Home » bitcoin » Bitcoin’s Supposed Non Monetary Use As a Transporter of Money.

Bitcoin’s Supposed Non Monetary Use As a Transporter of Money.

That’s the latest rationalization for bitcoin having non monetary value. Bitcoin has non monetary value as a means of transporting money. The folks at Mises.org have even fallen for this one. I’ve written about it before, but I just had a new idea.

Costello: Hey, Abbot, get this. A new Armored Truck company has opened for business. They will transport your money securely anywhere, plus there is a roulette wheel installed in the truck. As the truck speeds your money to its destination, it is automatically bet on any number you choose, from 0 to 00 to 36.

Abbot: What if I don’t want to bet on any number, just keep my money as is? All I want is for the Armored truck to deliver my money to its destination.

Costello: That’s no fun.

Abbot: No, that’s bitcoin. As a means of transporting money, it includes a gamble its price may drop and you lose big time. What kind of way is that to transport money?

Costello: Come on, Abbot, if you work fast, buy the bitcoin right away, then instantly transport it, the odds of losing anything are miniscule.

Abbot: But what about the recipient? Why should he accept payment in something that may drop in price?

Costello: He will have to unload it right away, too.

Abbot: So we are talking about a means of transporting money that involves both the sender and the recipient not holding onto the money for more than a few seconds, and this is baked into the transportation system.

Costello: Yep, and that’s how Microsoft and all them others are using bitcoin. Isn’t it wonderful?

Abbot: Of course, Microsoft pays a nice fee to some third party willing to take the bitcoins off their hands and assume the risk.

Costello: And that third party will always be there. Like the Roman Empire. I guarantee it.

Abbot: So bitcoin is a means of transportation that has baked into it a serious risk of losing big chunks of the money sent, but there are people out there willing, for a fee, to take the risk.

Costello: Sound viable to me. That’s exactly the kind of thing Mises was talking about when he said a money has to start off with intrinsic value. Risky, but someone out there is, for now, willing to insure you against the losses. Can’t get more intrinsic than that. What’s not to like? Microsoft thinks it’s OK, so why are you worried about it?

Abbot: To Microsoft, the whole thing is just another advertising expense. The companies interviewed about why they accept bitcoin all said it’s an advertising gimmick, and a cheap one at that, must cheaper than a television commercial. But Mr Average person would never agree to transporting money that way, or accepting money transported to him that way, with his money constantly gambled with whether he likes it or not.

Costello: Unless he’s buying drugs or something, which is a transaction involving other risks. So he figures the risk of losing on the roulette wheel is less than that of being arrested if he uses real money.

Abbot: Bottom line, bitcoin is not transporting money. It is transporting a lottery ticket with an unknown expiration date.

Costello: So it’s like a delivery truck that can only deliver rotten eggs.

Abbot: Exactly.

Advertisements

7 Comments

  1. Vlad says:

    Aaah, I once in a while visit your blog and… I’ve got to admit, it feels satisfying popping in and seeing a point I made being discussed. I didn’t know the folks at the Mises institute had the same view.

    Still, your solution keeps going further and further down the logic hole to invalidate bitcoin. Have you ever considered BTC might actually hold some merit?

    Still, I enjoy reading your views, even if they are contrary to mine.

    Like

  2. Smiling Dave says:

    Glad to see you drop by. I stand by everything I wrote about bitcoin.
    Sure bitcoin holds some merit. It will be prove a valuable lesson to a lot of suckers to watch their money carefully.

    Like

  3. bitcoin_sad_face says:

    Dave,

    This thought crossed in my head after reading your bitcoin articles.

    People gang up either as pro or against bitcoin, what if there is a third way!

    That is, the position is irreducible as of now. There are many things in life that is irreducible to logic or modelling (eg: uncertainty of entrepreneurship risk taking, high impact blackswan events of market, complex adaptive systems) . In these irreducible cases we simply have to wait and see what happens, no amounting logic/computing power can give us crystal ball.

    Although it feels like dodging the debate, it seems this third way is a legitimate position!

    We just have to wait and see, all other arguments are simply people’s psychological projection of their thoughts on reality, they are seeing their mirror image reflected back in these type of ambiguous/uncertain situation! Future reality is unknowable as of now!

    Thanks,
    bitcoin_sad_face!

    Like

  4. Smiling Dave says:

    So you are saying:
    1. Many things in life are irreducible to logic or modelling.
    2. Therefore bitcoin is irreducible to logic or modelling.

    And again, you argue:
    1. Many parts of the future are unknowable as of now.
    2. Therefore, the future of bitcoin is unknowable as of now.

    You see the flaw. It’s like saying 1. Many people are left handed. 2. Therefore Jones over there, whom I don’t know personally and know nothing about, is left handed.

    My humble articles claim that they prove that bitcoin is doomed, for many reasons, and present a logical case. The job of the opposition is therefore to show where there is a flaw in my reasoning. So far, they have not succeeded, and not for lack of trying.

    I can see one instance where your argument might be valid. If someone would declare the arguments presented are too subtle, or too intricate, or too boring, for him to expend the effort to figure them out, and that he prefers to spend his time watching Keeping Up With the Kardashians, so that for now he will declare the bitcoin debate unsettled in his own mind, I would say that is a tenable position, if he is not going to gamble big money on bitcoin.

    Like

  5. baxy says:

    so what’s your current stand with respect to bitcoin!?
    They have blown up eveywhere!

    Like

  6. Smiling Dave says:

    I stand by all I wrote. The Ithaca Hour, a famous fake money just bitcoin, lasted 18 years before hitting zero. Give it time.
    Meanwhile, does anyone do anything with bitcoin but hoard it or cash out? Does anyone buy pizzas with it, or junk on overstock.com? Does anyone actually use it as money? I didn’t think so.
    In other words, it’s being used in the exact way one defines a bubble.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: