I have spent countless hours discussing money with Bitcoin enthusiasts. In general, I have found them to be closed-minded believers in an irrational cult ideology. However the following was an interesting conversation that I had with a Bitcoiner on Twitter. The reason why I feel it is worthwhile sharing this exchange is because of the discussion of the definition of a
I think Bitcoin is fundamentally flawed and that it will never serve as money. However I am not negative on the idea of digital currencies in general. I think it's a fascinating subject. I plan to write a more detailed article soon about the reasons why I don't think Bitcoin is the right tool for the job.
I think your opponent in the conversation has a point to an extent. Bitcoin does function as currency and as a MoE even if it's just among 15 people. It's like a small Bitcoin republic with its own currency.
For instance, when one buys something for USD, a large part of the labour to produce that something may have been paid for with, say, Chinese money or EUR. Still, USD is MoE in this case.
Same applies to BTC in this case. The labour to produce that something was paid for with not-BTC but it was quasi imported into the Bitcoin republic of 15 people.
I would say that this boils down to a semantic argument -- i.e. what the term "medium of exchange" means. Sure, you and the Twitter guy can take the position that because Bitcoin is used to make economic exchanges it is a medium of exchange. But my position (and the whole reason for writing this article) is that my definition of MoE is more specific than that. The way I understand the term is that a MoE is the essential precondition for a highly developed division of labor. What kind of instrument allows for people to trust enough in a system to exchange goods & services with people they don't know and will never meet? Sure, in a community of 15 people you can use Bitcoin, dollars or sea shells to facilitate exchange. The bigger question is how you can conduct exchange throughout a large, complex economy which is capable of growing food, manufacturing automobiles, drilling for oil & refining gasoline, making computers, etc., etc., etc. In order to accomplish that degree of division of labor, sea shells won't work. And, in my opinion, neither will Bitcoin. Therefore it is not a medium of exchange according to my definition of the term.
What is your general opinion about Bitcoin? Does it serve a purpose or should just be done away with?
I think Bitcoin is fundamentally flawed and that it will never serve as money. However I am not negative on the idea of digital currencies in general. I think it's a fascinating subject. I plan to write a more detailed article soon about the reasons why I don't think Bitcoin is the right tool for the job.
Would a Geselian invest in Bitcoin right now?
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I think your opponent in the conversation has a point to an extent. Bitcoin does function as currency and as a MoE even if it's just among 15 people. It's like a small Bitcoin republic with its own currency.
For instance, when one buys something for USD, a large part of the labour to produce that something may have been paid for with, say, Chinese money or EUR. Still, USD is MoE in this case.
Same applies to BTC in this case. The labour to produce that something was paid for with not-BTC but it was quasi imported into the Bitcoin republic of 15 people.
I would say that this boils down to a semantic argument -- i.e. what the term "medium of exchange" means. Sure, you and the Twitter guy can take the position that because Bitcoin is used to make economic exchanges it is a medium of exchange. But my position (and the whole reason for writing this article) is that my definition of MoE is more specific than that. The way I understand the term is that a MoE is the essential precondition for a highly developed division of labor. What kind of instrument allows for people to trust enough in a system to exchange goods & services with people they don't know and will never meet? Sure, in a community of 15 people you can use Bitcoin, dollars or sea shells to facilitate exchange. The bigger question is how you can conduct exchange throughout a large, complex economy which is capable of growing food, manufacturing automobiles, drilling for oil & refining gasoline, making computers, etc., etc., etc. In order to accomplish that degree of division of labor, sea shells won't work. And, in my opinion, neither will Bitcoin. Therefore it is not a medium of exchange according to my definition of the term.