What are your thoughts on BitCoin?

[Tahuti]

The thing to keep in mind about deflation is that the holders of bitcoin actually want deflation! Because if you are holding money, as cash, and the system has deflation, the holder of the money is now holding something of increasing real value. They are either ignorant of, or indifferent to, the fact that that deflation is utterly destructive to those who need the money, and do not have it on hand, but rather have to do something to get it (work for it, or trade some other asset for it). And so while the bitcoin economy is not actually sustainable because of deflation, the bitcoin holders, and advocates, personally stand to benefit, at least in the short-medium term, from what ruins the system for everyone else.

But as long as BitCoin isn't used for the issuing of debts like with national currencies, I do not see why the deflationary nature of BitCoin should be a problem.

 

[Crezth]

But as long as BitCoin isn't used for the issuing of debts like with national currencies, I do not see why the deflationary nature of BitCoin should be a problem.

We've been over this like fifty times. Yes that's true but it's also not relevant. We have already established that bitcoins could still be useful for exchanges even if only one bitcoin remained (and the value of that lone bitcoin was high enough).

It's like someone invented a flying race car they wanted to replace all cars, except it couldn't fly and exploded when you used the acceleration, and people were like "well as long as you don't use the car for driving, it can make a pretty good shelter."

 

[Tahuti]

I think that would miss the very point of BitCoin. I do believe its creators and many of its die-hard supporters are idealists who seek the elimination of national currencies as their endgame, but BitCoins are to money and wealth what harddrives are to data (though BitCoins have varieties of other uses, including several that Mise already named).

Money and wealth isn't the same thing, but BitCoins happen to be both: Since these are money, you can use them as medium of exchange, but since these are wealth too, you can't emit credit with BitCoins. Well, you can, but you would be stupid to borrow BitCoin denominated debts. The use of BitCoins - aside from the points Mise mentioned - is that the government can't increase money supply at will, so in this sense these are inflation proof. And that's the main reason why BitCoin started and also the primary way it is marketed. And since this sounds so similar to arguments why Gold is used, I can understand why certain people would react allergically to that.

 

[Cutlass]

But as long as BitCoin isn't used for the issuing of debts like with national currencies, I do not see why the deflationary nature of BitCoin should be a problem.

Debt is not the issue. At least government debt is not. There can be no private debt either. And neither can there be any wages. So bitcoin will exclusively be limited to those who have real money, and trade it for bitcoin to make certain transactions, and then convert it back into real money.

Now remember that the purpose of money is to facilitate transactions. So with bitcoin, you add a conversion to, and then a conversion form, real money with every transaction. So bitcoin defeats it's own purpose.

 

[timtofly]

It would defeat it's own purpose if it were a means of conversion. Perhaps it's purpose was to replace currency that was centralized to a certain group of banks? A non-capitalistic currency?

 

[Cutlass]

It would defeat it's own purpose if it were a means of conversion. Perhaps it's purpose was to replace currency that was centralized to a certain group of banks? A non-capitalistic currency?

Then it defeats the purpose of money altogether. Remember, with deflation you get frequent economic depressions. So if you actually manage to replace real money, you destroy the economy in the process.

This is like the Austrian economics and Ron Paul's "sound money". Which is to say, a highly authoritarian system where the government supports the rich by the process of taking from all the rest and giving to the rich, just so that the rich never have to do a moment of work again so long as they live. It's more like feudalism than capitalism.

 

[timtofly]

I would say that is the point and the carrot is always dangled in front of the rabbit.

 

[Tahuti]

Now remember that the purpose of money is to facilitate transactions. So with bitcoin, you add a conversion to, and then a conversion form, real money with every transaction. So bitcoin defeats it's own purpose.

If conversion costs are outweighed by the benefits, which apparently, increasingly more economic players perceive it does, then conversion costs are a non-issue.

This is like the Austrian economics and Ron Paul's "sound money". Which is to say, a highly authoritarian system where the government supports the rich by the process of taking from all the rest and giving to the rich, just so that the rich never have to do a moment of work again so long as they live. It's more like feudalism than capitalism.

