# What is money. Why Bitcoin is, and is not.



## cremeegg

Apologies for yet another Bitcoin thread, but I didn't want to distract the other threads with this point. 

Historically there have been two types of money, money with its own intrinsic value and money with no intrinsic value. 

So if a tin of beans or a packet of cigarette is used for payment, that is money with an intrinsic value.

Paper money, or fiat money has no intrinsic value.

It acquires value because it is accepted as a means of payment. In the immediate sense this is because people have confidence in the value of the paper Euro. 

Behind that confidence however lies the fact that it is legal tender. Government will accept Euro in payment of tax and the bank is legally obliged to accept Euro in payment for my mortgage.

The blockchain technology behind bitcoin may give it advantages in terms of security and more dubiously in terms of anonymity. However that to my mind is not the distinguishing aspect of bitcoin. After all a visa debit is reasonably secure with minimal precaution and anonymity largely facilitates criminals. Also a €50 note is fairly anonymous.

The major difference between Bitcoin and fiat currency is that there are just 21 million bitcoin in existence. This is an interesting concept and means that inflation cannot occur, at least in the traditional, print more money way. 

Is bitcoin money. Today no, it cannot be used to pay all debts. When loans are issued in bitcoin that can be repaid in bitcoin then it might be considered money.


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## john luc

is that correct that there is only 21 million bitcoins. Are they a physical coin and if so what is the material used to make them.


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## Protocol

Yes, the supply of bitcoin is limited.

No, they are not a physical coin.


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## PaddyBloggit

Protocol said:


> Yes, the supply of bitcoin is limited.



If there's a limited supply .... where is it? When bitcoins are being mined where are they being mined from?

Are they close to the limit yet?


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## Protocol

"Mined" means created electronically.

There is no physical mining.

"Mining" is a load of computers, graphics cards, running huge computations.

How close are they to reaching the ceiling on supply? I don't know.


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## fpalb

About 16.7 million of the eventual 21 million have been mined. The rate of mining halves every 4 years so it'll be another 100 years before all are mined.


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## Merowig

Under the assumption I guess people are still mining it for the next 100 years and energy prices won't be prohibitive...


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## fpalb

Yes, but people will mine it for as long as bitcoin has value. If energy prices become prohibitive for some, they will stop mining. When some miners stop, mining becomes more profitable for the remaining miners. Therefore, Bitcoin always tends towards an equilibrium where there is an appropriate amount of mining for the value of bitcoin. So far, the value of bitcoin has generally been going up, so the amount of mining has generally been going up also.


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## Funnyname

fpalb said:


> About 16.7 million of the eventual 21 million have been mined. The rate of mining halves every 4 years so it'll be another 100 years before all are mined.


So it this the reason for the large increase in the value of Bitcoin in the last 12 months or so, as they become harder to mine the existing ones become more valuable and with there being a limit number in existence and they become more in more value also due to the transactions they are used for?


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## fpalb

Well that's part of it for sure, in the early days you could say that the bitcoin market was being steadily flooded with a high rate of new coins being generated, now it's down to an inflation rate of less than 5% per year, and that steadily decreases. Of course the other side of that is that demand also needs to increase, if nobody wants to buy the new coins it doesn't matter how few of them are produced.

In summary, this year bitcoin has been inflating supply at a lower annual percentage than ever while at the same time gaining new users at a higher rate than ever. This could only result in a price increase.


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## WolfeTone

Money is a form of communication of the human species that conveys value from one human being to other human beings. It is information.

The characteristics of money - divisibility, unit of account, medium of exchange etc, are traits of _modern_ form of money, namely currency. But before currency, there was always money.

In the Stone Age village of Orkney, there is a dwelling dated somewhere around 3,500 BC wherein the remains of a mantlepiece lies.
The mantlepiece, is an integral part of almost every human household that has held some items of value in it since. It is hard to envisage a dwelling being built today without a mantelpiece, or a shelf of some kind, or some form of structure built to display valuables , ornaments, personal artifacts, belongings and attachments.
All of this is money. A human form of communication attributing personal value and wealth and it dates back as far as the Stone Age, or more.

We use and accept the characteristics of modern money, currency, as a convenient explanation of what money is, but there are many other characteristics dating back to the dawn of human evolution that still exist today.
An example would be a border of some kind surrounding a village. It conveys a message to other humans outside the border that within the border there is something of value for the humans that is worth protecting. The border, a fence or a wall, is money. It is not easily divisible, a medium of exchange etc, so it is not currency, but it is a form of money.

