demonstrated. Worse, Forbes ignores this and continues to repeat neoclassical tenets as though they are fact.
Take Forbes statement that money is "optimal when fixed in value." At the limit case, this is clearly false. Assuming for a moment that money could be fixed in value, like a kind of physical unit or a determined expression of material value. Of course, this raises two issues: First, there is the problem of which material value to anchor to. Then there is conversion problem: how do we convert all other values into this fixed material unit? Assuming these could be solved, this would suggest that prices remain constant, much the same way the speed of light remains constant. How then do you explain profit, or any market at all for that matter? Clearly, Forbes must allow for at least some level of price setting, which then in turn suggests variability or "floating" of pecuniary value. Unsurprisingly, in empirically terms, no modern democratic currency is based on fixed values. The opposite is the case: currency itself is treated as a commodity that can be bought and sold on markets, and this is only possible because money does not have a fixed value.
But if monetary value is variable and not linked to material goods, what are the units of money? The answer, in neoclassical terms, is to base definitions of money on a fictitious unit, the util. Since the util is abstract and not observable directly, there remains the problem of how to measure it. Current definitions are claimed to be "reasonable" and "generally accepted" but economists. But utils remain an idealization, and hardly the known unfloating physical quantity Forbes suggests. Forbes simply glosses over or ignores the of the uncertainties and shortcomings of marginal utility theory. Nitzan and Bichler make this case convincingly in their excellent if controversial Capital as Power. They summarize:
The reason the folks whose wealth is tied to old style monetary instruments are up in arms is that currencies like bitcoin are out of their control. Even metals upset them. It's harder to manipulate them than it is fiat currencies, although the last few days has shown that the world's wealthy still have a pretty good grip on those.
Money beyond the control of easily purchased governments is probably the biggest social revolution that could occur in the world at this point.
So Mr. Forbes's response is quite predictable, and will be repeated endlessly over the next few years in the corporate-owned mainstream news echo chamber.
In the end, of course, reality wins. Robust, bottom up systems prevail, just as they did when the Mayan heirarchy (and ecology) collapsed, or Rome fell, but that could be decades away, after a few more economic disasters and permanently high energy prices coupled with tight supplies.
Cheers!
Please do not read this sig. Thank you.
Steve "just doesn't get it." Never has. Should've learned from his dad, but he apparently did not.
Volatility generally declines as trading volume increases, similar to common stock. Bitcoin is still in its infancy, and there are a lot of places you can't spend it. I don't think a currency derived from converting electric energy into heat is a particularly good idea, but that does tend to tie its long-term value to the cost of electricity, for better or worse. Its value is likely to trend steadily up over a decent time horizon. Large percentages being "stored" in a relatively few places is bad news, since every time one of them is hit, uncertainty results in volatility. So... decentralize, and increase its acceptance. Stability will follow.
I seriously doubt Steve is ignorant enough to store most of his wealth as dollars. He just converts some shares of whatever to dollars by selling them whenever he wants to buy something. So he does NOT think the dollar is a good store of value, either. It's too volatile, and its value decreases over time relative to most other things. In fact, the FED tends to adjust the money supply so that its value does decrease slowly over time, most economists believing that a low rate of inflation is better for employment and output than zero inflation or deflation.
Heck, that's not even the real problem, (governments printing their own money). I wish it were only that simple a problem. It could be managed through laws.
As things currently stand, money is borrowed by nations from global banks, at interest, and then injected into the economy.
This means that as debt increases, the governments have to borrow more from the banks in order to keep things liquid. When usury and interest bearing loans enter the picture, there is instantly and automatically more and (exponentially growing) debt than there is currency. There is only one end point to such a scheme. Disaster and/or debt slavery where a small group of super-wealthy private bank families control everything.
I WISH we only had to deal with the problem of government fiddling their accounts for their own benefit. At least that way there would be a chance for the populace to regulate things. With the current system, it's impossible to escape doom.
We're experiencing it today.
