Bitcoin (BTC) as Money

Okay yeah, we should make a discussion tree. Besides being off-topic, I think the conversation between @Max and me was getting overwhelmingly complex/long.

I made a rough draft of a discussion tree which I think summarizes a big part of our conversation. The root of the tree is the claim that we are trying to refute. The nodes directly underneath the root are attempted refutations of that claim, the nodes underneath those are attempted counter-refutations, etc. I tried to reduce everything to essentials. Here it is:

  • In the long run, the value of BTC will NOT go to ~0.
    • Continuity matters. If something disrupts the network of BTC miners for—say—100 years, there is no good reason to think that people would stick with BTC.
      • If BTC still has value after a 100 year disruption, then miners will still have an incentive to mine it. Therefore, the reason to stick with BTC only goes away after a disruption if the value of BTC also goes away after a disruption. In other words, the argument in the node above is circular: it assumes that the root of the tree is false.
    • BTC doesn’t have any value as a commodity, so there’s nothing to stop demand for BTC from going to zero.
      • The first clause of this sentence is false. Although BTC has far fewer uses as a commodity than gold, BTC actually does have some value to people as a commodity, because BTC is already valuable. E.g. someone could use his BTC to flaunt wealth.

Are there any parts of this tree that you don’t like or don’t accept, @Max?

I watched this yesterday by the way, was pretty hilarious. Thx for sharing

Yeah, I think I did take my own context for granted. I was watching the episode at the time with a friend (it was released sometime that day). The other major factors that occurs to me is that I wasn’t sober, and was eager to post given its relevance.

I agree that it’s an important error, generally.

In this case I feel like it’s not a big deal, tho. Mb that’s part defensiveness, or trying to ‘brush it off’, so I’ll share my reasoning. The post is atypical in that: I usually think about my posts here before making them (draft them, etc) and didn’t that time; I was unusually eager to post it (like, I felt like it was time-sensitive to post it b/c the ep was recent); and I wasn’t sober. So, since it’s atypical, my intuitive reaction is that I don’t need to worry about making that mistake again (for similar-enough cases) provided I keep a better check on when I post and my motivations for posting.

That said – and this isn’t the first time I’ve noticed this pattern – I did consciously consider beforehand if I should say more or post at all, but posted anyway. in this particular case, I thought more about not giving away spoilers than context tho, which is (I think) part of why I didn’t add more context – but those two things (context and spoilers) aren’t related. Like it’s fair to omit why it’s relevant (tho we do have spoiler tags), but not to omit which episode I’m talking about.

I know I’ve made this sort of mistake outside CF though, even without all the above excuses. I don’t think it’s been v common, but I haven’t been watching for it before now.

IDK if I’ll end up looking through past posts for that sort of mistake, but it is something I am going to watch out for, esp considering that I know I’ve made similar mistakes before.

I did mention the tree before the south park post, not sure if you saw that. I agree that we’re not really sticking to the make-a-conversation-tree plan, though.

(Note: not sure exactly why, but my reply got posted to the crypto currency fraud thread instead of this one; copying it here)

Yeah – I didn’t think you’d answered it (I probs should have mentioned that).

The post you linked has problems IMO; not sure if you consider them relevant or not to the discussion, though.

Bitcoin isn’t dead between blocks – there’s no way for it to be alive without gaps, so logically it can’t be dead in those times. There is still an ongoing process – miners are hashing – but the results of that process are stochastic (next block could be in 20 seconds or 20 minutes).

The above is one reason, but another is that there’s a sense of financial continuity – but that wouldn’t necessarily be the case 2, 20, or 200 yrs later. I don’t think we need to agree on that much here btw, like roughly day-to-day continuity is enough (e.g., stock markets often close overnight, so it seems like day-by-day continuity is good enough for most finance stuff).

Yes, tho I’m not sure if the nodes correspond to each of our points or not. If each node is either something one of us claims or something we agree/disagree on, then I don’t necessarily disagree with the nodes.

Two points of disagreement are below, but this gives me an idea for a cycle we could go through to build the tree, taking turns as we build out each branch:

  • Given there’s a prior node, one of us interrogates that point. The goal of that person is to figure out the next node(s) in the tree, for that branch. The idea is that having little discussions about each point let’s us both get a good understanding for the main through-line of that branch.
  • Once the interrogator is satisfied (and the arguments are understood), a node is added, and the roles swap.

So the next step for me would be to figure out follow on nodes for the two depth=2 nodes (taking root at depth=0). It seems like you own the root node, then I own d=1 nodes, and you own d=2 nodes (in your tree). That’s part of what I’m basing the above on.

Things in the tree I disagree w/ depending on what the nodes correspond to:

(Note: Emphasis mine)
I disagree with this b/c we’re talking about something over time. Referring to the past doesn’t necessarily mean the argument is circular.

IMO flaunting wealth isn’t a thing BTC does b/c it is or isn’t a commodity – it’s a property of BTC as an economic good. Cash is the same – flashing cash isn’t flaunting wealth for anything to do with its material (paper, polymer, w/e). Similar with gold. Basically, flaunting wealth is only possible b/c the good only has prior value due to it’s properties as an economic good (i.e., a money-like thing).