The Mona Lisa is money. Again, does not fit the characteristics needed for currency, but it is money because it generates wealth from job creation, tourism, security, etc, it is something that humans make considerable effort to protect.

Anything that a human attributes value to is money. Be it emotional value, aesthetic value, associative value, utility. The price attributable to that value is derived in the market place of supply and demand for goods and services, or the auction bids in arthouses and galleries, or the experiments of science laboratories, teachings in school classrooms, the chiming of melodic music, the worship at the alter, or even on the battlefields of war with the lifeblood of soldiers.

All of that is money. Because money is everywhere that humans relate to, and everything that humans value. How it is valued, and the price attributable to that value is the autonomy of each human being.

Bitcoin is also money. It is a digital form of money, conveying information to other humans that other forms of money, namely central bank digital fiat currency, are more secure and more valuable on its network because of its decentralised, immutable, trustless structure.
The price attributable to that value is derived from the market of supply and demand of fiat and bitcoin.


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## NoRegretsCoyote

WolfeTone said:


> The Mona Lisa is money.



No it's not. It's a tangible asset. Of course it has value but you can't take the Mona Lisa under your arm and exchange it for a donut.


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## WolfeTone

NoRegretsCoyote said:


> No it's not. It's a tangible asset. Of course it has value but you can't take the Mona Lisa under your arm and exchange it for a donut.



Well aside from the obvious difficulties in obtaining the Mona Lisa in first instance, actually you could exchange it for a donut.


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## NoRegretsCoyote

WolfeTone said:


> Well aside from the obvious difficulties in obtaining the Mona Lisa in first instance, actually you could exchange it for a donut.



Please show me a donut shop that does barter.


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## RedOnion

NoRegretsCoyote said:


> Please show me a donut shop that does barter.


I'm pretty sure any of them would make an exception for the Mona Lisa!!


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## DublinHead54

But do you really want to be known as the person that exchanged the mona lisa for a donut? 

In 5 years time you could get 100 donuts for it!


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## NoRegretsCoyote

RedOnion said:


> I'm pretty sure any of them would make an exception for the Mona Lisa!!



But then do what with it? It has no resale value!


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## Duke of Marmalade

The philosophical foray is a tad above my pay grade.  I want to change the goalposts to "what is a medium of exchange".  First of all what do we mean by "exchange".  We mean exchanging or trading goods or services.  Barter involves trading these directly.  A "medium" of exchange is on the other hand a middle man.  It is something that of itself is not a good or service that you want.  It is in effect an IOU, something you can exchange at a later date for a good or service that you actually want.  We know all the desirable qualities - divisibility, durability etc.  but the one thing that an IOU must have is trust that it will be honoured.  In earlier times that trust could only come with the collateral security of the intrinsic value of the medium itself.
It is a huge advance that the medium no longer needs intrinsic value to gain that trust.  So yes in principle something like bitcoin could serve as IOUs if they had secured the trust of those who hold them.  With Fiat there are very strong institutional and structural supports to the trust mechanism.  I see no solid foundation whatsoever for trusting bitcoin.  The higher its speculative price goes the earlier its crash and burn will arrive.


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## EmmDee

Dublinbay12 said:


> But do you really want to be known as the person that exchanged the mona lisa for a donut?
> 
> In 5 years time you could get 100 donuts for it!



Bit like the guy who paid 10,000 bitcoin for a pizza 10 years ago - these things happen


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## DazedInPontoon

NoRegretsCoyote said:


> But then do what with it? It has no resale value!



Well since it's a *tangible asset* with *intrinsic value* you would obviously use that intrinsic value, by burning it for heat on a particularly cold night... mmmm I can just imagine the warmth of that intrinsic value right now, lovely. This is why it's important that money have intrinsic value.


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## WolfeTone

NoRegretsCoyote said:


> Please show me a donut shop that does barter



Obviously I can't, but that was not your original point. You claimed the Mona Lisa couldnt be exchanged for a donut. 
I was just pointing out that as absurd and unlikely for it to ever happen, that yes, it could be exchanged for a donut. 
I have no quarrels over the Mona Lisa being a very poor, inefficient, inadequate medium of exchange for the transfer of money. 
But money it is. 
And my initial point above is, before humans developed the convenience of currency, money obviously existed. The creation of currency in coins and notes allowed us to abandon the inefficiencies of barter to such an extent that we apply the notion of 'money' to currency and can comfortably classify the Mona Lisa as a tangible asset, rather than tangible asset and (extremely inefficient medium of exchange). 
So convenient is the currency system as means to exchange money that we have tended to consider money as currency of notes and coins and digital entries on a ledger. 
My view is however that money is everything and everywhere that humans relate to and apply value to.


