[npoc]

> "what I'm saying, which is that bitcoin is made of bits, and bits aren't scarce, so scarcity isn't what creates bitcoin's value"

I've chatted about bitcoin to a lot of people and this time I've come across this argument, so kudos for not spouting the normal rubbish.

So I can agree that there's a certain pattern of bits that assign some bitcoin in the block chain to me (but only because they're associated with an address for which I have the private key). If I try and copy that pattern of bits, the bitcoin network will reject my blockchain because I've double spent: each entry in the ledger is a transaction that moves bitcoin from one address to another. If I simply copy the transaction that says Jim gave 0.02 BTC to Sally, the network will detect it. If I try to add a new transaction that says the same thing, I'll need to sign it with Sally's private key, which is simply impossible for me to guess.

Am I getting closer to answering your point?

Regarding fundamental qualities of good money, "robustness" means how easily it can be destroyed. Gold can't be destroyed - it's a chemical element. Glass money however would be terrible. The digits in your bank account are robust, they can't be changed very easily at all without actually adding or removing money.

Scarcity does actually mean a controlled/limited supply when it comes to money. Technically it means "in short supply", which when it comes to money is the same thing - everyone would like more money. The quantity of monetary units makes no difference provided that it's divisible enough. If everyone in the world suddenly had 10x more dollars than they currently have, no one would be richer or poorer than they were before. Your wages would end up being 10x as much and everything would cost 10x as much.

Regarding acceptability, we talking about fundamental properties of the money rather than how people see it right now. For example, the first person to dig up gold would have found no one would accept it as payment because they didn't recognise it as having any value. It's value arose from the fundamental qualities I mentioned, the closest to acceptability being that it's fungible and relatively easy to recognise as gold. Its combination of colour, shininess softness and weight are quite unique and (were) hard to counterfeit.

Nakamoto went to very careful lengths to ensure that bitcoin is a commodity and not a security. Even the SEC agree that it's not a security (they'd love to class is as a security if they could).

If you think better alternatives to bitcoin exist, then it's because you see bitcoin and the alternatives in a different light to me (as evidenced by the earlier points). From my perspective, I agree that someone could always throw a curve ball and come up with a way to improve it, but after studying it carefully for years, I can't see any way that the problem bitcoin solves could be implemented significantly more efficiently. I envisage it being the best store of value for the next 1000 years or more (or at least until we advance from the digital realm)

[burnte]

> Am I getting closer to answering your point?

No, because you keep focusing on the technical aspects of bitcoin when I'm talking about the philosophical argument that crypto securities are not currency and that in the end, any medium of exchange that is a proxy is fiat money. My entire goal is to prove that "fiat money" is like saying "ATM machine" or "pin number."

All money is fiat, none of it has intrinsic value, it's all valuable because enough people agree. Commercial paper is not a gov't currency, but traded on it's face value. Rewards points and game tokens and gift cards aren't gov't issued, but they're tradable like money. Zimbabwean dollars WERE gov't issued, and when people lost faith it lost value. Hell, Brazil used fake money to generate faith in real money (1)!

The best currency we ever invented were bank notes and digital credit (card payments). It's the king, and BTC will never overtake it. A form of distributed ledger might become the ledger of the future, but it won't be BTC and it's extremely energy-hostile paradigm.

1 [https://www.npr.org/sections/money/2010/10/04/130329523/how-...]

[npoc]

Now I understand your perspective better, I think I can clarify one of your earlier comments:

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> "You're right, it's ALL fiat money. All money that has ever existed was fiat money, from shells and dollars to bitcoins and xbox points. IF it doesn't have INHERENT value as food, fuel, etc, then it's a fiat currency, it has value because we declare it to be so. Cryptocoins are the ultimate fiat because they don't even really exist."

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Okay so just as oats has inherent value as food, and oil as fuel etc... gold has inherent value as money. It has properties that make it useful as money.

