George Selgin Critiques MMT and Debates Murphy on Free ...

Debunking latest Core rhetoric: Medium of Exchange ≠ Means of Payment

Lately I've seen the "medium of exchange is not the same thing as a method of payment" idea being floated a lot by BTC maxis. Saifdean Ammous tried to pull this out in his debate with a George Selgin. The Bitcoin Observer also mentioned this argument on Twitter in a discussion about Libra's failure. However, according to this paper, the distinction between a medium of exchange and a means of payment is that a means of payment is not necessarily settled immediately. They argue that currency is a medium of exchange, while checks and debit cards are not.
In my opinion, this exposes the fundamental flaw in the argument that "Bitcoin is not a method of payment". It's as if the Coretards are trying to separate Bitcoin UTXOs from the Bitcoin P2P network and Bitcoin mining, and arguing that the network isn't important, and mining is a given. However, without the payment, mining, and P2P validation network, BTC UTXOs have a clear value: ZERO. You can't separate them, the value depends 100% on the network and mining. And as we saw in 2017, when fees rose over $100/transactions, a fair percentage of UTXOs became unspendable, as the fees to move them would be higher than their value.
Of course, we live in a world increasingly dominated by electronic fiat, is this a medium of exchange? Electronic fiat has a fairly tenuous supply and value, and it also depends intrinsically on a payment network that is controlled by governments and corporations. Increasingly, electronic fiat appears to be more a method of spurring labor and creating debt.
Thoughts are welcomed.
submitted by horsebadlyredrawn to btc [link] [comments]

I want BTC to be usable as a currency.

Fortunately, the existing Bitcoin system's capabilities are probably enough to allow for simulating the Currrency app to a nearly arbitrary degree of accuracy; the existing system forms a self-contained, coherent protocol for settlement on which another, higher-level protocol can be built to provide to BTC the properties of currency.
This is not a competing vision; this is not a re-imagining of Bitcoin.
BTC is a unit of account. Bitcoin is a settlement layer. The Lightning Network is a currency layer built on top of Bitcoin; the Lightning Network turns BTC into a currency.
Currency is but one app that can be developed on top of a settlement system; Bitcoin as a settlement layer has been discussed since the dawn of Bitcoin.
Whether or not you call the whole functioning ecosystem 'Bitcoin', the fact remains: There must be a settlement layer, and there must be a currency layer built on top of that settlement layer.
We've got the settlement layer working pretty damn well. Now, we're working on the layer that will provide cheap, high-volume, instantaneous confirmation for transactions that represent usage of BTC as a currency.
submitted by jensuth to Bitcoin [link] [comments]

"Most Bitcoin transactions will occur between banks, to settle net transfers." - Hal Finney Dec. 2010.

Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.
Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.
George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.
I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.
https://bitcointalk.org/index.php?topic=2500.msg34211#msg34211
submitted by brg444 to Bitcoin [link] [comments]

Is there support for a Status-quo Digital Gold/Settlement layer movement?