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## joe sod

WolfeTone said:


> Money is a form of communication of the human species that conveys value from one human being to other human beings. It is information.


Explain,  this is like something Michael D would come up with. How can money be a form of communication? afterall the 5euro note in my pocket contains no information,  it does not tell me who owned it or what goods and services the previous owner did to earn it. Imagine if I knew it was owned by a criminal and was the proceeds of drugs sure that would undermine the basis for money in the first place. If it's not broken don't fix it


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## DazedInPontoon

it conveys the information of the amount and of who is in possession of it, you could also say it conveys some information about the authenticity of itself.


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## WolfeTone

joe sod said:


> Explain, this is like something Michael D would come up with.



 I dont blame you Joe, you are not far off.

I subscribe to the views of three historians. Two of which were not even talking about the definition of money at time, but indirectly referenced value. 

I go with Professor Niall Ferguson in his series "Ascent of Money". 

In he defines money as "_trust, inscribed. It does not matter what it is inscribed in - metal, shells, clay tablets, computer screens". _All that matters is that the recipient or beneficiary of it trusts in its value. 

So if I trust you will turn up on time for work to produce goods and services in my business, that is money to me. 
If you trust I will transfer a portion of that value to you in exchange for your labour, that is money to you. 
The transfer of that money occurs through the medium of exchange of a €5 note that we both understand and as a trusted means of communicating the agreed value of that money. 

Money is a means of communicating value. Currency is the medium used to exchange that value.


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## Duke of Marmalade

WolfeTone said:


> Professor Niall Ferguson defines money as "_trust, inscribed. It does not matter what it is inscribed in - metal, shells, clay tablets, computer screens". _All that matters is that the recipient or beneficiary of it trusts in its value.


I 100% agree with that definition.  It is an IOU from society that you can trust.  I think the "inscribed" bit is important conveying as it does the analogy of someone signing an IOU.  I am not sure how a village border meets the definition but as _soddy _remarks that is definitely in Michael D country.
I just don't believe that long term bitcoin can command a trust in its value.


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## WolfeTone

Duke of Marmalade said:


> I think the "inscribed" bit is important conveying as it does the analogy of someone signing an IOU. I am not sure how a village border meets the definition



The village border provides trust to inhabitants in the form of security. That has value. Until of course, the border is overrun with invaders. Then trust, and value is lost. 

Signature provides trust in an IOU, until of course, the signatory reneges on the IOU. Then trust, and value is lost.


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## WolfeTone

Duke of Marmalade said:


> I just don't believe that long term bitcoin can command a trust in its value.



Without defining 'long term', it is possible to say that about anything and everything.


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## DublinHead54

EmmDee said:


> Bit like the guy who paid 10,000 bitcoin for a pizza 10 years ago - these things happen



The pizza story was the reference for my comment!


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## Duke of Marmalade

The MSO* has published a very interesting graph of relative exchange rates in terms of the price of goods.  In the case of bitcoin the only reliable series is the price of a latte  These are the results.
Start 2018  $4  Sat 20k
Start 2019  $4  Sat 140k
Start 2020  $4  Sat 40k
Start 2021  $4  Sat 20k
Today         $4  Sat 10k
Clearly bitcoin has a bit to go for its medium of exchange credentials to break out of their latte confines

_* Marmalade Statistics Office_


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## WolfeTone

Duke of Marmalade said:


> Clearly bitcoin has a bit to go for its medium of exchange credentials



Is anybody disputing this?
The thread title is 'What is money. Why Bitcoin is, is not'.

You seem to be ruling out the prospect that bitcoin is money because it has failed to become a stable medium of exchange?

This is the Kelleher proposition. But even Kelleher did not give a defining deadline to establish itself as a medium of exchange before declaring it to have no utility.

