Posted on 12/02/2013 8:26:08 AM PST by Star Traveler
The developers of bitcoin are trying to show that money can be successfully privatized. They will fail, because money that is not issued by governments is always doomed to failure. Money is inevitably a tool of the state.
Bitcoin relies on thoroughly contemporary technology. It consists of computer-generated tokens, with sophisticated algorithms guaranteeing the anonymity, transparency and integrity of transactions. But the monetary philosophy behind this web-based phenomenon can be traced back to one of the oldest theories of money.
Economists have long declared that currencies are essentially a tool to increase the efficiency of barter, which they consider the foundation of all organized economic activity. In this view, money is a convenient instrument used by individuals to get things done. It is not inherently part of the apparatus of government.
I think of the concept of privately issued tender as “right money,” because the whole idea appeals instinctively to right-wing thinkers. They dislike centralized authority of all sorts, including monetary authority. For example, Friedrich Hayek, Margaret Thatcher’s favorite economist, proposed replacing the state’s monopoly on legal tender with competing currencies offered by rival banks.
(Excerpt) Read more at dealbook.nytimes.com ...
The New York Times is a contrarian indicator for me. While I never believed in BitCoin before, now that the NYT hates them, I love them.
Yep. Just like the Federal Reserve Note.
All fiat currencies are scams.
/johnny
Bitcoin, or something like it, will thrive until the authorities do better.
In other words government currency is inherently better, but the people in charge are letting us down. Same argument as the GOPe - big government is the answer, as long as we are in charge.
I thought this was from The Onion.
Not quite that authenitic or reliable a source: merely the New York Times.
“Money” it seems to me is anything that both parties agree to exchange for goods or services. If enough purveyors are willing to accept bitcoins in exchange for their goods or services bitcoin will succeed. The government by necessity will use every attempt in their power to stop the idea of bitcoins because at this point they have no control over them.
One of my all time favorite books!
Bobby Shaftoe is a riot!
When he runs around screaming "Abandon SHIT, Abandon SHIT...!" after the ship he was on crashed into Norway I laughed so hard I actually came close to passing out from lack of air...
“They will fail, because money that is not issued by governments is always doomed to failure. “
I have no opinion as to whether bitcoin will succeed or fail, or whether it is a great idea or foolish; but I do not accept the premise of this article because it is obviously wrong. Whenever governments do a poor job of regulating commerce you get a black market. We have a black market for many things in the US. Russia has an even bigger one. Black markets thrive because they are either more efficient than government regulated ones or because they provide access to things the government does not want to be bought or sold.
If this person’s theory was correct then illegal drug trade would have collapsed as a business because they do not have government support.
If countries attempt to outlaw it, it will become even more valuable.
It is certainly going to be an interesting aspect of economics.
You’d probably like Stephenson’s “Quicksilver/Baroque” trilogy as well then.
The ancestors of the characters in Crypto are there except for the mysterious Root guy, who, I think is the same guy in both tales.
Bitcoin might fail but not for the reason this doofus says
I have some deep doubts about bitcoin but for very different reasons.
Guess he missed the period 1800-1863 in American history where money was ALL privatized. The ONLY thing government can do-—and it is legit-—it accept the payment of a certain money for taxes. That is how they give national fiat money value (and why Confederate notes failed so miserably).
Economic history shows that different money forms (gold, bank notes, Bitcoin, etc.) can co-exist as long as government does not demand monopoly power over over media of exchange. For the near future, the dollar will tend to be preferred because (1) the public is used to dealing in dollars and (2) governments demand dollars for payment of taxes, purchase services in dollars, and pay benefits in dollars. But this could change if inflation takes-off.
I agree.
I heard an interesting description of bitcoin that sort of clarified it in my mind.
Imagin a society where the currency is large rocks. You can trade large rocks with each other for goods and services, and you can even go to work in the rock mine to mine your own new rocks.
Everyone is happy with the system.
But on the way back from the rock mine, you drop a large rock into the lake. It still exists, but it is underwater.
Well, as long as you and everyone else agrees that you still own that rock, you can buy and sell the rights to own that rock, as long as everyone is in agreement.
That is bitcoin, everyone participating agrees on the value and ownership of bitcoins, but no actual rocks exist.
No. Money is most definitely not the sole domain of the state. And any currency lacking any backing can be expected to eventually fail. Dollars or Bitcoins or Monopoly money
Hmmm ... that sounds like a description of the US Dollar ... :-) ...
Print up some of your own and you will definitely believe they have value when they throw your sorry ass in jail!
Yup.
Gold could be used in place of bitcoins in this argument. If gold can be managed, so can bitcoins.
The same reasons and techniques to shutdown E-gold can be used to shutdown bitcoin. Well, except that e-gold had actual gold to raid, and there's no pot of treasure behind bitcoin that can be confiscated.
There is a place for digital currency though. Suppose the Chinese government decided to create it's own digital currency but backed each unit with gold. The fact that it would be an online currency means that it could be in world wide use almost instantly. Backing with gold means that it would be more trusted than the FRN or bitcoin, once folks got used to trusting the Chinese government (dumber things have happened).
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