It's true that no physical token of currency has any real value. Likewise, the electronic currency stored as numbers in computers has no intrinsic value. The only thing that really has value is energy - it's what allows us to survive, eat, reproduce, do work, and improve our standard of living.
There are actually a number of proposals to use energy as money. It makes sense because, even as it depletes through entropy, we receive more of it from the sun, nuclear isotopes, etc. Energy is the only currency that can't be counterfeited. I suggest we call the units "precious joules." :)
http://www.theperfectcurrency.org/main-energy-currency/energy-currency
The filthy-rich lecturing the great unwashed about financial 'integrity' would be very funny if not in actuality sad and deadly.
No doubt in my mind Steve "Richie Rich" Forbes personally knows at least fifty people (white guys) who in a more just world would be in PMITA prison or had been dirty-brick-walled by now.
Both gold and silver have considerable volatility. Silver once had a Bitcoin-like spike, back in 1980, when the Hunts cornered the market. But silver hasn't been a currency since the 1960s or so.
Bitcoin behaves like a penny stock. The market is small enough that it's easily manipulated, and it is. Bitcoin was supposed to be a currency, but it's used mostly as a speculative vehicle. Now the volatility is too high for it to be used as a currency. If you can't convert a Bitcoin to another currency within a few minutes, you can lose big. You can't price anything in Bitcoins unless it has a huge markup.
It doesn't help that most of the "Bitcoin exchanges" and almost all the "Bitcoin wallets" either went bust, turned out to be crooks, or both. Mt. Gox is widely suspected of front-running (putting favored orders ahead of others) during periods of rapid price changes.
The US dollar, which BTCtards and gold worshipers love to hate on as being problematic, usually changes about 2-3% per year in terms of real value. Real value here means the amount that a given nominal denomination buys you. Inflation for the USD is around 2-3% normally for the past several decades. There was a time when it was up near 10%, and that was considered very problematic by the government and they worked to change it (successfully). Those are yearly changes, and are quite consistent.
Now how about BTC? Well it is known to have a 10% bid-ask spread on occasion. It has increased in value by 600% in two months time, and then fell to 50% of that in just two days.
Now THAT is some instability. It has more change in a day then the USD does in a year. It has had a bid-ask spread above high inflation for the USD. The value of BTC is extremely, EXTREMELY volatile.
If you look at the price chart of bitcoins, it doesn't look like a currency chart, it looks like what you see on a thinly traded stock, where someone is playing with it to try and game money in the short term.
Hence it really doesn't fulfill the requirements of a currency (it has other failings in that regard too). You can't very well use it as a currency with fluctuations like that. I mean, would you agree to accept your pay in bitcoins, knowing that the amount you could buy with that could change drastically paycheck to paycheck? Suppose you agreed to be paid 7.4 bitcoins per paycheck back when it was trading at $260 per coin. That's a salary of a bit over $50,000/year, not bad. How would you feel now, given that it is only worth about $84, meaning you are only making $16,000/year?
Anything can be 'money'.
Money is just a means of representative value.
The main downfall of fiat money is that money creation is highly centralized. This means, the value of the money you have can be arbitrarily changed by the whims of the people in charge of the money supply (central bankers, government...).
It also means that those in charge of the money supply get to decide who gets the benefit of created money. That might be big bankers, governments... but it's generally not the average person.
The benefit of BitCoin and even the Gold Standard in this respect is that the generation of new money is not centralized. Rather, anyone can go out there and work to create new money. You go mine gold or spend computing resources with BitCoin.
There are a lot of things we can do to fiat currency to increase the trust level. Things like:
1. Any new printed money gets given directly to people on a per capita basis. The bank prints 1 trillion dollars, that trillion dollars is given to each American on a per capita basis. This removes the benefit of money creation from special interest groups.
2. Focus on inflation control. This *was* the mian focus of many central banks for a while. Though they don't appear to have the will to maintain it in bad times. Often messing with CPI figures in all kinds of ways.. including and excluding various things, reducing the impact of rising home prices..