We have discussed the theory of shells as a medium of exchange before. It seems silly to me that something as freely abundant at a local beach could have ever established itself as a monetary medium of exchange. But on hearing that is was shells, in decorative form (ornament, necklace, bracelet etc) that was used as a medium of exchange then that made more sense to me.
In that regard, its possible that shells were being hoarded by humans (on display on their stone age village mantlepiece for instance ) for thousands of years as valuable possessions.
However, their use as a medium of exchange may only have happened thousands of years after they were first collected?

I'm not saying it will take bitcoin thousands of years to qualify as a medium of exchange,  but I can't understand why it you dismiss it because it isn't a stable medium of exchange today?
As mentioned before, what would have to happening in the global economy for bitcoin to reach some of the $100,000+ outlandish price claims? And is there a $ point where bitcoin becomes acceptable to more and more retailers?
Your good friend Roubini admits CB's cannot go below  -0.75% interest rates. To do so would provoke widespread demand for paper money to be kept under the mattress.
Is there a $ value where retailers begin to accept bitcoin as medium of exchange on a widespread scale?
I would suggest there is, although I don't know what that $ value is. I would suggest we are moving closer to that point.


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## Leo

DazedInPontoon said:


> it conveys the information of the amount and of who is in possession of it,



What? Fivers are doing introductions now?

If someone hands me a fiver, I ascertain whatever information I can on the identity of the bearer from looking at the person, the fiver they are holding tells me nothing.


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## WolfeTone

Leo said:


> If someone hands me a fiver, I ascertain whatever information I can on the identity of the bearer from looking at the person, the fiver they are holding tells me nothing.



The fiver doesn't tell you that you can now afford the €5 donut and coffee offer at the coffee shop?


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## Duke of Marmalade

WolfeTone said:


> Is there a $ value where retailers begin to accept bitcoin as medium of exchange on a widespread scale?


That will not be the key determinant.  The key determinant is "volatility" with respect to a numeraire.  The numeraire is the standard measure by which all else is judged.  It is usually the local currency.  And in fact it is very rare to find a situation where a retailer accepts other than the numeraire.  I don't know of any shops that will accept dollars, for example.  Of course a US tourist, for example, can transact fairly easily in this country by credit card but that is not the same as retailers accepting dollars.
Bitcoin will never be a numeraire.  If it ever threatened to be one it would be clamped down upon. Bitcoin will never be a medium of exchange in any meaningful way.


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## WolfeTone

Duke of Marmalade said:


> The key determinant is "volatility" with respect to a numeraire. The numeraire is the standard measure by which all else is judged. It is usually the local currency. And in fact it is very rare to find a situation where a retailer accepts other than the numeraire.



I don't disagree with this but I sense you don't accept any prospect of the volatility emanating from local currency? 
As Roubini suggests, a negative interest rate below -0.75% will invoke a flood of demand for holding under-the-mattress cash. This does not sound like a stable local currency to me. Roubinis solution would seem to be an end to cash holdings with everything operating off a digital e-currency issued by CB's. He claims that CB's could then go to - 5%! 
This screams volatility to me. The pitchforks will be out. Capital flight. Only, if G8, G20 CB's, are coordinating negative interest rates on a global scale, where will capital fly to? 

$100,000+ bitcoin. 

And if bitcoin goes $100,000 +, it will start, at some point thereafter, to become the numeraire upon which all else is judged. Just as gold and silver has done in the past. 
The difference being, with a phone and Internet connection, anyone can access some bitcoin. 

The idea that retailers will not switch to using a different numeraire simply because the government or the central bank says that the local currency is the numeraire is to completely misunderstand the economic forces that drive their trade in the first place. 
If you sell lattes at $4 a pop, knowing the $4 is reducing 5% a year - because the CB says so - then more people will be inclined to take their money, and their entrepreneurial spirt elsewhere, and find different mechanisms of storing value and trading currency. 
In a global digital world, the obvious case will be bitcoin.


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## DazedInPontoon

Leo said:


> What? Fivers are doing introductions now?
> 
> If someone hands me a fiver, I ascertain whatever information I can on the identity of the bearer from looking at the person, the fiver they are holding tells me nothing.


All I was saying was that the a physical fiver is a bearer instrument, unlike for example a digital fiver.


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## Duke of Marmalade

WolfeTone said:


> I don't disagree with this but I sense you don't accept any prospect of the volatility emanating from local currency?


