Do you really believe Nixon had the power to end a 5,000 year old practice with a mere announcement?
That's the show talking my man
Discussion
He didn’t end it, FDR did in 1933, for everyone except foreign governments.
But in practice the telegraph ended it. If you wanted to keep up with the pace of modern commerce and not get out-competed, you needed to do business with the banks that could “wire” money across oceans. These banks, like all banks, cheated the issuance and were insolvent. So they created the central bank to literally paper over this problem.
Sounds like you're just making our point. The "gold backing" was already a fraud at that point because international redemption of any large amount was always going to be denied. Gold backing isn't something anyone can ever trust or enforce.
If you can't trust or enforce gold, why do you imagine you can trust & enforce shipments of oil, or grain, or manufactured goods?
This is my point - there isn't really anything special about gold (except for uniformity and durability which make it an excellent money but don't somehow predispose it to theft)
Either we develop enough trust to conduct remote trade in physical goods, in which case we don't need Bitcoin
Or we fail to develop that trust in which case we also don't need Bitcoin
Because you can trust Bitcoin... actually you don't have to, you can verify it yourself.
That's the whole point you're missing.
If you could teleport oil, grains, or manufactured goods across the internet for much lower cost than shipping them in the physical world, that method would eventually be adopted and eliminate the alternative.
The history of celluloid film is probably the most instructive. The studios used to spend millions of dollars every year manufacturing 35mm prints of their movies (~$50k/each!) and shipping them all around the country to be exhibited. They didn’t stop because this didn’t work, but because an alternative was developed: digital exhibition. Suddenly they could accomplish the same thing for a fraction of the cost in money and time. And within a decade, this multi-million dollar sub-industry vanished. Kodak, once synonymous with the photographic image, totally missed the boat and is no more.
It’s not that you can’t ship gold around the world for international trade, it’s that it is cheaper and easier to use fiat. And it’s even easier and even cheaper to use Bitcoin.
It took a decade to go from Blockbuster’s best year ever to bankruptcy.
I suspect the next decade will see a real phase change in money, for the same underlying technological reason.
If we could teleport gold around the world that would be a great invention.
But we cannot, and the people who are telling you that Bitcoin is digital gold have not thought through why Bitcoin enjoys nonzero valuation right now. They take it as a given that Bitcoin has a nonzero fiat price, which it certainly does. But why?
Why exactly did the pizza manager gift two pizzas for a bunch of Internet points he didn't understand and had no use for? Was he the first true believer? Did he read an advance copy of Broken Money?
Or if Bitcoin was already trading for a few cents or fraction of a cent, why?
The pizza manager didn’t accept the Bitcoin. Someone else on the internet paid the papa John’s in fiat and received the bitcoin. What’s interesting is that this was even possible - because the bitcoin settled fully, the other person had no problem extending credit to the buyer to facilitate the transaction as the major corporation demanded.
Bitcoin got its first fiat valuation by comparison to the relative electricity cost required to mine the equivalent amount of bitcoin.
So in fact it was the electricity cost that Bitcoin obtained naturally that provided an anchor for the first fiat for bitcoin exchange on record.
This doesn’t mean Bitcoin is “backed” by electricity or that it is “pegged” to electricity, but that it has a non-imaginary relationship to the cost of electricity from which basic shared valuation calculations can be made.
It was possible for two reasonable people to calculate and agree on the price of Bitcoin in electricity, and to calculate and agree on the price of fiat in electricity, and thus, calculate and agree on the price of Bitcoin in fiat. And so they did.
Electricity usage and its necessity in the computation of Bitcoin issuance is the real world peg of Bitcoin. With gold, it’s the atoms of gold, which no matter how hard the alchemists tried, could not be cheated. With Bitcoin it’s the energy cost of computation. If that can one day be cheated, it absolutely will be. But today it can’t be, and so Bitcoin has a peg to the physical universe.
Machine labor theory of value
Not at all. Electricity is a commodity. Anyone on earth is free to exchange their electricity for Bitcoin at a mathematically predictable rate, set by the computer program that issues Bitcoin. Why the first people would want to do this is immaterial, but today many people do. And because many people do, the relative valuation of Bitcoin vs electricity is maintained (there is a market price for Bitcoin vs Electricity). This is both your basic peg to the physical universe and your initial basic utility use case. Bitcoin and electricity can be exchanged for computation, and computation is perhaps the most valuable resource in the coming millennium.
Fiat can also be exchanged for electricity, Bitcoin, compute-time, etc
Your challenge is to explain why Bitcoin has value and fiat in some fundamental sense does not (or will not)
So just pointing to the nonzero market value at present doesn't advance your case unless you intend to defend fiat as well, which currently shares nonzero market value
Of course fiat has value. Is that even a question? The protection of the American Empire proved more valuable than the assurances of non-sovereign money. The destabilization of the rest of the world created a demand for the debt notes of the Empire. A strategic arrangement with Saudi Arabia created further demand. The threat of violence that will be visited on you if you don’t pay your taxes creates further demand. On top of all of this, it’s pretty easy to spend fiat in tiny denominations for coffee, or large denominations via wire transfer. It’s relatively easy to track with double entry accounting systems. And if you can get legal permission to manufacture this currency in the form of credit, you can actually acquire material goods as well as power and influence with those tokens. If you and I don’t, someone else will. Then they will use that power and influence to rule us.
Now, that may not be a fair game; indeed, it’s extremely rigged. But that didn’t stop those playing that game from literally conquering the world with it. It was the better tool for conquest and power, and it was used to those ends.
Fighting against this reality has been futile - it’s a self-powering flywheel. The fiat monopolists print the money that gives them the power to hire the violence to enforce the monopoly, and around again we go. Participating in this system is less an empowering choice and more a survival instinct.
Subjectively, people value the life they can live participating in this system more than the life they will live trying to fight it. Survival and conflict avoidance is a perfectly rational impulse.
Successfully fighting this Empire is impossible with outdated technology. You’re not resisting this tyranny with shells and bow and arrow, or even gold and gunpowder. The Leviathan got the upper hand technologically in the 20th century.
While it is not yet certain, it is my hope that the balance of power shifts away from tyrants and empires in the 21st century, enabled by the radical defensive technologies of encryption and Bitcoin.
You can trust or enforce the shipment of goods monetarily if the money only flows when contracts are fulfilled. That's the whole point. People don't get paid unless they send goods. They don't have to send goods until money is provably locked in a form of escrow that can be settled immediately upon the arrival & inspection of the goods. With gold you can either ship it first & take all the risk, or they can ship the goods first & take all the risk, but there's no way to balance the risk. And the added cost of shipping gold doubles the cost of the exchange.
Well you *could* add a third party escrow service who receives the gold and then forwards it along, and actually triple the cost
And arguably increase the risk by introducing another party to the transaction. You could be screwed by a trading partner or by an escrow service that could pick sides or screw both parties, whether on their own or threatened by a govt or other interested party.
So you’re saying add a fourth party (the government) and quadruple the cost (through compliance and taxes)? Sounds great! 😂