Fundamental misunderstanding of what currency is or What Craig gets wrong

(Chris North) #1

The criteria for currency is listed as “Currency, fiat money, cash. Issued by a monetary authority” on tokenized assets page. Fiat money and cash are not currency.

“Something that people don’t seem to understand well is that money is not in itself a valuable.” CSW
This statement is incorrect and has caused a lot of confusion about what bitcoin is and what it could become.

There’s a debate going on right now about if bitcoin is a store of value or if it is cash. There is a major problem with framing the question in this way.

Cash IS a store of value.

Why is cash a store of value? Because it contains socially objective value in the form of counterfeit-resistant highly decorated pieces of paper, paper alone is a store of value and anyone who hasn’t had it on a trip to the bathroom can tell you just how much value it has at times. So, is bitcoin cash or a store of value doesn’t work, again cash IS a store of value.

The root cause of this misunderstanding is the failure to recognize what money is, what currency is and how they are different.

Money is a unit for the measure of value that contains socially objective value, examples would be gold coins, silver coins, pounds of salt in the past, paper notes, BSV (possibly- in the future).

Currency is a unit for the measure of value that is solely a representation of value, examples would be USD digital balances or IOU’s in any form.

A simple way to tell if what you’re looking at is money or currency is to ask, ‘If redemption in the market were to be suspended, would what I have still be valuable in utility?’

There is a big misconception that money is preferred to currency in use, but science has proven that units of measure should not contain the properties they represent. Currency has a much greater utility than money for exchange, in the same way that inches have a much greater utility than inchworms. Money is good for storing value because it has objective social value. Currency is highly preferred for transferring value.

The way the question should be framed is “Is bitcoin money or is it currency?”

Bitcoin can never be currency because it derives its value from its utility and is not solely a representation of value. Bitcoin can not currently be used as money because its utility value has not been established. Bitcoin is not money, bitcoin cannot be currency, bitcoin is a commodity.

(James Belding) #2

These are my definitions:

Currency is money that is authorized to be the primary medium of exchange (legal tender) by an authority (eg. government) in the jurisdiction it controls. Entities in the jurisdiction must accept it as a form of payment. Bitcoin could be a currency, just as gold has been.

Money is a general term for something that is used as a medium of exchange, unit of account, and a store of value. It is one of the most marketable goods in an economy. Most importantly it is a measuring stick for value. The degree to which it is used as a medium of exchange, unit of account or a store of value can vary, as well as how good it performs at each of those functions. Different types of money can have different properties. However, all three of these properties are inextricably linked, at least to some degree. For example, you can’t have a unit of account with no ability to store value. You also can’t have a medium of exchange without the ability to measure value.

Cash is a term used to describe a class of highly liquid assets with money-like properties (eg. currencies, demand deposits (bank accounts))

A currency is money, but money is not necessarily a currency. Currencies and money are cash.

Bitcoin is money, although some of its properties make it an uncompetitive money compared to alternatives atm. However, it has the potential to become the best money, and eventually, governments around the world will deem it to be a currency.

(Chris North) #3

“Bitcoin could be a currency, just as gold has been.” Gold has never been currency it can only ever be money. IOUs for gold was currency, and IOUs could be issued by governments for bitcoin that would be currency, but if they did it would fail for the same reasons the gold standard failed.

“For example, you can’t have a unit of account with no ability to store value”…sure you can, you even say so in the tokenized docs. “That underlying value can be anything including ownership rights to an asset, or the promise of a future good or service, however, it is important to place maximum emphasis on the fact that a token is not value in and of itself, and any token representing something of value is ultimately valueless if the token’s owner cannot benefit from the underlying asset.”

This is an example of a unit of measure for value that contains no value. How about this… IOU(james) 100 joules worth of value? is that not a unit of account without any ability to store value?

That is the real difference between money and currency, not what government says.

(Chris North) #4

Regardless of semantics, I will write up my proposal, I am just not sure what label to put on it. To me it is currency ( a unit of measure for value that contains no value) but if you are saying only state issued fiat is currency then idk?

(James Belding) #5

Please don’t get stuck on definitions. Just propose your asset type with all of the details and we can look at classifying it afterwards.