There are certain properties of oats which lead it have economic value.

* tasty + nutritious + etc => demand (as food)

* human effort it takes to grow => supply/scarcity

There are certain properties of gold which lead it to have economic value:

* divisible + portable + fungible + recognisable + etc => demand (as money)

* human effort it takes to find and mine => supply/scarcity

For banks notes:

* the same (but improved) properties as gold => demand (as money)

* as much as bankers can get away with effortlessly creating (controlled by the interest rates they set) => supply/scarcity

This is how bankers decide it's value and where I think the term fiat comes from - they can control the value by creating/destroying the monetary units.

For bitcoin:

* the same (but improved) properties as large (currently) amounts of digital/paper fiat currencies => demand (as money)

* _fixed_ issuance curve => supply/scarcity

This is an an enormous difference - an asset with an absolute hard limit on issuance rate. No amount of corruption or even work can create more than is hard-coded into the algorithm. It doesn't matter how powerful you are, you cannot change the bitcoin issuance curve, and it doesn't matter how powerful you are, you can't create bitcoin with less effort than the bitcoin is worth. The world has no idea of the magnitude of what has been invented here.

[npoc]

Okay, I think we're getting somewhere. I agree that we the people decide the value of money. The people collectively choose what they want to use as money and they will naturally choose the best money for the job. I also can agree that just because the government says the dollar is worth something doesn't make it so.

We originally chose gold because of its fundamental properties I mentioned earlier, and then we chose paper notes because they worked better than gold.

However, this is where I think we see things differently. Originally the paper notes represented gold and so had the same limited supply. So it had all the improvements in portability, divisibility etc but also had the (illusory) strength of gold's scarcity. It seems perfect. In digital form even better! But over time bankers began to print more notes than there were gold and the notes rapidly lost their limited supply. For around the last century, the bankers have roughly doubled the number every decade. Make sure you've understood that - each decade since at least 1971, they've taken all the dollars in existence and printed the same quantity again out of thin air (as loans), and charged interest on every single one every year to date! This dilutes the wealth in the dollar system across twice as many dollar units, resulting in it causing a halving of the wealth in each dollar unit, every 10 years (this leaking value goes into the freshly created dollars). It's the main factor behind price inflation. It's why houses seem to go up in value for ever. They're not, they are just being priced in units which are going down and down in value. Houses still cost roughly the same today in gold as they did in the 70s.

This money printing causes enormous hidden problems to the world. The people who are close to the money printer get greatly discounted money, and the value of that money is sucked out of the dollars held by the people furthest away - your savings, your wages, your pension, granny's savings under the mattress, and all without you realising! It's called the Cantillon effect. The bankers get more and more powerful (they're collecting interest on every single dollar in existence even though they just printed them out of thin air!) and the population get weaker and weaker. What makes it worse is the people direct their anger at "greedy" businesses for the price increases rather than the banksters! You have to hand it to them - what a beautiful scam.

Bitcoin solves the problem of having a few select people in control of creating the money tokens, which throughout history always results in them abusing their power and inflating the supply into hyperinflation. It's the initial form of the URV described in the article you mentioned!

As expected the URV ("Brazilian Real") was inflated away over time once the central bank got its hands on control of the issuance as can be seen in this graph: https://tradingeconomics.com/brazil/money-supply-m2

Because bitcoin's supply is hard limited - the decentralised nature ensures no one has the power to change the issuance curve, it's the initial form of the URV you mentioned, but the decentralised, proof-of-work paradigm means that it will stay like that _forever_. The more they print money, the more the price of bitcoin goes up.

Its energy paradigm is no different to gold's - having to put in work to dig up gold is what makes gold the hardest money we ever had (today gold mining still uses more energy than the bitcoin network). It's the most natural thing in the world that money tokens we use as "proof of work" require equivalent work to create. Any system that breaks that rule will ultimately be corrupted and fail. History has shown this over and over again.