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<blockquote data-quote="foxbenw" data-source="post: 997719" data-attributes="member: 115475"><p>I'll ignore the immature mimicry, but some fair points from others.</p><p> </p><p></p><p> </p><p></p><p> </p><p>Overall, there's not much more to say here, as there seems to be a general desire for bitcoins to be encouraged. If they ever form a valid replacement for normal money I will be proven wrong. However, in the meantime, like many things in finance, the definition of a currency is open for discussion. Taking the comments above together, as I think they are essentially the same, I of course agree that bitcoins are a form of exchange. That is not really controversial. They can also be argued to be a store of value, from the perspective that they do not decay. But, I would hope to add to that part of MrCrab's professor's definition of a currency above by pointing out that in order for a currency to be <em>my</em> currency, it also needs to be a store of value relative to my own future liabilities. For most people that means 'my government's/country's currency'. Oxan says that the value of the dollar could halve tomorrow. True, from the perspective of a GBP or EUR investor. But not true from the perspective of a US citizen. I know that has implications in terms of inflation and trade, but we are not talking about the merits of fiat money here. If that concept is accepted, then there is no-one today from who's perspective the value of bitcoins does not change when their 'price' changes, and there cannot be in today's economic world. So what I have really being describing is probably a more what makes a currency a valid or good currency, rather than just 'a currency'. If you like, I will agree that bitcoins are a currency because it's just semantics and doesn't impact my argument. But they will never be enough peoples' base currency (if anyone's) to be successful as a currency. And because of that they cannot ever be guaranteed to be stable enough to form a store of value relative to anyone's liabilities (unless there's a BTC mortgage provider on that list from earlier, of course <img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7" class="smilie smilie--sprite smilie--sprite1" alt=":)" title="Smile :)" loading="lazy" data-shortname=":)" /> ).</p><p>It's an interesting topic, in many ways. I still don't think we should be encouraging their use though. There'll be a press article some day about someone who put all their money in BTC and lost everything when their computer crashed or something and their wallet got wiped.</p><p> </p><p>As a more philosophical point, I think a virtual currency can probably work, but it will take time to take hold, and at present would need to be denominated in a 'proper' currency to become a feasible long term store of value. eg if I could buy GBP denominated bitcoins. That gets a whole lot more complicated when you start to work out the exchange rates and availability and all that stuff I imagine. I haven't thought about it beyond that. However I am pretty sure that the marginal supply of a virtual currency probably needs to be determined by something other than how fast your computer is! It should probably take into account how much it is needed by participants somehow, meaning both how much someone expects to be able to generate with it for the 'greater good', or simply some kind of charitable aspect. Ultimately it should be a more efficient way of distributing capital to those who need it and those who want it. Currently we call them banks and governments, but for some reason we don't seem to trust them as much as we used to.</p></blockquote><p></p>
[QUOTE="foxbenw, post: 997719, member: 115475"] I'll ignore the immature mimicry, but some fair points from others. Overall, there's not much more to say here, as there seems to be a general desire for bitcoins to be encouraged. If they ever form a valid replacement for normal money I will be proven wrong. However, in the meantime, like many things in finance, the definition of a currency is open for discussion. Taking the comments above together, as I think they are essentially the same, I of course agree that bitcoins are a form of exchange. That is not really controversial. They can also be argued to be a store of value, from the perspective that they do not decay. But, I would hope to add to that part of MrCrab's professor's definition of a currency above by pointing out that in order for a currency to be [I]my[/I] currency, it also needs to be a store of value relative to my own future liabilities. For most people that means 'my government's/country's currency'. Oxan says that the value of the dollar could halve tomorrow. True, from the perspective of a GBP or EUR investor. But not true from the perspective of a US citizen. I know that has implications in terms of inflation and trade, but we are not talking about the merits of fiat money here. If that concept is accepted, then there is no-one today from who's perspective the value of bitcoins does not change when their 'price' changes, and there cannot be in today's economic world. So what I have really being describing is probably a more what makes a currency a valid or good currency, rather than just 'a currency'. If you like, I will agree that bitcoins are a currency because it's just semantics and doesn't impact my argument. But they will never be enough peoples' base currency (if anyone's) to be successful as a currency. And because of that they cannot ever be guaranteed to be stable enough to form a store of value relative to anyone's liabilities (unless there's a BTC mortgage provider on that list from earlier, of course :) ). It's an interesting topic, in many ways. I still don't think we should be encouraging their use though. There'll be a press article some day about someone who put all their money in BTC and lost everything when their computer crashed or something and their wallet got wiped. As a more philosophical point, I think a virtual currency can probably work, but it will take time to take hold, and at present would need to be denominated in a 'proper' currency to become a feasible long term store of value. eg if I could buy GBP denominated bitcoins. That gets a whole lot more complicated when you start to work out the exchange rates and availability and all that stuff I imagine. I haven't thought about it beyond that. However I am pretty sure that the marginal supply of a virtual currency probably needs to be determined by something other than how fast your computer is! It should probably take into account how much it is needed by participants somehow, meaning both how much someone expects to be able to generate with it for the 'greater good', or simply some kind of charitable aspect. Ultimately it should be a more efficient way of distributing capital to those who need it and those who want it. Currently we call them banks and governments, but for some reason we don't seem to trust them as much as we used to. [/QUOTE]
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