Skip to comments.Satoshi Nakamoto’s Silence: Why Gold and Silver are Money and Bitcoin is but Thin Air
Posted on 03/12/2014 6:44:31 AM PDT by SeekAndFind
One of our favorite japes is about the group of scientists who figure out the secret to life a way to make a human being from nothing but dirt. When theyve worked it all out, they are so excited they go directly to God to announce their discovery that He is no longer necessary. He appears a bit surprised, but they offer to demonstrate. He nods. One of the scientists bends down and scoops up a fistful of dirt.
Oh, no, God exclaims. Youve got to make your own dirt.
This is how we feel about bitcoins. The idea that one can make money specie out of thin air just strikes us as illogical. The money is gold and silver. Bitcoins, as we comprehend the whole business, could be a form of currency. But money is a different matter. Its not merely the scarcity of gold and silver that make them money. Its their innate qualities, which have endured over millennia.
What put us in mind of this today is Newsweeks scoop in tracking down the founder of bitcoins, Satoshi Nakamoto. It found him standing shoeless at the end of his sunbaked driveway looking timorous and annoyed, it says. It describes Mr. Nakamoto as tacitly acknowledging his role in the Bitcoin project by looking down and staring at the pavement as he categorically refuses to answer its questions. I am no longer involved in that and I cannot discuss it, Newsweek quotes him as saying.
(Excerpt) Read more at nysun.com ...
The currency of the future is chicken eggs and neosporin.
There's a non-sequitur in there somewhere.
Exactly, the same argument applies. US Dollars can be currency, but they aren’t money.
Many of them don't. The have pieces of paper that says there is a company that sold them shares with several other organizations in the pyramid that promise there is some physical gold somewhere that someday they can take possession of.....unless the government says they can't in a Emergency.
I just looked at the gold and silver price and it seems to be rising rapidly this week. Gold is outpacing silver?
Very good post. Many thanks.
April gold up 1.37%
May silver up 1.63%
That's the first thing they got wrong. They give a nod to "mining" but obviously don't trust it (i.e. they don't understand it). Given that bitcoins are mined to create artificial scarcity, there's a second quality that they don't mention in the article. That is that the mining algorithm is used to automatically validate transactions which means that the bitcoin network can easily be used for automated payments on delivery of any kind of digital goods.
Suppose I wanted a software widget that does "X". I would set up a server that tests for X and the first person to upload a program to the server that passes the test automatically gets the promised bitcoins. Once the server is set up I don't have to lift a finger and undoubtedly third parties will set them up (for a fee of course).
I’m 99.9% against fiat money (buy $1,200 of silver in CAL, skip a hefty tax).
But I need to answer 1 Keynesian claim:
Limiting the money available for capitalization to sound money, puts a cap on investment.
The answer could be all of the other coins (i.e., mediums of exchange) making an appearance on the currency scene. The competition will help to keep Btc in check, price wise, and prevent hording of BTC to some extent, IMO.
In other news:
Money is divisible.
A limit on the upper boundary number of units is not a limit on the value it can represent.
Let's consider those characteristics that are valuable to the market process of elevating gold and silver to money.
They are durable. Gold won't rot or rust away. If you are preparing for a Mad Max scenario you might not be interested in bitcoin as a store of value, but if you're preparing for a Mad Max scenario you'll want lead and brass over gold anyway.
They are divisible. 1 gram of gold can be combined into 1 ton of gold, or separated down to a single atom (but that is the lower bound, bitcoin has a lower bound as well, but if the community accepted a modification to the protocol it could be subdivided even further), and recombined with no change to its nature. That's hard to do with a cigarette or cowrie shell.
They are transportable. I'd rather carry a million USD on my person in gold than a million USD of pig iron. Bitcoin is actually more transportable than gold, because it can be sent anywhere in the world in a matter of minutes, with no transportation risk. If I had to get 1 million dollars out of Argentina I'd rather do it with bitcoin than try to smuggle gold or suitcases of govt. fiat currency across the border.
It's really on the transportability and transferability of bitcoin that it shines over gold and silver. Couple that with governments around the world in a race to debase their currencies, and their inability to debase bitcoin, it's possible, even likely, that at some point they'll decide to make it illegal or order to better extract the inflation tax.