JackTheMimic @JackTheMimic - 2d
Okay there's really a lot to tackle here but I'll start with some definitions. Money- an asset used to solve the coincidence of wants problem. Currency- an abstraction of money to facilitate the frequency of trade necessary to keep up with the velocity of commerce. Value- a heirarchical system to organize speculation on the importance of one thing over another. Volatility- rapid change in value usually due to either supply economics or demand economics. So, with those definitions, I will sort of unravel what I see to be misapprehensions and/or inaccuracies. "Bitcoin doesn't preserve purchasing power" because it's volatile. This has a smuggled assumption: The ruler by which you measure value is stable. If you price everything in bitcoin, it is stable. The price of everything has steadily declined in a very predictable way. It is inversely correlated to the inflation of your measuring stick, The Dollar. The dollar is the volatile aberration that distorts the prices of everything else. The reason for this can be summed up like this: If I asked you to build a house and the measuring tape increased the distance a foot was every few days. How would you be expected to have an accurate way to build? The "Unit of Account" inflating distorts one's idea of what is stable. As far as NGU speculating, literally all valuation is speculation. By holding any asset for any amount of time you are speculating that it will hold more value later than if you sold, or consumed it right now. The number going up is reassurance that your speculation was correct. Bitcoin "handling credit, bonds, and unfunded liabilities" is kind of confusing. By recapitalizing into bitcoin, all that happens is that the true cost of those goods and services emerges and market actors will decide if they want to continue funding those things. Bitcoin doesn't consume other assets. It just demonetizes them consuming their monetary premium. In a Bitcoin standard no one will buy a house just to sell it. No one will buy gold for it's monetary value, only it's utility value. Bitcoin can't consume a negative monetary value (unfunded liability). Now we come to lightning. People don't realize this but Lightning is a currency token. The sats you send over lightning are not real sats. They are a claim (programmatically enforced) upon real sats locked in an HTLC on the BTC Timechain. Bitcoin is money, not currency. Lightning is currency, not money. They are used in collaboration to facilitate this digital age commerce. Assets/money are generally inefficient at being mediums of exchange. Gold coins had very little verification when used as currency. Hence all the chicanery of coin clipping, alloy mixing, weight dilution and so on. Gold was best used as the reserve asset/money behind a currency. MANY countries in the past 5000 years have done this. Bitcoin can't get around the Monetary trilemma: Speed vs Security vs Scale. You can only have two of the three in any monetary network. So what a currency does is cover the missing piece. Fast and secure FINAL settlement is what Bitcoin offers. Scale however is not. Lightning solves this by having Speed and Scale. The security is wholly dependent on the BTC Timechain verifying the Final channel states. This is how ALL money scales. Layer 1- Asset Layer 2- Coupon Layer 3- Credit And a final point on Time preference. The Bitcoin's value growth prevents it's expenditure, point. This is simply not true. The more valuable it becomes the less of it you will have to spend to acquire everything you need to live. No one can sustain themselves with money alone. Especially not digital money. Having money is not a good unto itself. You have it for the sole purpose of spending it on goods and services you need and want. The amazing thing is that the more valuable a money becomes over time, The lower your time preference becomes. Frivolity and decadence fall dramatically with sound money. I myself find this to be a good thing. I don't exactly understand the mindset that it is bad if people don't throw their money away frivolously. Anyway, I hope this elucidates you upon my perspective and why Bitcoin is THE tool have a sound economy.
I will reiterate, my definition of value is the correct one. There is no such thing as inherent value. Every value is the speculation upon it by a human. Water is inherently valuable? How much would a drowning man pay for a bottle? How about a man in the desert? No good or service has intrinsic value. I emplore you to read Human action by Ludwig Von Mises or if you REALLY want to break it down as far as possible read Man, Economy, and State by Murray Rothbard. All of your analysis hinges on that fact being untrue. I agree that Lightning isn't hard money because it's not money, angain it's a currency. The problem of a trilemma is that choosing more than 2 options of a trilemma is like choosing both options in a dilemma... It's logically impossible. Monero is dynamic in that it's two changes as the block changes. Its dynamic blocksize diminishes its security proportional to its scale. The security is based on its auditability not the signatures. The ability to audit and verify is what secures any blockchain. So, anyway I am not really into debating definitions. I am glad we agree that Fiat is destructive. I think bearing down on what makes sound money sound, is what really reveals what properties are important.
Yes #3 but I completely reject #4. By the Austrian logic, nothing is intrinsic, which was the basis for most of the previous post. Currency IS collateralized credit. That's what it is. Money is an asset that solves the coincidence of wants. It is a good not meant to be consumed. The 5 attributes of sound money are: Scarcity Verifiability Divisibility Portability Durability Currency is a technology that makes better the transactional functions of a money that has these attributes. The sole attribute of currency is that it is collateralized by the money. Bitcoin (like gold) is highly inefficient as a currency. I say Bitcoin is money not currency because it doesn't collateralize itself. All assets can be traded for goods or services, that does not make it a currency.
So, no those two things aren't contradictory. Absolute scarcity is not a measurement. It is a true/false attribute. Scarcity in general has degrees yes. Corn for instance, there is a number of corn kernels on the planet. It's probably unknowable but there is a number. The problem is corn is a produceable good meaning even the last kernel on earth can be reproduced. Absolute scarcity means the number of something in existence is fixed. Such as the number of authentic Monet paintings, or Bitcoin. Subjective value theory has no qualms with this for goods because goods can be scarce but not absolutely scarce. A Monet painting being finite means it is technically priceless not because it is valuable but because it cannot be reproduced (authentically). Bitcoin's value is derived from the human valuation of the 5 properties I expounded upon earlier (Scarcity, Divisibility, Durability, Verifiability, and Portability). Scarcity is merely one of the five but the point is that it's scarcity is absolute or finite meaning it is perfectly scarce compared to all physical assets. It is all of the attributes combined with a human want for a neutral money that derives the value we see today.
"Given that non-decreasing demand is not assured the theory is invalid" That's rock solid logic right there, the demand for money will decrease therefore the subjective value of an absolutely scarce money will not sustain. Lol, just let me know when you walk up to a person and ask "Do you want some money?" And they say "Nah, I have enough."