Isn’t this basically what Elliot suggested you do before you started this thread?

I disagree with what you write below this, but we shouldn’t talk about this post directly because the point I’m making in that post is already contained in the discussion tree (but in a cleaner / more applicable form). We should focus on the discussion tree.

Did you see what I wrote here:

?

From what you wrote here

and here

, I’m not sure if we have the same idea in mind for what the discussion tree is.

In more detail, I guess that the type of discussion tree I have in mind is a strict debate tree, described here.

Going to read (or re-read) some of the linked stuff about discussion trees before replying more substantially. (FYI)

I have new thoughts about this part of the conversation tree:

I thought of a counter-counter-refutation. (edit: what I’m about to say has a lot in common with the point made in this post but I forgot about it until now).

BTC does indeed have this “second order” value coming from the fact that it’s already valuable (see the quote above or this post), but it occurred to me that as the price of BTC decreases, BTC will have less and less “second order” value. A corollary of this is that for a rational market actor who is not a speculator, his demand for BTC will decrease as the price of BTC decreases. I know of no mechanism that would cause the price of BTC to naturally* go back up if it goes down, so therefore** I expect the price to decrease to zero in the long run.

Contrast BTC with gold, which has “first order” value (it looks pretty, it can be used in high-end electronics, etc), in addition to having “second order” value. If the price of gold goes down, its “second order” value goes down, but its “first order” value is unaffected. For a rational market actor who wants to use gold for “second order” purposes, his demand for gold will decrease as the price of gold decreases; but for a rational market actor who wants to use gold to make things, his demand for gold will increase as the price of gold decreases. I suspect that these two forces roughly balance each other out in the long run.

TL;DR the discussion tree looks like this now:

  • In the long run, the value of BTC will NOT go to ~0.
    • Continuity matters. If something disrupts the network of BTC miners for—say—100 years, there is no good reason to think that people would stick with BTC.
      • If BTC still has value after a 100 year disruption, then miners will still have an incentive to mine it. Therefore, the reason to stick with BTC only goes away after a disruption if the value of BTC also goes away after a disruption. In other words, the argument in the node above is circular: it assumes that the root of the tree is false.
    • BTC doesn’t have any value as a commodity, so there’s nothing to stop demand for BTC from going to zero.
      • The first clause of this sentence is false. Although BTC has far fewer uses as a commodity than gold, BTC actually does have some value to people as a commodity, because BTC is already valuable. E.g. someone could use his BTC to flaunt wealth.
        • The type of value described above decreases with demand, so it does not protect demand for BTC from going to zero.

*What do I mean by “naturally”? Something like, a price goes up naturally if something other than peoples’ ignorance caused it to go up.

**I just wanted to note that this “therefore” is not even close to being obvious. It’s hiding a pretty complicated argument and some extra assumptions, which I spent a long time trying to write out but ultimately deleted because what I wrote was bad and unnecessary.

Yes. Early on in Bitcoin’s history this was brought up – e.g., if you tried to sell a house then buying ~$1m of BTC to do that would move the market significantly, and similarly cashing that $1m out all at once would do the same, too.
You put it more generally, but I think the essence is the same.

Have you changed your mind?

There’s one special case I can think of where BTC might go back up – if it were the only option; if no other cryptos existed.

I didn’t understand this when I first read it. I thought I did. I agree with it now.

The “continuity matters” node assumes that something bad happens and BTC → 0, and uses the lack of an exchange value to argue that ppl wouldn’t adopt it again, so BTC would stay at 0.

I agree it’s circular. Another decisive crit I thought of is that: whether BTC could recover from going to 0 is a different issue to whether BTC will or will not go to 0.

I recreated the conversation tree based on yours with some added nodes.

Tree as tab-indented text
In the long run, the value of BTC will NOT go to ~0.
	[Refuted / Not Relevant] Continuity matters. If something disrupts the network of BTC miners for—say—100 years, there is no good reason to think that people would stick with BTC.
		If BTC still has value after a 100 year disruption, then miners will still have an incentive to mine it. Therefore, the reason to stick with BTC only goes away after a disruption if the value of BTC also goes away after a disruption. In other words, the argument in the node above is circular: it assumes that the root of the tree is false.
		Decisive criticism: Whether BTC would come back from -> 0 is a different issue.
	BTC doesn’t have any value as a commodity, so there’s nothing to stop demand for BTC from going to zero.
		BTC has value as a commodity because it has exchange value (a price). e.g., flaunting wealth.
			Crit: The type of value described above decreases with demand, so it does not protect demand for BTC from going to zero.
			Q/Crit: Are there any examples of BTC as a commodity that are independent of it's current value?
			(Note: disagreement about meaning of "commodity")

Additions:

  • I think we’re using different meanings of “commodity” – mine doesn’t include 2nd order value (which I equate w/ the idea of an economic good with exchange-value from TMC). We might not need to resolve this, considering your crit and the next node.

