A very low one, and one that’s constantly dropping, but so long as the government still exists and still accepts its own money, it still has some value.
As soon as a government is gone, though, the money’s value drops to zero. Just look at Confederate dollars. Ever wondered why they suddenly lost all value?
Exactly.
But you and others are saying that the difference between a government-backed currency and one that is not, is that only the former has value.
I think this a fundamental misunderstanding of what currency is. Currency is a medium of exchange, and cash is just tokens that only have value while other people will accept them. So we can adjust to changing prices because at any given time all we are trying to do is get the best “bang for our buck”. A dollar has no fixed, non-tautological value, and I would argue, no intrinsic value, period.
If there are too many dollars in circulation and my savings become virtually worthless, it doesn’t matter a damn that it’s government-backed.
Now if you’re trying to say that the chance of the dollar collapsing is far less than the chance of bitcoin collapsing, sure, I agree with that. But that’s a difference of degree, not the kind of qualitative difference where some here are saying it’s a ponzi scheme, or speculative bubble etc.
This is where you and I disagree. Just because something has no fixed value, that doesn’t mean it has no intrinsic value - those are two very different things. The fact that someone is has a legal obligation to accept dollars is what gives them a basic core of intrinsic value. Their actual market value may fluctuate, sometime violently, but that small core of true value remains. Bitcoins lack that core. People will accept them because they know someone else will take them from their hands, but in the end, the music will stop and someone will be left holding the bag.
Currency isn’t a medium of exchange - it’s a product *used *as a medium of exchange. That’s not the same thing.
Yes, they are not the same thing, but currency has neither.
I think it’s really reaching to say that the rule that you must accept dollars to pay off a dollar debt, is some fundamental difference that gives dollars legitimacy. How often is that even put to the test?
Note that many countries do not bother with such a statute. So a hell of a lot of people have been duped into using fake currency.
That “core value” can of course get arbitrarily close to zero.
…and that’s all that a currency is.
No, the fact that the government has to accept dollars to pay taxes is what gives dollars legitimacy. No government has ever denied *that *obligation.
The government has to take dollars even if no-one else will take them from it. That’s what anchors the system - an end user.
But at some point a difference in degree can become some great it qualifies as a qualitative difference. My gut feeling is that the difference in stability between a dollar and a bitcoin is at least a million to one.
Just look ahead a decade. Does anyone seriously think the United States will not exist in 2024? Or that the United States government will have repudiated dollars? Anyone who thinks dollars will become worthless within the next ten years should contact me so we can make some wagers.
But where will bitcoins be in 2024? I’m not predicting they will disappear but it wouldn’t surprise me if they did.
And I think that’s largely irrelevant. People used to make the same argument about the gold standard.
You think if tomorrow the government decided taxes would be reduced to nil the whole system would collapse?
But again, why are we only comparing to dollars? Why not to riskier currencies or other media of exchange?
Just because it’s riskier doesn’t mean it’s not a currency, and bitcoin has a number of advantages over investing/using groats.
Yes. Yes I do.
Though I can see why those of a more libertarian bent would disagree.
Why?
And in your answer don’t talk about the drawbacks of a small state, because that’s off-topic. We’re talking about the need to pay taxes in dollars being the thing that supposedly gives dollars intrinsic value.
Sure, I’d rank bitcoins ahead of groats. And I’d rank dollars ahead of bitcoins. So if I have a choice between the three (and I do) I’m choosing dollars.
What advantage do bitcoins offer me over dollars? Dollars are a lot easier to use and are more stable. Bitcoins may be more anonymous for certain transactions but I don’t make those kinds of transactions. For any purchase I might want to make anonymously, I’d just make it with dollars.
There is a large entity called the United States of America. It has existed for over two hundred years and there is no reason to think it will cease to exist in my lifetime. This entity issues a thing called dollars and states that these dollars have value to the entity. The entity has valued these dollars for a long time and there is no reason to think it will stop valuing them in my lifetime. So I feel confident that dollars will hold some value for my lifetime. And hundreds of millions of other people feel the same. So dollars have been the basis for a relatively stable system of exchange for over a hundred years. And I reside in an area where it is easy to participate in the dollar-based system of exchange.
Nevermind the fact that you can’t “give” something intrinsic value. That’s the whole goddamn point of it being intrinsic!
If the value can disappear with the removal or addition of something, it cannot, by definition, be intrinsic.
Then what commodity *does *has intrinsic value that cannot be taken away? Is there any such thing?
I would say there is no such thing; it’s always possible that someday nobody will want to trade for gold or mutton or water. We’ll probably have to invent matter replicators first, though.
But then you need energy to run the replicators. That’s probably going to cost something.
Nope.
So you’re saying that there’s no such think as intrinsic value.
Yes, intrinsic value is a myth. Value of anything is only determined by what people are willing to exchange for it. (Not counting an item’s sentimental value or suchlike.)
Imagine you have a giant pile of gold bricks and you’re the last human on earth. Does the gold have value?
Ding ! Ding! Ding! We have a winner! Outside of the tiny handful of businesses that accept Bitcoins, the most common uses seem to be drug trafficing, child pornography, and other illicit transactions. Legitimate transactions appear to be few & far between. So yeah, the run up price is due mostly to speculators hoping they’re buying the next Apple or Facebook.
Has there ever been any business that’s sold things in bitcoins? I can go to a local sandwich shop and buy a sandwich for five dollars. Tomorrow, the dollar might have fluctuated up or down in value, but that sandwich will still cost five dollars. It’ll probably also cost five dollars a few weeks or months from now. Go back in a year, and the shop might have raised the price of the sandwich to $5.25, but if they do, it’s probably going to stay at that price for another year or so. I can leave home with a $5 bill in my pocket, and be confident that when I get to the sandwich shop at lunchtime, I’ll be eating.
Are there any places where the same is true for bitcoins? I mean, yes, I know there are a few sandwich shops which will accept them… but the price of a sandwich is still five dollars. If you pay in bitcoins, the shop will run the conversion at the exchange rate of the moment, and charge you that amount of bitcoin. Come back in a day, or a week, or maybe even in an hour, and the price in bitcoins will have changed, but it’ll still be $5 worth of bitcoins.
So long as that’s true, it really is a commodity, not a currency.