I've noticed lately a few notable posters that are standing strong on the belief (which I share) that both sides of the scaling debate are perpetuating the same tacit assumption that bitcoin NEEDS more transactional throughput in some capacity (effectively etc.).
One such example: https://jonhq.com/i-dont-support-bitcoin-scaling/
I've repeatedly called out both sides of the debate for what is basically a strawmanning competition for not founding their arguments in economic philosophy but rather in the (unfounded) beleif that the introduction of a transactable scarce (digital) asset solves a previously unsolved problem and provides significant value.
Both sides are incredibly intent on disproving even the tiniest error or falsehood, yet NO ONE wants to address 20 years of explanation of the economic significance of the introduction of an e-currency with a stable supply, left by the man whose discoveries FIFTY years prior and nearly SEVENTY years ago provided the basis of game theory and economic understand that this entire project rests on. An argument he has been working on that entire time since such discoveries.
A man that CLEARLY knows more about money than ANYONE in this community.
I've said it before, this conflict exists because neither side knows what they are talking about in regard to the economic considerations of bitcoin in relation to our legacy global economy. And I read of no one's argument that discusses such things.
The debate is a red herring and btc is winning because they have everyone choosing between "scaling" and "scaling": https://medium.com/@rextar4444/the-blocksize-debate-is-a-red-herring-the-uahf-mahf-and-uasf-are-all-part-of-the-same-deception-dbe0fa17f492
Bitcoin's most valuable usecase is as describe by John Nash: https://medium.com/@rextar4444/bitcoins-most-valuable-usecase-7f5c6e95be22
NO pressure for scaling should be acceptable: https://medium.com/@rextar4444/why-bitcoin-shouldnt-be-scaled-how-bitcoin-will-become-a-commodity-money-that-inspires-our-9a6b048a4b0f
I've argued Nash's works supports this, Szabo's works, Selgin's, Hayek, and Smith.
I've yet to be provided with a counter argument. I've yet to see any founded argument for the economic implications of bitcoin put forward.
Status quo should remain unless someone can show otherwise based on sound and founded economic philosophy. Those that disagree, deny the purpose of SCIENCE.
Economics (UK English: /iːkəˈnɒmɪks/, /ɛkəˈnɒmɪks/;[1] US English: /ɛkəˈnɑːmɪks/, /ikəˈnɑːmɪks/[2][3]) is "a social science concerned chiefly with description and analysis of the production, distribution, and consumption of goods and services".[2]
submitted by pokertravis to Bitcoin [link] [comments]

We should consider Bitcoin, as a (George Selgin defined) commodity money, might be best evolved to have no other utility than settlement

Selgin defines commodity money to be, for example, gold that arises as units of settlement between major banks. I've always argued bitcoin will arise to serve as this effectively replacing gold (or SDR's the IMF uses etc.).
Selgin also notes that as the money tends towards ideal supply through a naturally approached equilibrium process less of the actual commodity is needed and thus it is freed up for other uses.
Gold might be then used for space equipment etc.
But there is seemingly no need or want to structure bitcoin to do this.
What would it matter if the participating banks used 21 million bitcoins or 1 million bitcoins or 500 bitcoins and the rest were used for other purposes other than settlement?
It would also necessary effect the price/value of a bitcoin which is counterproductive to a stable unit of value.
What is also interesting is if we consider this argument then bitcoin is really nothing new in regard to a settlement system, its simply the commodity money Selgin describes.
But the blockchain provides tamper proof security which is a residue left over from the process. It's what is really the new technology and yet it doesn't really add to the utility of bitcoins.
submitted by pokertravis to Bitcoin [link] [comments]

These two pieces are damaging propaganda

https://medium.com/@johnblocke/network-congestion-is-problematic-c9d7829ed4ec#.pip1zb9yt
the currently accepted view among developers in Bitcoin Core is that the electronic cash model is incorrect, and that bitcoin will work better as an expensive “settlement layer” for high-value transactions, with low-value consumer payments being driven to “second-layer” network overlays which have varying degrees of centralization.
This is correct (I don't like the word “expensive” so much though). I also think it is correct to suggest that core has an implicate mandate, which is to preserve bitcoin's soundness (which is definitely partly comprised of it's security).
There is also the implicate mandate that core cannot budge on its “monetary policy” without a scientifically founded argument to support the decision. This puts bitcoin (and all the players involved) in a quandary, because the only empirical evidence is the current network protocol and the history of it and the block-chain.
This makes bitcoin “hard” on a vector that is surprising to people.
The result is an ever-growing transaction backlog, ever-rising fees, and a stagnant bitcoin economy. Without also increasing the rate at which this backlog is periodically flushed, what we are left with is a permanent backlog. Bitcoin will be accessible only to the highest bidders, and as the great mass of consumer users turn elsewhere to find a cryptocurrency that is both fast and cheap, I suspect the transaction congestion problem will solve itself.
The premise here is true, but the conclusion is to not understand the nature of money and to not have read the likes of Hayek, Nash, and I would add Szabo (perhaps Selgin). They want us to know that if we guard bitcoin's properties that it share with what we have traditionally valued gold so highly for, then the public will very quickly learn to demand ONLY sound money.
“Cheap money” is a folly that Hayek warned us of:
Once public had an alternative, it would become impossible to induce it to hold cheap money... Money is the one thing competition would not make cheap, because its attractiveness rests on it preserving its 'dearness'.
And this proposal and the whole contest:
https://np.reddit.com/btc/comments/57t0c8/my_entry_to_olivier_janssens_transaction_fee/
The future is uncertain.
It is. And this is rhetoric.
The author makes no claim that exponential growth will continue forever,
I think its good you don't try to make such a claim....
but is certain
You have not shown anything to be certain with scientific basis.
that intentional crippling
It was Satoshi's intention and crippling is a metaphor for your feeling on the subject.
of Bitcoin’s capability to scale onchain is not going to help Bitcoin get any more widespread adoption.
This is not at all certain. Bitcoin CAN gain widespread adoption but without scaling its transactional capacity with a contentious hf.
Furthermore, it should be noted that one of the main arguments of the small blockist is that higher level scaling solutions on top of Bitcoin will increase Bitcoin’s market cap as well, which might bend the red curve upwards by an unknown amount. The time is now, though, and reliable, usable and widely accepted solutions have not been implemented yet.
Small blockists I think want to see what happens when you introduce a sound money into an economic system where un-sound money is currently targeted.
There is also no reason that higher level solutions on top of Bitcoin can not work synergistically with a lifted maximum block size limit.
Yes there is. Something has to be the anchobenchmark. If you mess with bitcoin's soundness then this will effect the nature of such “higher level solution”.
submitted by pokertravis to Bitcoin [link] [comments]

