This doesn't mean that Bitcoin can't be valued but it means that the community has to have a strategy to provide equivalent reassurances.
The conversion rate of gold to USD vastly exceeds the intrinsic value of gold. People are investing in gold far more than they would ever invest in any other commodity.
In other words, you'd be a fool to use gold as a commodity material in manufacturing when any other similar material would do, because we've collectively decided that gold has more value than its usefulness as an element would otherwise indicate.
Currencies aren't commodities and have no innate value. The represent wealth, they aren't themselves wealth.
> In the case of a government-backed currency, there's at least some value based on that government's ability to mandate its use for taxes.
That begs the question -- by which I mean it assumes what it should be proving (the real meaning of "beg the question"). The fact that government collects taxes using dollars as a medium of exchange doesn't mean the government's action validates dollars, but that government gives dollars the same regard the public does, for reasons having nothing to do with government itself.
> This doesn't mean that Bitcoin can't be valued but it means that the community has to have a strategy to provide equivalent reassurances.
The validity of dollars results from public familiarity, faith and trust. This may or may not happen with Bitcoin, but that's the usual route to currency validation.
Just like a commodity then. Where does this "intrinsic value" that you think gold has come from?
Your definition of commodity is incorrect. See http://en.wikipedia.org/wiki/Commodity:
“In economics, a commodity is a marketable item produced to satisfy wants or needs. Economic commodities comprise goods and services.
The exact definition of the term commodity is specifically applied to goods. It is used to describe a class of goods for which there is demand, but which is supplied without qualitative differentiation across a market.”
Gold and silver meet this test because they have other uses (jewelry, industrial, dentistry, etc.) dating back throughout recorded human history.
In contrast, bitcoin – like all fiat currencies – has no value except as a unit of exchange. There's nothing meaningful that you can do with them unless you find someone else willing to accept them – defunct paper currency could at least be used for kindling…
1. Jewelry
2. Electronics
3. Dentistry
----
Uses for USD (besides trade):
1. Rolling in it
No, this is false. Gold and silver had innate value long before anyone "in authority" declared this to be so. In fact, central authorities eventually recognized the value of gold and silver, they didn't declare it or bring it into being.
The really remarkable event, that cements the role of modern government in economic matters, was the relatively recent unlinking of paper money from the backing of gold and/or silver. This step was taken for a number of excellent reasons, but it was predicated on the idea that the public will have faith in the stability of the economy, not on the innate representational value of paper money.
Then the USD was decoupled from everything.
Far before any of that, people actually used gold and silver coins and pieces of coins as currency.
TL;DR Gold-as-currency first used in Egypt 4,000 BCE; Egypt implements a commodity-tax somewhere between 3,500 - 20 BCE; Coinage first cited between in Lydia 700 - 550 BCE.
Could you give me an example, like I originally asked?
http://en.wikipedia.org/wiki/History_of_money#Early_usage
> It has long been assumed that metals, where available, were favored for use as proto-money over such commodities as cattle, cowry shells, or salt, because metals are at once durable, portable, and easily divisible.[45] The use of gold as proto-money has been traced back to the fourth millennium BC when the Egyptians used gold bars of a set weight as a medium of exchange,[citation needed] as had been done earlier in Mesopotamia with silver bars.[citation needed]
http://en.wikipedia.org/wiki/Lydia
> According to Herodotus, the Lydians were the first people to use gold and silver coins and the first to establish retail shops in permanent locations.[12] ...
> The dating of these first stamped coins is one of the most frequently debated topics of ancient numismatics,[14] with dates ranging from 700 BC to 550 BC, but the most common opinion is that they were minted at or near the beginning of the reign of King Alyattes (sometimes referred to incorrectly as Alyattes II), who ruled Lydia c. 610-550 BC.[15] ...
http://simple.wikipedia.org/wiki/Ancient_Egypt#Early_history
> Ancient Egypt, or the Egyptian Empire, was a society that began about 3500 BC and lasted until 20 BC when it was invaded by the Roman Empire.
> Ancient Egypt had a lot of different taxes, but there was no real money, so people paid each other with goods or work. The person who watched the tax collection was a scribe, and every tax collector in Egypt had to tell him every day how many taxes they had collected. Each person paid different taxes based on the work that they did: craftsmen paid in goods, hunters and fishermen paid with food, and every single household in the country had to pay a labour tax every year by helping with work for the country like mining or for canals. A lot of rich Egyptians paid poorer people to do this for them.
2. Does the article call the gold bars "proto-money"? Sure, but now we're just bickering over definitions. The same article says the Egyptians used gold bars as a medium of exchange, which I believe exactly fits what we've been discussing. If you define "currency" to mean something other than a "medium of exchange", then what is the distinction and how is it relevant to Bitcoin?
3. And this brings us back to the original point of contention ITT: Why do you believe a a successful currency (or successful medium of exchange) requires a centralized "standard" despite historical evidence of decentralized "commodity money"?
The "gold standard", in the US, was established by federal law in 1900, replacing bimetallism, the previous basis. Respectfully, I don't see how the use of precious metals in Ancient Egypt is relevant to the role of currency in a post-industrial world.
It appears our disagreement lies in "post-industrial". My first thought was "I don't see how the use of precious metals in Ancient Egypt is any different from the role of currency in a post-industrial world." Now, asserting our myopia leaves us nowhere. But as long as this thread is already, I'd like to dig deeper.
Given the Mt. Gox debacle, I'm assuming your line of reasoning is related to trust. E.g. "the purely electronic form of bitcoin allows it to be stolen on a scale not feasible with more tangible forms of money." But then, do banks prevent the laundering of USD electronically? Or perhaps "who will insure against theft if not the government?" But then, who insured against theft prior to Hamilton's creation of the U.S. National Bank?
But at this point, I'm fully immersed in strawman land.
Ideally, I wanted to understand your reasoning. I still haven't gotten very far. Consider that if I can't decipher why you disagree and I'm not permitted to construct hypotheticals (strawmen) as to why you disagree, that leaves me with either assuming you're automatically wrong or not thinking critically at all.
Derailment? I don't think that's fair. Until now, I've been pursuing the same question this entire thread (why you disagree with top post).
Your conclusions may be correct, but your argument is rubbish.