3. A political change so people don't feel created money is going to be spent by government (via cheap debt) and the benefits going mainly to special interest groups. Things like guaranteed income, guaranteed government jobs...
BitCoin itself is money with the explicit intention of being money. It definitely is better in the decentralized money creation area. But aside from that, it is not clearly better.
If you're so good with money, why are you eating at Arby's?
(j/k, I like Arby's once in a while too)
is the fact that bitcoins design explicitly resists things like command and control from a centralized banking institution.
Along with the negative aspects of control you mention, it also means:
1) As a store of value, it will not be insured. Hard drive crashes? You're SOL. No FDIC.
2) Transactions can't be rolled back. Fraud perpetrated on you? Customer doesn't deliver? You're SOL. Use a broker to handle the transaction? Guess what, that is a form of centralized control (and surprise, surprise it is a point at which transactions could be taxed).
3) No minimum valuation guarantee. No centralized authority to prevent the currency falling through the floor.
All of the things mentioned above weaken trust in the system, meaning people will not use it or accept it.
The simple fact of the matter is that people trade a portion of control for security and are comfortable with that. We aren't going to devolve into what essentially represents an untrusted bartering system overnight. Financial institutions aren't in fear of anything.
The lack of control and distributed nature you speak of is a blessing and a curse.
Most posters here are ignoring some important properties that money should have:
1. It should be small and easy to carry.
2. It should be hard to forge or counterfeit.
3. It should be cheap to manufacture.
I don't want to be more sarcastic than necessary but the majority of posters here have zero knowledge of economics. Those of you who are not unduly proud of their ignorance might wish to read up on German economic history, not only the inflation of the 20's but the period immediately after WW II.
He's just said why bitcoin is a BAD form of money (and heck, I agree with THAT), but the question of its quality/value as a currency is separate from whether it is or is not a currency. It's money as long as people accept it as money.
Particularly when trying to come up with flimsy support for something they like. Somehow there are people on /. that are honestly equating the 2-3% change per YEAR the USD usually sees to the 600%ish change BTC has seen in a couple MONTHS (even worse when you consider it grew by that much, and then has shrunk a good part of that back down). Somehow, that is totally equivalent in some people's minds.
That's why everyone has dumped the US Dollar and moved over the the Zimbabwe dollar - because it's SOOOOOO stable. Currency is all about confidence. And after last weeks debacle with exchange rates, the seemingly constant hacks, forks and other threats that could make your "money" worthless overnight, who in their right mind would invest in an uninsured, volatile nerd-gasm like Bitcoin ? The only thing anyone is scared about is possibly cracking a rib while laughing at your pitiful attempt to make a "magic-money tree".
Others have/will correct(ed) you, but I'm more interested in: where did that meme come from? Seriously, who said what, which led you to believe that?
From the very beginning you could buy things with mined bitcoins, where no other currency was involved. Exchanges and other currencies got involved later. So it's really weird that a belief system would (or even could emerge) that denies the very origins (let alone the daily realities) of the system.
I'm curious how that happened. It's sort of like not merely ignoring the core of a religion, but saying "there weren't any Christians before 1980" or something weird like that -- going beyond the sundry details and questions about magic, etc, straight to amazing depths of revisionism. How do such ideas get started, and how do they spread?
Every time the currency topic starts in Slashdot, there are always people speaking of gold as if it were our salvation. Every time I read about all this, I remember something I experienced when I used to live in Spain...
When the economy of Spain started to collapse, many people started to get very paranoid, and as the economy started to really go down the hill, many people started to talk about "magic" ways of preserving their wealth. In some internet forums (with 100k+ users) many people started to trade with gold. As a young agorist (I still believe in Austrian economics, but I think I have dropped the anarcho- from my political ideas) I absolutely loved it. People privately trading gold! They even traded it in person sometimes because some people said that a big volume of trade of gold in ebay would attract government's attention. Some people even went as far as taking a train to Switzerland to buy gold with cash because they were worried about being traced by government officials. Everything was really cool, as I said, until some people needed cash to buy stuff. Some people tried to sell gold to get euros to buy food, pay bills, etc. It was an absolute disaster. Some people spent 22.000 euros in gold and a year later were able to recover only 18.500. Some people had to put a lot of effort just to be able to sell their gold. Some people struggled to sell their gold in real shops because they had too much and they were unable to produce documentation to prove it is theirs, and when they managed to sell it, all of them made a loss. Some people had too much gold and people treated them with suspicion. The more gold you needed to sell, the less money they offered you (who has 30.000 euros spare in cash to spend in a yellow metal?). And I said, some people really struggled to sell their gold when they actually needed cash.
