Bitcoin (BTC) as Money

[lmf]

One quick note:

@Max

WRT aliens, […]

Sure, gold would be valuable to aliens who trade with humans, even if it doesn’t look pretty to them. The alien civilization I’m imagining is not aware of the existence of humans, and doesn’t think gold is pretty, and doesn’t know about the industrial uses for gold. To them, gold would be no more valuable than dirt.

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I should probably read TMC. There are some things you wrote in here

@Max

Because there is demand for consumption ( what that demand is doesn’t matter that much). One core idea behind gold-as-sound-money (as I understand it) is that there will always be some demand for its consumption. I agree that industrial uses aren’t a significant factor in the price of gold (industrial use is minimal and sparing), but the fact that there are (at all) industrial uses (among others) is important.

WRT TMC[1], gold is considered the best candidate for sound money for reasons including: wide acceptance (note the network effect here), and wide understanding of soundness (including scarcity, persisting demand, etc). But it’s by not the only candidate.

Crucially, WRT the disparity between the current price (including the demand for gold as an exchange medium) and like an equilibrium-commodity-price, TMC doesn’t say that such a disparity is forbidden. Rather, it’s expected. One reason that gold is a good candidate for money is that the demand is somewhat ~inelastic (see wedding ring paragraph below), so a change in it’s objective exchange-value doesn’t affect the perception of it as a good medium of exchange (for the most part).

that I don’t really understand. I’m going to mostly ignore it for now because I want to keep the discussion focused (but let me know if any of it is important for what I say below).

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@Max

BTC can only have value if: it’s useful for exchange, or ppl subjectively value it.

Agreed.

@Max

Looking pretty explains gold-colored plastic rings, but IDK if it explains gold rings (similar for necklaces, bracelets, earrings, etc). I think that’s b/c there’s an extra reason: a display of, or locking-up-of, wealth. Like a gold (or platinum, etc) wedding ring is a significant expense, and one common reason (mb) is to demonstrate significant investment. Like, wrt wedding rings, it’s literally entangling that value ($) with the fate of the relationship.

I think that here ^^^, you’re saying almost the same thing as what I getting at with this sentence:

@lmf

Maybe the real reason gold looks “pretty” to us is more because we feel good when looking at gold or something, and maybe the reason for that is because gold is rare and expensive in first place.

But yeah, there’s this weird feedback effect going on: much of the reason why gold has value as a commodity is because it’s already valuable. Let me call that type of value “2nd order commodity value” for lack of a better term.

Since BTC is rare and expensive, BTC already has value as a 2nd order commodity (e.g. allowing people to flaunt wealth, allowing people to look at their wallet and feel good about themselves).

Does what I’m saying make sense so far? Do you agree that BTC has some value as a “2nd order commodity”?