Bitcoin versus other monies.

[Truthseeker]

What we have here is a failure to agree on the definition.

[Sparko]

What we have here is a failure to agree on the definition.

well anything COULD be considered money, I can trade goods with you to buy things for instance. Or I can make up some arbitrary object to give you, that only exists in cyberspace, and you could call it money if you want to. But I think that in the case of bitcoins, no government recognizes them as legal tender, yet they do have worth. And that worth goes up and down a lot. So to me they are more like shares of stock in a company than actual money.

[Truthseeker]

Finally Michael Robinson had something to say about the decision by the IRS to tax transactions that involve Bitcoin like a stock being sold for cash. He's not selling his Bitcoin hoard, he says. He IS unhappy about that decision, calling it "nothing short of a sham."

He suggested what I had suggested before, that someone will do an app that keeps track of all one's Bitcoin transactions.

I'm not sure I understand. Let me give an example. Sparko buys a pirate flag for x bitcoins (x can be a fraction, like 0.11). At that time a Bitcoin exchange values a bitcoin at $y. Before that time, he had purchased his only hoard with $z dollars, where z is less than y (thus, it is a capital gain).

The transaction is taxed as follows, where t is the tax rate (like 15%) that is applicable to the transaction:

tax = t*(y-z)*x [in dollars]

A numerical example: t = 0.2, y = 405, z = 300, x = 12.11

then tax = $254.31

[Truthseeker]

well anything COULD be considered money, I can trade goods with you to buy things for instance.

That's not a definition.

Or I can make up some arbitrary object to give you, that only exists in cyberspace, and you could call it money if you want to. But I think that in the case of bitcoins, no government recognizes them as legal tender,

So you would let the governments of the world define what money is?

yet they do have worth.

Still not a definition. I would say that something has worth qua money insofar as people are willing to take it in trade even though they have no plans to use that thing afterwards except for future trading.

And that worth goes up and down a lot.

That's vague. Better to say that the exchange value of Bitcoin in a specific currency (dollars, e.g.) can vary tremendously. I admit that's undesirable, but is not fiat "money" (not a market commodity that is usually used as money) undesirable? If the world somehow did away with fiat money everywhere, we would not have any fiat-money exchange rate to wring our hands over.

[Truthseeker]

M-Pesa is not cybermoney or, if you will, digital money. But I wonder if it could give Bitcoin a run for its money (sorry about the pun).

Jeff D. Opdyke wrote, "Kenyans can spend, receive and save money simply by sending a text message from their phone. Smartphones aren’t required nor are special apps. It’s just a basic text message. ... Effectively, M-Pesa technology allows consumers to live a financial life through their cell phone, safely, securely and conveniently … even consumers in the middle of the brush in Kenya, who have never even seen a bank or a landline phone."

I'm not sure what that means. Will there be people who get and spend money exclusively via M-Pesa? In effect, what those people get and spend is really digital money, at least partly?

[Paprika]

In effect, what those people get and spend is really digital money, at least partly?

What is money, but a convention?

[Truthseeker]

What is money, but a convention?

You would have to prove Aristotle wrong. He gave criteria that money should meet:

Durable, portable, divisible, intrinsically valuable.

Regarding the last criterion, he was wrong about value existing independently from anyone's mind: Value is subjective. Say 99% of the world desire bitcoins. Then 1% do not value them even if they know about them. Otherwise, the Austrian School of Economics agree on the first 3 criteria. Clearly money is supposed to be a physical thing, such as a gold bar or platinum coin. Mere convention is not physical. Like value it has no independent existence outside our minds.

I would concede that bitcoins are less physical in some sense. Nevertheless if they are used more and more in commerce, they would be more and more useful.

I guess I should mention that Jeff D. Opdyke thinks Bitcoin is no more than a fad.

[Paprika]

Clearly money is supposed to be a physical thing, such as a gold bar or platinum coin.

Clearly you don't know how banks operate nowadays.

You would have to prove Aristotle wrong. He gave criteria that money should meet:
Durable, portable, divisible, intrinsically valuable.

Why should his criteria be accepted?

[Truthseeker]

Clearly you don't know how banks operate nowadays.

You forgot that I discussed fiat money.

Why should his criteria be accepted?

Are you asking that as someone who accepts fiat money?

[Paprika]

Are you asking that as someone who accepts fiat money?

I am speaking as one who observes that it is in use. Thus Aristotle's definition fails.

[Truthseeker]

Michael Robinson admitted that Bitcoin fell ~18% in April 10, but he pointed out that since then exchange rates appear to have stabilized, trading between a weighted average of $458 and $529. He suggested that could be building a long-term solid foundation. Wishful thinking?

[seanD]

Michael Robinson admitted that Bitcoin fell ~18% in April 10, but he pointed out that since then exchange rates appear to have stabilized, trading between a weighted average of $458 and $529. He suggested that could be building a long-term solid foundation. Wishful thinking?

What is the difference now as opposed to the similarities in fluctuations of bitcoin in the past?

[Irate Canadian]

Bit-coins values seems to be fluctuating a bit due to the closure of Coin/Currency Exchanges.

[Truthseeker]

The USG's ability to create money out of thin air means that it does not need to tax us and hold bond sales. That is so as long as there are still sellers willing to take dollars. Take the Chinese for example. Through the years China gained a huge amount of dollars that people refer to as US debt. That's not the correct way to view things. The US owes China nothing! Again, as long as sellers are willing to take dollars, the USG can roll over its "debt" indefinitely.

That state of affairs should be intolerable--unless the USG is truly doing more good than bad with its fiat-money purchases. What if the rest of the world does think that the USG is doing more bad than good, and is shifting to other monetary systems?

That's why Bitcoin and other monies like that might have a ever-more important place in our future, as ever-more people glom on to what is really happening and try to change the state of affairs.

For a much longer discussion, grok here http://dailyreckoning.com/the-real-r...lar-has-value/

[Truthseeker]

Bloomberg LP, data manager for financial-market players and media company, is now including real-time Bitcoin data. Wow. Another wow: Bill Gates likes that Bitcoin is allowing poor people make trades they couldn't before because of low transaction costs. Third wow: Coinality.com is listing offers of jobs for those who want to be paid in bitcoins. [Thanks, Michael A. Robinson]