I don't say this would be the experience of people in other countries. I don't even say that I think buying gold is stupid. I just say that in a real world situation, the solution is not as simple as "run and buy gold".
If the argument against Bitcoins (and the reason they aren't money) is because their value fluctuates, then doesn't this apply to the US dollar as well? It may not fluctuate as much as Bitcoins, but it certainly costs more for just about everything in the last few years. What is that if not "fluctuation" in value?
For saying: "We don’t really know how this coin is created. You can’t have a functional money without a basic transparency." I disrespect him - we know exactly how bitcoins are created and the math behind it proves to be pretty sound so far. But the thesis behind it is sound - if the value of the currency is volatile, it's not that useful. Back in the day, people would barter with food, furs etc - those items themselves were and still are currency. They were rather incovenient in most cases, as food would rot, the furs may not be in demand and take up a lot of space etc - therefore they came up with an idea of an intermediary item that wasn't useful in itself but both parties agreed to have value. To support that agreement it was usually handy to have the item be rare - in case of gold, for most people it is easier/cheaper to just buy it in exchange for other goods/currencies - this ensures that the agreement that holds the value of the currency can not be easily gamed. I am not sure if I need to reiterate why is it important for the currency to hold value - you may want to wait until spring time to buy some seeds, until then, it's more convenient to store your wealth as currency and in that regard BitCoin fails for now. I also think that for now it is far easier to game BitCoin system than it is to game gold or US Dollar system - for BitCoin, just buy an ASIC miner or hack someone's wallet etc...
in relation to the Zimbabwe dollar of old:
here
Seriously, nobody has the right to stop people trading in btc's but like owning a load of bank stocks when a property collapse hits, you don't want to be holding this when the music stops, and everybody else is sitting in their chair with real wealth: gold, silver, land, food, water, knowledge, books, musical instruments, musical talent ..
This article makes no sense to me. Yes - you get 60 minutes in an hour. That doesn't change. You get 100 cents in the dollar. You also get 100 bitcents in a bitcoin... From the article "When you make a capital expenditure or a buy an equity, you are obviously taking a risk. With stocks, you are buying future streams of income. Same with that new factory. But the risk is increased exponentially if you don’t know what you will be paid back with. Is it a 100 cent dollar, a 20 cent, or a 115 cent dollar?". Let me ask, if I, in Australia purchase US$1,000 with my Australian money costing me A$970, and then three months later sell my US$1,000, will I get A$970? Unlikely. Perhaps I'll get A$950 or A$1,050. No-one knows. It's called Forex Trading. It's still money... Bitcoins float in comparison to other currencies exactly the same way.
Money is not fixed value. If so, why does my house, which cost RM120k when I bought it now cost RM800k now?
Bitcoin isn't very sticky yet and not a lot of people are demanding a reserve supply to keep on hand for trades they expect to make. In addition they look towards the past hour or day to determine thier value rather than looking back over the past month or year. However there is nothing fundamentally preventing this from happening should it gain wider and more consistent adoption in trade.
NO currency has a fixed value.
God damn it, articles like this make me hope
a new strain of flu wipes out all the fucktards who
work at the new Slashdot. Die, your incompetent
uneducated pieces of subhuman waste.
Bitcoins are collectibles that people can choose to trade. Are postage stamps a currency? Casino chips? Visa reward points? Cereal Coupons? If it's not backed by a government, it's not a currency.