  • I have a question that I think needs to be answered for “BTC has value as a commodity” to be true considering your crit: Are there any examples of BTC as a commodity that are independent of it’s current value? If we don’t have an answer to that (or the answer is “no”), then I think we should mark these nodes refuted and/or not relevant:

    • lmf’s tree: “BTC actually does have some value to people as a commodity, because BTC is already valuable. E.g. someone could use his BTC to flaunt wealth.”
    • My tree: “BTC has value as a commodity because it has exchange value (a price). e.g., flaunting wealth.”

Yes, I changed my mind about the main topic (which is what I assume you’re asking?). See how the lowest level leaf on my discussion tree is unanswered.

Yeah, that’s what I was asking.

You might have added the node but not been fully convinced, or were waiting and thinking about it.

Do you want to talk about any related things? Like whether BTC will definitely go to 0 at some point?

I am interested in what could have been done differently / better, too.

Sure, I definitely have some other unresolved questions about crypto stuff that I’d like to know, e.g.

  • are NFTs as dumb as I think they are?

  • are there any good uses for blockchain technology that aren’t related to subverting regulators/authorities?

  • are there any protocols which are robust against government interference (or even just robust against interference from relatively free governments that pay lip service to freedom of speech)?

  • how do I think properly about when the crypto bubble will pop?

If you’re looking for more of a debate thing, something that comes to mind is that you indicated elsewhere in this thread (or in the other) that you think ETH is a commodity, and you didn’t seem to accept my argument that burning ETH is really just an obfuscated way of paying people for services (as opposed to consuming a commodity).

I don’t think this is a great question as it is currently phrased. We can’t answer it definitively because it depends too acutely on peoples’ choices. Like, it’s definitely physically possible for BTC to stay above 0: people could choose (knowingly or unknowingly) to keep its value inflated.

That criticism also kind of applies to the original proposition “In the long run, the value of BTC will NOT go to ~0,” but it’s more vague. What we really did earlier was we answered a more answerable question “Are there any natural barriers to stop BTC from going to zero?” or something like that.

I liked the debate tree thing. I don’t think the conversation would have reached a conclusion without it

Mostly, yes.

There are sensible ideas for NFTs.

Here’s an example: a TCG like MTG.[1] The secondary market for MTG cards relies on their physically limited supply (and things like when they were printed, how many runs/sets, materials used, wizards of the coast’s (WOC’s) policies, etc). Digital MTG cards are records on WOC servers, similar to $ in normal banks but with lesser security standards. A p2p TCG game + secondary market has some advantages over typical client-server games (like MTG arena / hearthstone). You can have a p2p TCG + market with a central issuer (so WOC could run an MTG blockchain game using NFT tech).

Here are some.

I am going to presume a western idea of “regulators/authorities”. e.g., free speech tech subverts the CCP – I guess that you’re not interested in excluding that kind of subversion (tho mb you are interested to know when it could subvert bad authorities)

  • p2p end-to-end verifiable voting systems w/ secret ballot (so that anyone can download and verify the votes). possible criticisms: no point if you can’t verify the electoral roll, you can’t do electronic secret ballot b/c of X. (I have a response to the latter that I can give in private.)

  • twitter / YT type app that is not able to be censored / manipulated like these platforms are being

  • asset exchanges (like forex, stock markets) that do not rely on a central intermediary (mostly not an issue, but sometimes is. e.g., a company in an unstable country/region might have use for this; not a subversion of govt, but protection against govt failure)

  • tokens (money, stock, NFTs, whatever) that need a high degree of connectivity (but low liquidity is okay); normally financial systems are only practical using a pipeline with reliable services that have the right capacity/pricing for the use case. those are not available everywhere, and sometimes you can’t connect two endpoints if you need more than 1 service. An international transaction (IME) uses ~3 services.

    • theoretically (no pratical examples yet), blockchain systems should be able to support transactions between any two locations without adding extra services and things in between – this is not yet a reality, but it’s able to be implemented. So you could start with a low-liquidity unoptimized ~MVP and then build up later.

Not if you include turning off the internet as government interference.

Yes WRT relatively free govts. This isn’t a blockchain example, but good protocols are definitely possible – Signal was subpoenaed for user records and complied as they could:

I don’t think about it: I’m not exposed. If/when I am again: I don’t know.


  1. These are NFTs in the sense that there are X non-fungible cards in a set. But each of those cards might be fungible w/ cards of the same name. The limit of non-fungible are things like ultra-rare cards (similar to ultra-rare CS:GO skins or w/e). I have other examples, but this is the easiest to see, I think. ↩︎

I’m interested in discussing this. Do you want to start? (Mb a new thread is appropriate.) I can respond or start tomorrow. (too tired tonight)

will respond to this more later

sure.

Yeah, might be a good idea since it’s not about “BTC as money” anymore. I’ll leave making the thread to you since I think it’s on you to explain why what I said about ETH is wrong.

You shouldn’t have private conversations with people you don’t know and tell them things you aren’t willing to say publicly.