Bitcoin and Gold: What is Money to Us Now?
Bitcoin, Gold, and Money:
"Everything [including Gold] that was real was imagined first"
Authored by Vince Lanci, ZH Edit
What is money to us? We know what money does.. Nearly everyone can recite the 3 characteristics of what it does by now.
- Store of Value (SOV),
- Unit of Accountancy (UOA),
- Medium of Exchange/ Settlement Medium (MOE).
Funny, 4 years ago almost no-one could tell you this on their first try. Bitcoin is why we now think about that now. That isn't what money is. That is what money is used for.
What does money represent to human commerce and humanity itself? How is it viewed by those who use it? What does it signify to the user? That answer is power. How it is actually used is how that power is expressed.
Historically, at root, there are two camps on this:
Is it a commodity store of economic value (SOV) used to facilitate exchange (Real/Bullion) or is it better to see money primarily as a credit (MOE) or IOU debt-ledger (Abstract/Fiat)? All paper-money is after all just a transferable IOU, a debt instrument.
About UOAs: Gold and its digital brother Bitcoin are both excellent UOAs with differing nuances. This makes the UOA aspect no longer a part of the debate. Thus, it's the SOV vs MOE battle from here on in. You can even see the split in real time (Austrians vs Neo-keynesians) very loudly now. Truth is, the SOV/MOE debate is as old as money itself and still unresolved.
So which is right?
What is Money Historically?
One Answer: Money is viewed societally as both real and abstract with each viewpoint taking turns being the dominant force for long periods of time in molding economies. In the west it looks like
- Real | Abstract | Real | Abstract
- Rome | Middleages | Colonial | Post 1971.
In the East, China alone throughout centuries has gone back and forth between Abstract and Real paralleling these same time-frames.
For starters each type of mindset has attached to it, ts own inhumane foibles.
Real/ Bullion: if Money is an SOV, portable and a bearers asset, then those who wish to secure power can/will kill for it. Historically, Bullion Eras are mostly marked by physical violence and slavery from those who exercise power with no regard to their fellow man to obtain it and the power that it provides
Abstract/ FIAT: which is arguably what we are in now post 1971, usually are marked by an intolerance for chattel slavery opting for passive violence and debt slavery (a different less obvious way of abusing your fellow man) to stay in power
Either way, money is a means for exercising influence over others to do good, or not. So which way, Real or Abstract, dominates now?
Is Money Real or Abstract Now?
Bitcoin's existence forces this discussion. Perhaps Bitcoin's existence augurs in a new era of dominance by one or the other mindset described above; or perhaps a 3rd way.
What is Bitcoin and its future offspring then; A chattel-slavery inducing SOV, or a peon-slave creating MOE.. or some kind of hybrid instrument? That depends on how it is used, like all tools the powerful wield. Bitcoin is a tool like a hammer or printing press, or black (gun) powder.
Bitcoin, using this analogy, is a potentially world-changing hammer. But a hammer nonetheless. A tool that can bash brains or build houses. We've all heard how BTC can build houses, and that is all likely true in competent hands just like the hammer.But....How will it be used by the incumbent powerful who wish to stay in power?
How will its foibles be exploited by those who understand (incumbent or upstart) and are positioned to take advantage of them? Will it be used as an SOV accompanied by chattel slavery, or will it be used as a debt ledger for peonage. That answer, whatever it is, may be your answer as to what BTC or its offspring actually becomes, if anything. Maybe a hybrid of both types of slavery perhaps?
For that matter, how will Gold, formerly reduced to an SOV in this post 1971 Abstract/FIAT era, now potentially resurrected as an MOE again via its own hybridization using blockchain evolve? (Spare us the "Gold is centralized" argument... everything is a tradeoff.. do you want a real thing centralized, or an abstract thing decentralized?)
The point is.. how will it (BTC or some Gold hybrid) be wielded by those in power to remain in power? That is what it will become used for predominantly by incumbent power. That is how it will be viewed; whether by the incumbents in power, or the upstarts who take it from them.
According to the late @davidgraeber we are in the beginning of an abstract era right now. These last for centuries. If that is correct, then BTC (and/or hybrid gold) used by those in power will be a tool of debt peonage.
What is intrinsic value...
What is BTC worth? if its an SOV, its worth A LOT to the extent it is allowed to be transferable and usable. A permanent bearer asset that everyone (someday?) recognizes and accepts as an SOV.
If however, it's an abstraction (think MOE) easily replicable.. it's not intrinsically worth much ( it's worth the labor needed to replicate it) -- but still potentially ALOT nonetheless. (what has intrinsic value after all?) I.E. What is the dollar's network and payment chain worth?
BTC is in the process of piggybacking that MOE network globally if Saylor's Godzilla analogy is right. Distribution networks are worth A LOT.
How Will BTC be Used to Control?
Fact is, the powerful are all about Abstract Debt Slavery now. If they can't stop BTC from being an SOV, they will continue to centralize it while throttling it among the peons (Gold 2.0). If that is the case, how good is it truly as an SOV if it's network/distribution effect is negated... How good was the BETAmax? Unfair comparison maybe, except for one thing. The hammer always is what powerful people (incumbents or challengers) who win and wield it say it is.
The incumbent-powerful want it to be a failed MOE And while they are trying to make it fail, they are accumulating it in case it becomes a successful SOV. This is what they did with Gold. Obviated it as MOE while accumulating it as SOV, just in case it ever made a come-back. And it is making comeback thanks to BTC
What is money to you?
What is money as a tool to those in power? That is what money will become.
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