Well, by definition a numeraire cannot be volatile against itself.  If bitcoin achieved numeraire status then it would lose its volatility and we would be talking instead of, for example, the volatility of the euro versus bitcoin.  We will never get there, and so IMHO bitcoin will never be a meaningful medium of exchange.
But you highlight a different issue - the lack of confidence in the long term value of a currency irrespective of its lack of volatility.  That is undoubtedly a factor in bitcoin's performance over the last while.  I understand any flight to gold on that count but the flight to bitcoin is a complete mystery to me. other than it is being manipulated by the wicked forces described by Roubini.


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## jpd

What do you mean by bitcoin's volatility against itself?

I have no idea what you mean - 1 bitcoin yesterday is 1 bitcoin today and will be 1 bitcoin tomorrow

obviously, the exchange  1 bitcoin v euro, usd, gold, or whatever is volatile


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## WolfeTone

Duke of Marmalade said:


> If bitcoin achieved numeraire status then it would lose its volatility and we would be talking instead of, for example, the volatility of the euro versus bitcoin.



Yes



Duke of Marmalade said:


> But you highlight a different issue - the lack of confidence in the long term value of a currency irrespective of its lack of volatility.



It is not a different issue, it is the same issue - lack of confidence in the value (long-term or otherwise) signifies emerging volatility.


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## NoRegretsCoyote

Duke of Marmalade said:


> Bitcoin will never be a medium of exchange in any meaningful way.



It is ideal for illegal transactions, specifically drugs at wholesale level and weapons.

There is massive volatility risk of course, but try moving and storing €3m in €100 notes. It weighs 30kg.

I was a huge bitcoin sceptic when I heard of it in 2009, but it's still around. This can only be due to its use as a medium of exchange in niche markets.


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## Duke of Marmalade

jpd said:


> What do you mean by bitcoin's volatility against itself?
> 
> I have no idea what you mean - 1 bitcoin yesterday is 1 bitcoin today and will be 1 bitcoin tomorrow
> 
> obviously, the exchange  1 bitcoin v euro, usd, gold, or whatever is volatile


BTC/$ is very volatile, you agree.  But we talk about BTC being volatile not the $.  That is because the $ is the numeraire, the basic entity against which we measure other currencies. But the real numeraire are goods and services. We can see from the MSO data on the prices of latte that it is indeed much more correct to talk about BTC being volatile rather than the dollar.
The point is that something can’t really be called a currency until it is a numeraire for a sizeable constituency. BTC will always be seen in terms of of what it is worth in a conventional currency. We will never see for example ads advertising goods in their BTC prices, even if such ads are targeted at the criminal community.


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## ArthurMcB

Duke of Marmalade said:


> We will never see for example ads advertising goods in their BTC prices, even if such ads are targeted at the criminal community


Who knows?we might! If it becomes widely usable like a traditional currency then why not. Its a big "if".


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## Duke of Marmalade

ArthurMcB said:


> Who knows?we might! If it becomes widely usable like a traditional currency then why not. Its a big "if".


Exactly, it's a big "if".  According to John Kelleher (Investopedia) today's price would require bitcoin to have achieved a currency status on a par with, say, sterling.  There would need to be 10s of millions of consumers who "think" bitcoin, who expect to be paid in bitcoin, who expect to see prices in the local supermarket marked in bitcoin, who immediately change any other currency into bitcoin as soon as they get it.  Today's price is  a massive gamble on that "if".


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## WolfeTone

Duke of Marmalade said:


> According to John Kelleher (Investopedia) today's price would require bitcoin to have achieved a currency status on a par with, say, sterling.



Kelleher makes no such claim. 

"_This article will not make a case for what the market penetration will be, but for the sake of the evaluation, we'll pick a rather arbitrary value of 15%, both for bitcoin as a currency and bitcoin as a store of value. You are encouraged to form your own opinion for this projection and adjust the valuation_ accordingly."


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## Leo

DazedInPontoon said:


> All I was saying was that the a physical fiver is a bearer instrument, unlike for example a digital fiver.



Ah now, cash and bearer instruments are different things, bearer instruments convey rights to an underlying property, cash is cash. But neither cash nor bearer instruments, as you suggested, convey any information about their owner.


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## Leo

WolfeTone said:


> The fiver doesn't tell you that you can now afford the €5 donut and coffee offer at the coffee shop?



And what does that say about my identity?


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## WolfeTone

Leo said:


> And what does that say about my identity?



