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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?
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.
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.
1) First they ignore you
2) Then the laugh at you
3) Then they fight you
4) Profit!
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.
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.
Gold hasn't been the basis for our money in many, many, decades. And while there's some merit in having some common "thing" for currencies to be pegged to, gold has always seemed especially stupid. The US forced itself to do so from the 1950s until the early seventies, creating a situation where every country that was having financial problems could devalue its currency except the US itself, causing relatively substantial problems for the US itself.
(Why? Bizarrely, national pride. The 1950s-1970s version of the Gold Standard came because the major economies wanted a single currency to peg their currencies against. What they wanted was an independent currency called the "Bancor". The US vetoed this, as it felt it would diminish the importance of the dollar, and demanded they peg their currencies to the dollar instead, and in return would make sure the dollar was pegged to gold. More evidence, perhaps, that national pride can be a destructive, stupid, thing.)
You are not alone. This is not normal. None of this is normal.
...when you can pay your taxes with them.
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.
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.
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.
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Definition is something I look for when thinking about increasing the population.