- John Robarts Bitcoin is here to stay. Watching peeps who know nothing about it nay say it is SO funny!
- Alan Petrillo Oh, sure, John. But that falls into the category of "bits in domains of a computer program", because that's all a Bitcoin really is. And, again, Bitcoin only works with traders who accept it. Again, it only has value because all parties involved in the trade agree it has value.
- Eliska Reilman Adema It's been fascinating to see a new form of 'money' evolve.
- John Robarts Yes, but it and the block chain are open source. The financial implications of that are only just barely starting to be glimpsed. Its like Where's George on steroids. Regardless of our definitions now it will be a game changer. And the second oldest profession, bankster, is coming to a hard awakening. Every transaction is recorded, essentially out in the open. Identifying who had what address requires great effort of course. And that is a good motivation for the NSA to have such huge processing power. Eventually they will ban all possession of ordinary currency for all individuals.
- Alan Petrillo I won't say that the banning of possession of hard currency can't happen, but I don't see it happening anytime soon. In any event, it's really something of a nonissue, because people are choosing less and less to carry currency anyway. Especially with the advent of chip and PIN and chip and signature cards, people, especially in Europe, don't have to carry cash if they don't want to, and many are choosing not to.
- Eliska Reilman Adema I don't like the prospect that all my 'income' could be wiped out with a keystroke
- Alan Petrillo I recall a scene in /My Name Is Legion/, by Roger Zelazny, in which the central character approaches the Maitre D' of a restaurant.
"Do you accept cash?"
"Of course not! What sort of place do you think this is?" - Eliska Reilman Adema Sometimes I joke, when paying w/cash "Do you need i.d. with this?"
- Alan Petrillo I got bitten by the closure of eGold. I didn't have much in my accounts there, but I got screwed out of most of what I did have. This is the bottom line with precious metal: If you aren't in possession of physical metal then you don't really own it. You're placing your faith in the good faith of whoever is keeping it for you.
- John Robarts US silver coins, dimes, quarters, and so on are hard to beat as a hedge. Much easier to exchange than gold.
- Alan Petrillo Yeah. I like gram weighted bullion as well. The best thing about it is that it doesn't have a face value for anyone to demand.
- Alan Petrillo I found a really good definition of money: A medium of exchange, a unit of account, and a store of wealth. That's what money is, whether the medium itself is metal coins, slips of specially printed paper, bushels of grain, bits in specific domains of a computer file, hours in a time bank, sacred stones, or cowrie shells.
- John Robarts People don't realize that Federal Reserve Notes are Cryto Currency. You don't agree? Take a close look. EACH AND EVERY ONE HAS A UNIQUE SERIAL NUMBER or "CODE". Just like EVERY Bitcoin. Or any another Cryto Currency. Or the imaginary Fiat "dollars" in every gift card, credit card, ....or the TRILLIONS OF "DOLLARS" the Banksters create in DERIVATIVES.
What is money? Money is a COIN! AND ONLY A COIN. EVERYTHING else is currency, bits, notes, value, token, or etc. etc.
Ever notice coins DON'T have SERIAL NUMBERS?
That's because they are money. - John Robarts You are right, those things are mediums of exchange. Except coins. Coins are money.
- Alan Petrillo Even coins are a medium of exchange. Keep in mind, in the ancient cultures that invented metal coins, those coins themselves didn't have much intrinsic value. They only had value because they were backed by grain. Because, as one ancient Roman said when having a similar discussion about money, "You can't eat gold."
- Alan Petrillo To the extent that the US Dollar is based on anything it is based on consumer debt. Especially as most of the dollars circulating in the economy today were borrowed into existence.
- Charlie Martin Sigh, John, go look up Milton Friedman and the "quantity theory of money:. Oh, and look into what happened in Spain when they suddenly brought in a whole bunch of gold from the new world.
- Alan Petrillo Several people, Charles Mann, and Jared Diamond among them, have written about the lasting after effects of the Conquest. Most of the gold and silver extracted from the New World never actually made it to Spain. They went to Amsterdam, where the Crown's accounts were held, and from there they went all over Europe. The major effect was that Spain never developed the kind of industrial economy that the rest of the world did. Spain paid the rest of the world for industrial products with metal extracted from the New World. It's an era from which Spain to this day has not fully recovered. I think the Conquest could be considered "how to permanently wreck an economy in one easy lesson."
- Robert Luis Rabello Any currency can be debased. We have to agree on the value of a thing in order to exchange it for goods and services. The aboriginal inhabitants of North America realized that gold has no "intrinsic" value. It's certainly useful, but not necessary for life.
- John Robarts My only point about money is the difference between the colloquial, constitutional, and "strict" definitions.
- Alan Petrillo I prefer the chartalist definition, myself.
I see a lot of commentary lately about money needing to be something "of intrinsic value". The people who say this almost always have precious metals in mind. "Gold is money" they say.
Nonsense.
Money is a medium of exchange which people use in trade. It has value because the people who use it agree it has value, and for no other reason. This is true whether the money in question consists of slips of paper, or precious metals, or jewels, or bushels of grain, or barrels of oil, or cowrie shells. Or bits in specific domains of computer programs. Or, for that matter, favors.
Try to trade in gold with someone who does not value gold and the trade won't work. In many ancient cultures that used coins as money the coin only had value because it represented a quantity of grain. The coin, even though it might be made of a precious metal, didn't have much intrinsic value of its own when the culture was one based on trading grain. When a sum of money was mentioned in trade in ancient Rome the first question the trader would ask was "In coin or grain?"
You want the US Dollar to be based on something of intrinsic value? In a way it is. As the global petroleum market is denominated in US Dollars, to the extent that it is based on anything, the dollar is based on oil. So when you trade your dollar for an item you are, effectively, paying about 2 quarts of crude oil for it.
If you want to trade your dollar for the goods of someone who does not accept dollars, however, then the trade won't work. The trade might be for your time. "Sure, I'll watch Johnny for you tonight if you can watch Janie tomorrow night." It might be for favors. "Sure, I'll mow your lawn for you. How about you wax my car for me?" It might be for direct barter. "I'll trade you a bushel of my peaches for a bushel of your apples." One need not boil down the value of everything to a sum of money.
That isn't to say money isn't important. It is. As a common medium of exchange, agreed to by all parties of a trade, money is one of the most important inventions leading to a modern society. This is true whether or not it has any property related to an intrinsic value.
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