Nothing. I didn't make that point, albeit, in quoting your earlier comment I did misconstrue your point.


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## Duke of Marmalade

WolfeTone said:


> Kelleher makes no such claim.
> 
> "_This article will not make a case for what the market penetration will be, but for the sake of the evaluation, we'll pick a rather arbitrary value of 15%, both for bitcoin as a currency and bitcoin as a store of value. You are encouraged to form your own opinion for this projection and adjust the valuation_ accordingly."


John himself speculates that btc will achieve 15% of world currency penetration, thus justifying an ultimate price of $500k.  Now sterling takes up 4% of world forex, so using that as a proxy I estimate by John's criterion that an ultimate penetration of btc on a par with sterling would justify a price of $500k x 4/15 = $133k.  So I would say that a current price of $47k is a bet that ultimately btc will be a more important currency than sterling.  My guess is that the @tecate 's of this world have no problem with such a prediction.


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## WolfeTone

Duke of Marmalade said:


> John himself speculates



Indeed. 

And he also encourages you.... _to form your own opinion for this projection and adjust the valuation_ accordingly.

My own estimation is that a sustained price tag of north of $100,000+ before bitcoin even starts to become accepted as a medium of exchange of any significant level.


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## Duke of Marmalade

WolfeTone said:


> Indeed.
> 
> And he also encourages you.... _to form your own opinion for this projection and adjust the valuation_ accordingly.
> 
> My own estimation is that a sustained price tag of north of $100,000+ before bitcoin even starts to become accepted as a medium of exchange of any significant level.


It's  a bit cart before the horse.  A price over $100k can only be justified by a currency penetration equal to sterling, according to John.  It can only become a currency if it achieves  a price above $100k according to @WolfeTone.  That makes today's price of $47k extremely speculative indeed for it says that it needs to more than double from here to justify its existence.  Even I would not make put such a high requirement on the crypto. 
If the volatility came down to levels such that BTC/$ was about as volatile as £/$ then it would have at least established itself as being a candidate for being a currency, no matter what the price level that secured that level of stability.  At these volatilities it is hopelessly unsatisfactory as a tranactional currency.


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## WolfeTone

Duke of Marmalade said:


> A price over $100k can only be justified by a currency penetration equal to sterling, according to John. It can only become a currency if it achieves a price above $100k according to @WolfeTone.



Yes, and between me and Kelleher, both of our views are speculation. Open to be proven right, or proven wrong.



Duke of Marmalade said:


> That makes today's price of $47k extremely speculative indeed for it says that it needs to more than double from here to justify its existence.



Except it is Kelleher who is speculating that bitcoin _must _become a medium of exchange to have any utility. He speculates at what point that would/should occur, but is clear in his commentary that it is a simplified estimation and encourages others to make their own projections for vsluations.
Your frequent reliance on Kellehers speculative views indicate that you place, somewhat ironically, a great store of value in them.

For myself, I don't dismiss his views but I don't make the claim that bitcoin _must _become a medium of exchange to have utility.
As invited to do by Kelleher, I make my own projections.

That is, regardless of what governments and central banks tell us, or instruct, or advise, people will act in their own economic interest in the long-run. That interest, typically, should operate within the parameters of a sound monetary system, backed by over-arching authorities providing trust and confidence in the system.
It is a central argument of those who buy bitcoin that we do not operate within a sound monetary system. That confidence is being ebbed away by virtue of a system that does not operate within defined parameters of a sound monetary system - despite what our leaders tell us.

To get a tiny sense of the distortions manifesting in our monetary system you only have to look at the headlines on the RTÉ business website today.

UK economy retracts 9.9%
House prices increase 3.5%
Are banks about to start charging us for our savings
Office space take-up down 49%

What is going on? This is just one snippet of headlines on one day, that signal (to me at least) clear distortions manifesting themselves in our monetary system.

Eventually, these distortions will feed into a widespread realisation that the monetary system is not operating within defined parameters of a sound money system, that realisation will induce people to utilise other means to sustain the value of their own wealth.
There is an obvious trend in motion now, at institutional level, to sustain the value of their own wealth by others means other than within the parameters of the global central bank monetary system.

I can't say when, or if, bitcoin will become a medium of exchange, but I suspect it will. The higher the price, sustained, the sooner that realisation will emerge.


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## tecate

This thread sets out to suggest that bitcoin can't be money due to its volatility.

