- From: Joseph Potvin <jpotvin@opman.ca>
- Date: Sun, 26 Jan 2014 10:39:49 -0500
- To: Melvin Carvalho <melvincarvalho@gmail.com>
- Cc: Web Payments CG <public-webpayments@w3.org>
- Message-ID: <CAKcXiSq+SkoH-89Y6AtYVgLhU13ng70gKKaXdHj9x48EFoP3Ew@mail.gmail.com>
RE: "I suspect that if bitcoin grows, it will become less volatile" Two propositions for consideration: 1. If any decentralized digital medium-of-exchange grows in use without the maturity and predictability of a value-in-exchange benchmark*, it will reproduce and even augment the aspects of fiat systems that add uncertainty and risk to general commerce (trade in goods, services and rights); 2. If any decentralized digital medium-of-exchange grows in maturity through association with a meaningful and predictable value-in-exchange benchmark*, it will be well-positioned to grow in use because it would provide a broad useful purpose in reducing uncertainty and risk in general commerce (trade in goods, services and rights). __________ * Such a benchmark must have the properties of transparency, verifiability, integrity (i.e. freedom from manipulation), and reliability (i.e. freedom from errors) Joseph Potvin On Sat, Jan 25, 2014 at 10:17 PM, Melvin Carvalho <melvincarvalho@gmail.com>wrote: > > > > On 26 January 2014 03:44, Joseph Potvin <jpotvin@opman.ca> wrote: > >> [Tanential to the web-payments topic, except in terms of considering how >> medium-of-exchange volatility is to be handled...] >> >> RE: "volatility being inherently terminal" + " when a store has a "50% >> sale"" >> >> Melvin, If you say that, then do you stand with the governments of >> Finland and China who have determined that BTC is a virtual commodity, not >> a type of money? >> >> http://www.bloomberg.com/news/2014-01-19/bitcoin-becomes-commodity-in-finland-after-failing-currency-test.html >> > > No strong opinion on this one, but satoshi had some interesting insights > here: > > [[ > https://bitcointalk.org/index.php?topic=583.msg11405#msg11405 > > As a thought experiment, imagine there was a base metal as scarce as gold > but with the following properties: boring grey in colour, not a good > conductor of electricity,not particularly strong, but not ductile or easily > malleable either, not useful for any practical or ornamental purpose, and > one special, magical property: can be transported over a communications > channel. > > If it somehow acquired any value at all for whatever reason, then anyone > wanting to transfer wealth over a long distance could buy some, transmit > it, and have the recipient sell it. > > Maybe it could get an initial value circularly as you've suggested, by > people foreseeing its potential usefulness for exchange. (I would > definitely want some) Maybe collectors, any random reason could spark it. > > I think the traditional qualifications for money were written with the > assumption that there are so many competing objects in the world that are > scarce, an object with the automatic bootstrap of intrinsic value will > surely win out over those without intrinsic value. But if there were > nothing in the world with intrinsic value that could be used as money, only > scarce but no intrinsic value, I think people would still take up something. > > (I'm using the word scarce here to only mean limited potential supply) > ]] > > >> >> Sure, the prices of goods and services are supposed to rise and fall with >> a vendors strategies and tactics in relation to supply and demand. But the >> "prices" of currencies are not supposed to do that, rather they are >> precisely supposed to NOT do that. Because in a well-functioning and >> efficient market for goods and services, autonomy over goods and services >> prices vests with the vendors of those goods and services, not with the >> programmers of forex algorithms and other speculative instruments who have >> nothing to do with those vendors. >> >> Sure, in today's forex market the whole point of the "Speculation Use >> Case" is volatility. But the forex market as we've come to know it since >> the early 1970s is not serving the economic purpose of facilitating the >> "Goods and Services Commerce Use Case". >> > > On volatility, I have no idea if it's good or bad for bitcoin, but I > suspect that if bitcoin grows, it will become less volatile. > > >> >> Joseph Potvin >> >> >> >> >> >> On Sat, Jan 25, 2014 at 9:06 PM, Melvin Carvalho < >> melvincarvalho@gmail.com> wrote: >> >>> >>> >>> >>> On 26 January 2014 01:17, Joseph Potvin <jpotvin@opman.ca> wrote: >>> >>>> >>>> http://wcoats.wordpress.com/2014/01/25/cryptocurrencies-the-bitcoin-phenomena/ >>>> >>> >>> Quite an informative piece. A few inaccuracies, such as he says that >>> there's a 10 minute wait in the P2P network before a transaction is >>> confirmed. Actually most transactions are pretty instant. >>> >>> This is largely an opinion piece. He seems to have a strong view on >>> volatility being inherently terminal. I think there's a difference between >>> inflationary currencies and deflationary currencies on this point. There's >>> a long held view at central banks (in fact the ECB even made a cartoon >>> about it) that deflation is bad. The theory goes that if something is >>> deflationary people will hold on to their money before spending it, so that >>> prices come down. However, prices continually drop in the computer >>> hardware industry, and yet people still buy computer hardware. Similarly, >>> when a store has a "50% sale" to attract customers, it does not mean that >>> this is the only time they interact with customers. Inflationary >>> currencies can achieve stability, but it comes at a price (ie the >>> inflation). Dr. Bernanke has described inflation as a tax. >>> >>> I think there's room for both systems. As per the quote from the >>> article. >>> >>> [[ >>> "My expectation is that it will never achieve importance and that it is >>> likely to vanish all together, giving way to more robust means of payment >>> of more stable mediums of exchange. However, it deserves the chance to >>> compete" >>> ]] >>> >>> Most transactions in bitcoin will happen off block by trusted third >>> parties as part of an IOU system. If these TTP's are firms they can (and >>> do) comply with existing laws. I think it's a reasonable balance because >>> you choose if you want to use a trusted third party for the fee they >>> charge, or you choose to go to the block chain, for the fees that miners >>> charge. >>> >>> >>>> >>>> Background: >>>> Former Assistant Director of the Monetary and Financial Systems >>>> Department, IMF >>>> http://www.compasscayman.com/cfr/company/Warren-Coats/ >>>> http://works.bepress.com/warren_coats/ >>>> >>>> Joseph Potvin >>>> >>> >>> >> >> >> -- >> Joseph Potvin >> Operations Manager | Gestionnaire des opérations >> The Opman Company | La compagnie Opman >> http://www.projectmanagementhotel.com/projects/opman-portfolio >> jpotvin@opman.ca >> Mobile: 819-593-5983 >> LinkedIn (Google short URL): http://goo.gl/Ssp56 >> > > -- Joseph Potvin Operations Manager | Gestionnaire des opérations The Opman Company | La compagnie Opman http://www.projectmanagementhotel.com/projects/opman-portfolio jpotvin@opman.ca Mobile: 819-593-5983 LinkedIn (Google short URL): http://goo.gl/Ssp56
Received on Sunday, 26 January 2014 15:40:41 UTC