The problem is that is also true for the current system. Fractional reserve banking is a subsidy on those who already control money (notice that I said control, not own). Since abolishing fractional reserve banking itself is impossible - despite the possible benefits - we may want to limit it to cooperatively owned banks.

 

[Cutlass]

If conversion costs are outweighed by the benefits, which apparently, increasingly more economic players perceive it does, then conversion costs are a non-issue.

Trivial + 5% still = trivial.

The problem is that is also true for the current system. Fractional reserve banking is a subsidy on those who already control money (notice that I said control, not own). Since abolishing fractional reserve banking itself is impossible - despite the possible benefits - we may want to limit it to cooperatively owned banks.

Fractional reserve banking is just a market economy doing it's thing, like it has for the past half millennium, at the least. And, yes, the rich benefit from that.

But so does everybody else.

With deflation, the rich benefit by the process of causing extreme harm to everyone else!

With FRB, you have a bigger pie that can be divided up to benefit more people without making anyone worse off. Without it, you have a smaller pie, and no one can become better off without making someone else worse off.

 

[timtofly]

China fumbles the BitCoin ball.

 

[Tahuti]

Fractional reserve banking is just a market economy doing it's thing, like it has for the past half millennium, at the least. And, yes, the rich benefit from that.

But so does everybody else.

With deflation, the rich benefit by the process of causing extreme harm to everyone else!

With FRB, you have a bigger pie that can be divided up to benefit more people without making anyone worse off. Without it, you have a smaller pie, and no one can become better off without making someone else worse off.

Fractional reserve banking in its current form is a government-granted privilege. Not everyone can just do it thanks to government regulation.

However, the more money you control, the more you can lend out. However, THIS also means that banks in control over large deposits will be able to earn significantly more than smaller banks and have significant economies of scale advantages. Unlike non-financial companies, it impossible for small banks to grow into large ones in a relatively small amount of time (say ~10 years). So the rich will get richer than everyone who isn't.

However, since you are right FRB increases the pie, no creditable proposal for the abolition of FRB does not include a side proposal to have the Central Bank create more money (usually through basic incomes) to prevent the deflation it otherwise causes. However, forcing banks that engage in FRB to mutualise may be a slightly more realistic alternative to outright abolishing FRB.

 

[Symphony D.]

China fumbles the BitCoin ball.

No no no, you've got it all wrong, you just haven't gotten the latest updates from the hivemind mothership:

What China said today. Banksters stay out of bitcoin with your speculative takeover tricks. People - bitcoin is legitimate for you to own and buy and sell. F off banksters (self.Bitcoin) - submitted 1 hour ago* by georedd

In other words:

Bitcoin is for the people and legitimate.

Banksters you may not manipulate the price or cheat people who want to buy or sell bitcoin. We want banksters completely out of this field. You won't corrupt this new excellent innovation in any of your typical ways and you won't gamble in bitcoin and try to take it over. You also will not pretend to be a middleman and sell people bitcoin that they can buy without you and your fees.

People and businesses- Bitcoin is legal for you to buy and sell and own as you wish but you can't launder money with it.

So sayeth the government of China.

F off banksters.

 

[Zelig]

No no no, you've got it all wrong, you just haven't gotten the latest updates from the hivemind mothership:

Straw man.

 

[useless]

I'd say more of a delusional echo-chamber

 

[hobbsyoyo]

Electric sale: Someone used bitcoins to buy a Tesla

 

[useless]

 

[Zelig]

More straw man.

 

[Symphony D.]

Hey yo, Zelig, I know you don't, you know, read, but the title of this thread is "What are your thoughts on BitCoin?" and so not everything has to be related to your arguments, or indeed any argument made here-in, and therefore everything you don't agree with is not automatically a strawman argument, because it's not "Refute Zelig's Fanboyism for BitCoin."

 

[Zelig]

"Zelig's Fanboyism for BitCoin."

I'd probably have more than zero bitcoins if that were the case.

And seriously we get it. Bitcoin fans are stupid, so are most other people, it's not very interesting to keep reading posts about "people who like topic X are stupid" when it has no relevance to topic X and nobody is claiming that those people aren't stupid.

 

[Symphony D.]

Nobody's compelling you to read the thread or respond to it, bro.