The article today is by a reader who uses the BitCoin and it’s in response to my previous write up about the BitCoin in the post… The Financial Bubble.
As a Blogger I express my opinion on the subjects I write about as a ‘Jack of all trades’ if you will… but a master of none. So I enjoy the interaction from readers that want to forward their views about a topic or issue.
Hi Gord. Thanks for taking the time for this. As you will see, it is very important to me, and to the world to have a better understanding of the big picture. Here it is…I’ve tried to keep it short. lol
Gord, thank you for opening up comments for this post, because I think that a few more things need to be said in order to have a clearer understanding of how the bitcoin community thinks. The article you have linked to, is not necessarily wrong entirely, however it leaves a lot to be desired for someone who’s actually attempting to learn about bitcoin rather than just picking a side for the sake of it. Quite frankly there is no side. We have been presented with an alternative from a brilliant mind, and I think it is important to look at all aspects of this alternative before classifying it and compartmentalizing it (humans seem to love doing that, and especially governments) into a category that it was never meant to be in. I understand that writers in journalism need to make quick decisions about their stance on any particular subject in order to be “first on scene” with a story, but in this case as with many others, more research and testing is needed to have a clear picture of where this technology can take us. He took his position very early on, and will stick with it, since he probably doesn’t want to be wrong, just like anyone else. Just like the internet itself, (with its own share of naysayers early on, and with many still believing the internet is some evil place to stay away from…their opinions have obviously become irrelevant) bitcoin is very young, and it would be a shame to write off this five year old child before she even reaches her teen years. It is impossible to explore all aspects in one blog post, so I wouldn’t dare attempt to do so in a comment section.
I agree with one thing that Mr. Kinsella has pointed out, and that is the fact that classifying bitcoin as a “property” is short-sighted and simply a misrepresentation. However it seems quite convenient for him to choose the Canadian definition for his attack in order to drive his “ponzi” message home. Stephen Kinsella: “There’s nothing new here beyond the cool software implementation.” Let’s take a look at the big picture…something that people with an agenda always fail to do. The software, the technology, the protocol itself is where the value is. He points out that bitcoin holds no intrinsic value other than for the purpose of trade/exchange, and that cannot be further from the truth. The protocol itself has many uses.
Gone may be the days of “democratic” voting where unions with political agendas make up the majority of all votes. Also “democracies” where voting results are manipulated…gone! This in itself makes the technology more relevant than any currency our elected officials force us to use. When looking at the protocol in this fashion, brilliant minds have pointed out many other uses for it, which are too numerous to mention here. For this reason, we must be very careful with definitions. It is a store of value. It is not exactly a currency, nor is it a piece of property or commodity.
Let’s take a quick look at the intrinsic value of a dollar bill, shall we? We can use it in an exchange and/or purchase of goods or services. That’s it. Even toilet paper does a better job of…well you know. This is especially true in Canada where it’s made of metal. It is backed by nothing, other than its usage (forced, not necessarily by choice) by people. People quit using it, and it’s finished. The US government has been printing money since 2008 in an attempt to devalue its own currency to spark an inflationary situation similar to what China has done. The fact that the dollar remains pretty stable in spite of this, tells us that it is actually in a deflationary phase which if left un-manipulated, would be worth much more than it is, and the US public would be in a better financial position than they are at this time. Of course, human intervention, and the infatuation with having the power to control other people’s lives and net worth for the sake of their own, continues to take precedence with our “leaders” as it has for many years. History has proven that human beings cannot be trusted in positions of extreme power. The dollar bill is not evil itself. The fact that people in positions of power continue to manipulate and fudge the numbers if you will, is!
Bitcoin technology makes this a thing of the past. The market decides for itself what the value of a bitcoin is. The volatility is a result of trading, (fear, greed and speculation) not its usage. The original concept as I understand it, illustrated the fact that as more bitcoins are mined and we reach the capped number of coins in circulation, the price of a coin would become more stable, and in fact it is doing just that. The bubble argument is irrelevant when considering bitcoin’s sheer resiliency. The market has not collapsed, and the number of users continues to steadily increase. Pretty much what was predicted by its early adopters five years ago. Yes the number of transactions have declined, however consider how many traders have taken their profits and left. Bitcoin still stands. The type of adversity bitcoin has had to face, would have crippled any economy in comparison anywhere on the planet. It amazes me that some economists use the idea of volatility with negative connotations when traders in fact rely on volatility to turn a profit. If the price of an Apple share never moved, there would have been no profits for the taking. As folks sit on their mutual funds and what have you, the banks turn huge profits using the upswings and downswings of the markets, but I guess in an economist’s mind, that’s different. Although he did say that he has no problem with investors taking advantage of market swings, so his flip flop in that regard is a bit confusing.
So it seems that there is something very different here. Bitcoin takes trust (and lack of it when speaking of mine for government officials) out of the equation.
Again, considering the technology has many uses other than an exchange or trade, it would be ludicrous to write it off because of misguided definitions. If that were the intelligent approach to take, then the dollar should have been abolished long ago, and we’d be back to bartering tomatoes for eggplants.
It most certainly can, AND IS being used as a currency between parties who agree to use it as such. The “it will never work” mantra has been decimated by the fact that it is working and it is being used. I am not an economist, however I don’t need to be in order to use a little common sense when looking at the economic and social ramifications of an adoption of an idea. An idea which by its very nature eliminates the forced sense of trust we must have with our current economic systems.
There were many perfectly intelligent people screaming that email would never work…that there was no need etc. Those same people today can’t stay off of their electronic devices checking their inboxes. Email made the world a little smaller, and connected people in a much more efficient manner. Bitcoin technology used as a currency does the very same thing.