And yet the world's oldest currency is just as volatile.

Other commentary has focused on the 'terrible' losses suffered by those who have purchased bitcoin, when it was bought at up to $20,000 in late 2017 - early 2018. And again, in the more recent hype cycle when it ran up to $67,000.

I don't see anyone screaming about Snapchat though.  Why is that?


__ https://twitter.com/i/web/status/1583469429714694146


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## Brendan Burgess

@tecate 

Is this a trick question? 

Snapchat isn't money?   

No one is suggesting that stocks are money.

Brendan


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## Brendan Burgess

@tecate 

As regards sterling

(Bloomberg) -- The pound sterling -- regarded as the world’s oldest currency still in use since its inception more than a thousand years ago -- is almost as volatile as new-comer Bitcoin as of late. Here’s a look at the 30-day volatility for both:

30 day volatility? Very short-term and very unusual. 

Your graph tells it all 





Over the last 5 years, sterling has been relatively stable. 

Brendan


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## tecate

Brendan Burgess said:


> @tecate
> 
> Is this a trick question?
> 
> Snapchat isn't money?
> 
> No one is suggesting that stocks are money.
> 
> Brendan




The world's oldest currency as administered by the Bank of England is regarded as money - although evidently it's just as volatile as Bitcoin. Who knew? On your follow up post, so we can use the GBP as money today even though it's as volatile as Bitcoin today - because it's not been so volatile other times? Let's accommodate the pound when its as volatile as Bitcoin but lets not even countenance the mere mention of Bitcoin being money. Yet bitcoin is destined to become less and less volatile - a trend it's already established.

The follow up point I made is separate - and relates to commentary made by folks here lamenting the poor craturs that bought the Bitcoin tops. I've been searching through the board and can't find any outrage when it comes to Snapchat (the most recent example - there are countless others). That's rather odd don't you think?


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## Brendan Burgess

tecate said:


> evidently it's just as volatile as Bitcoin. Who knew?



Hi tecate

It's not as volatile as Bitcoin.  Look at the graph - your own graph.  How can you compare the two?  If Bitcoin has been unusually  steady for a few days while sterling has been unusually volatile - that means nothing.

What is worrying me is that when you make completely specious arguments like this, you damage your credibility. 

Brendan


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## Brendan Burgess

tecate said:


> The follow up point I made is separate - and relates to commentary made by folks here lamenting the poor craturs that bought the Bitcoin tops. I've been searching through the board and can't find any outrage when it comes to Snapchat (the most recent example - there are countless others). That's rather odd don't you think?



Not remotely odd at all.  There are repeated advices on this website everywhere else to buy  a diversified portfolio of shares and to expect some of them to go to zero.   So there should be no outrage when it happens.

Brendan


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## tecate

Brendan Burgess said:


> It's not as volatile as Bitcoin.  Look at the graph - your own graph.  How can you compare the two?  If Bitcoin has been unusually  steady for a few days while sterling has been unusually volatile - that means nothing.


We are both talking about the performance of GBP in recent weeks set against BTC in recent weeks. Don't try and suggest otherwise.
The point is that it's acceptable to you as a currency in these weeks despite that volatility. Your claim is that 'it means nothing'. What it means is that it's sub-optimal for a currency to be volatile but it in no way precludes it from being money. All the while bearing in mind that the GBP is a top tier fiat currency - there's a whole host of others that are much further up the charts when it comes to volatility.



Brendan Burgess said:


> What is worrying me is that when you make completely specious arguments like this, you damage your credibility.


I disagree. What would be damaging to my credibility in this discussion would be for me to take an absolutist position. i.e .If i was to say that in the case of two outcomes (bitcoin continues to succeed vs. bitcoin dies),  I decide that only one of those two outcomes can happen. Even if I think that one of them is highly unlikely, to declare that it can't happen would be a credibility buster.



Brendan Burgess said:


> Not remotely odd at all.  There are repeated advices on this website everywhere else to buy  a diversified portfolio of shares and to expect some of them to go to zero.   So there should be no outrage when it happens.


Proving my point - double standards.
We're discussing two separate points but there's a common theme running through both of them. i.e. a conventional stock is volatile - but of course it is - that's totally acceptable. Bitcoin is volatile, would someone please think of the children.
A top tier fiat currency is volatile - and that's perfectly fine, i'm still using it as money. Bitcoin is volatile - well it can't possibly be used as money.


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