"Hint: For those who are too lazy to read the opinion,. Bitcoins are too volatile to be money." Hah, it's like this blurb was written for me! Exactly what I wanted to know in exactly the right amount of sentences (1). Kudos.
I have not heard of any currency that has ever had a fixed value, and I would be very surprised if Forbes could name one. It is pretty obvious that buying power will fluctuate over time, and shifting circumstances. The size of an economy that routinely uses a given coinage is what gives stability - modified by whatever good, bad, stabilizing or ruinous government or speculator interventions and manipulations are performed, of course.
IAIFARSIJDPOOTV - I Am In Fact A Reality Star; I Just Don't Play One On TV
By this argument, federal reserve notes are definately not money either. In fact, by this argument nothing could be money. Even gold has a trivial amount of inflation each year as new gold enters the market.
As for the argument itself, money doesn't necessarily need to be fixed in value to facilitate trade, it just needs to have a reliable and predictable value. This is part of the problem with the federal reserve today- there is no reliable way to tell how much paper they are going to put out from each year to the next. In comparison, bitcoin has a fixed, algorithmic amount of new currency coming into the market each year which makes it a much more predictable system than the federal reserve. In my opinion (and the opinion of most Austrian school economists), bitcoin is a better currency than USD.
is money really supposed to be held long term? i think the original use of money was for short term transactions, the proverbial not taking the cow to a transaction and the indirect exchange (not having to trade your goods and services directly for the good and services you seek).
isn't it odd that money doesn't suffer from entropy (explicitly)?
Currency value in the U.S., Europe, and pretty much the rest of the world is based on formulae that are constantly in flux! A U.S. dollar has no more intrinsic value than poop... less, in fact. Poop can be processed and used as fertiliser for the food production process. Anyway, Forbes is just a rich guy with no real sense of how people live, and it's in his best interest to de-value a form of money over which he has no control to manipulate.
Economics based on currency, at least fiat currency, is meant to be a temporary system - a bandage applied to prevent the collapse of the world economy at the last quarter of the 20th century when people started to wake up to the fact that the Yen, the Dollar, the GB Pound, etc... are part of a game made exceedingly complicated in order to obscure the reality that it is in fact just a game played by pretenders of economic authority.
Bitcoin is not real money but merely a different way of employing existent fiat money, obviously it cannot replace it.
http://lewrockwell.com/shostak/shostak14.1.html
Casteism
If Forbes is coming up with this kind of dross then it's little wonder economics is a mess.
If a large number of people are willing to exchange bitcoins for other items, then it's a form of currency.
"Money" (Actually, "currency") is only as good as confidence in it, no matter what's backing it. The Roman Empire lasted about 18 months once confidence was lost in the currency (If noone will accept your coin then it has zero value - ironic as the reason it came to be rejected was a direct result of attempts to maintain confidence in the currency)
If you still wanna buy Bitcoins in the UK, directly without intermediators on ebay or other middle men (with huge fees) is difficult, I made this guide with an easy process:
http://howtogetbitcoinsuk.blogspot.co.uk
http://en.wikipedia.org/wiki/Paperless_office#Difficulties_in_adopting_the_paperless_office
Casteism
i agree on one thing, if you're conservative and scared of change, stay away from it. I don't agree on plunge though, it had a spike and is on a normal course now. But i wonder ... who is steve forbes, should i have heard of him ?
Free speech was meant to be free for all... how can anyone grow up in a nanny state ?
Last time I checked, gold has both aesthetic and functional value
For example, gold can be used for plating electrical connectors. But Bitcoin lacks even that.
you can get more bang for the buck if you wait 6 months buying a computer.
Not necessarily. If I want to buy a 10" laptop today, I have to buy a Windows 8 tablet and a keyboard. That can run me over $600. Before December 31, I could get a netbook for half that.
we know that computers are going to get cheaper
Not always. Until the end of last year, one could buy a new laptop with a 10" screen for under $300. Now, one has to either buy a much more expensive Windows 8 tablet or try one's luck in the used market.