[mikeash]

Stable currencies are a good short to medium term store of value. If I withdraw $100 from the ATM, I can spend it a week or a month later and be fairly confident that it'll be worth essentially the same. I'm not rushing to the stores on payday to buy all of my supplies before fluctuations wreck my money.

This is not the case for BTC or AAPL. If I get 1BTC today, some new MtGox story might wreck its value before I buy groceries with it tomorrow. AAPL is unlikely to move as much, but it moves around by several percent on a fairly regular basis, and some huge negative news could send it plunging.

I could imagine your scenario of pricing in AAPL and paying in oil and GOOG in a technological sense, but I have a hard time imagining anyone actually doing it.

[smokeyj]

> I could imagine your scenario of pricing in AAPL and paying in oil and GOOG in a technological sense, but I have a hard time imagining anyone actually doing it.

In Kenya people trade in cell phone minutes (MPESA). It's not a huge stretch to imagine trading in units of energy or other commodities.

It seems to me that having an instant settlement layer challenges the need for currency as an intermediary.

[TheSpiceIsLife]

Which reinforces @mikeash's point.

1 cell phone minute today is 1 cell phone minute tomorrow - it's a real thing with real utility. Not so with BTC.

[smokeyj]

Each bitcoin is divisible up to 8 digits and can be used to represent certificates - potentially representing cell phone minutes, or certificates to equity or commodities - for the cost of .000000001 satoshi.

Now the kicker is, the bitcoin transaction fee is increasing rapidly due to (self-induced, political and totally fixable) bottlenecks in the network. I foresee an alternative taking over bitcoin if this isn't resolved soon.

[mikeash]

The other kicker is that if 0.00001 (whatever the actual number would be) buys one cell phone minute today, it might buy two tomorrow, or one half. Short-term volatility makes it difficult to use as currency.

[smokeyj]

You're missing my point. You don't ever have to use bitcoin as a currency. Instead of holding say - 1 bitcoin - you could own a certificate for oil (or a diversified basket) - represented on the blockchain (still .000000001 satoshi).

So when you want to buy cell phone minutes, you simply convert your oil certificate to cell minute certificates through a settlement layer. This means merchants can denominate prices in whatever they'd like - and buyers can pay in whatever currency/asset they'd like.

[TheSpiceIsLife]

I think we do understand your point, and it reduces to "blockchain blockchain blockchain blockchain because blockchain blockchain".

But then fails to be better or even different to what we have now:

This means merchants can denominate prices in whatever they'd like - and buyers can pay in whatever currency/asset they'd like.

Indeed! We have that now. Where I live we use the Australian Dollar because that's what buyers and pays like. When I want to convert stock to cell phone minutes I do that through a settlement layer: log on to stock trading platform, sell shares, wait two days, buy cell phone minutes - it's sufficiently instant for my needs, and appears to be meeting everyone else's needs as evidenced by the continual churn of economic activity.

One issue I see with your proposal is I'm not convinced I know how to rationally price an oil certificate vis-à-vis a cell phone minute. That's why we need markets, I guess.

Blockchain is a solution looking for a problem. The problem of converting stock certificates to cell phone minutes is largely solved for most people who own stock. The problem of purchasing cell phone minutes is largely solved, and for those places where it isn't slapping a blockchain on it won't help any more than slapping whatever database is popular this week on it.

[mikeash]

I understand that perfectly. You seem to be missing my point that using volatile assets as currency makes things really complicated because you can't easily plan based on their value.

It doesn't matter if I hold a bitcoin or an oil certificate or a share of AAPL or a futures contract for polar bear fur, I don't want to use stuff as currency where I don't know how much groceries it'll buy next week.