Bohmian Dialogue as a Re-solution to the Block Size debate: No Scaling As Scaling

I can't feel it is very true that many devs have already taken such a stance. Well I'd be happen to know there are enough behind the scenes to hold steady, but publicly we see many core devs and proponents wanting to offer a scaling compromise and sometimes a solution. On the one hand I will argue that the general public has not much business telling active developers what they can and should do, but on the other hand there are economic ramifications that SOME developers might not have a strong understanding of.
I don't know if that is silly of me to suggest, I don't know if i have any such understanding...but...
I have argued, which is inline with what finney was projecting for bitcoin in regard to george selgins commodity money (and szabo hayek smith), that bitcoin already has the capability to arise to function as a high value settlement system, and that if the properties that allow it to do so are preserved then such a system will spark the events as described by John Nash.
When we understand the argument and the ends Nash explains it is the only clearly rational and optimal path for humanity. And so this is the FOUNDED argument for the direction we should take bitcoin. This suggests the conflict exists solely because we are ignorant to the insight Nash has left us NOT because one side is correct and the other is not.
Our goal is wrong.
The goal shouldn't be to optimize bitcoin, but rather to align it was the Nashian observation.
Lastly, I suggest that the want to somehow increase, or effectively increase, bitcoin's transactional capacity comes about from a tacitly held belief that such a change would increase the value and utility of the network. Obviously to some extent you disagree with this faction of supports of this argument....
Dialogue, specifically bohmian dialogue, is a protocol for relieving groups of their tacitly held beliefs. I call for a small handful (perhaps more than 5 and less than 10) of, at least fairly reputable, members to enter into dialogue and open the discussion of whether or not bitcoin should be scaled for tx throughput and whether or not it can be direction to function as the premise of Nash's argument.
https://bitcointalk.org/index.php?topic=2015696.msg20100149#msg20100149
submitted by pokertravis to Bitcoin [link] [comments]

Interesting prediction from Hal Finney about "Bitcoin-backed banks (...) issuing their own digital cash (...)" and more efficient systems

This quote is from 2010:
"Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.
Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.
George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.
I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today." https://bitcointalk.org/index.php?topic=2500.msg34211#msg34211
About Hal Finney: Harold Thomas Finney II (May 4, 1956 – August 28, 2014) was a developer for PGP Corporation, and was the second developer hired after Phil Zimmermann. In his early career, he was credited as lead developer on several console games. He also was an early bitcoin user and received the first bitcoin transaction from bitcoin's creator Satoshi Nakamoto. https://en.wikipedia.org/wiki/Hal_Finney_(computer_scientist)
submitted by Ph03n1xII to lykke [link] [comments]

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