Hi Bob A,

I saw Bob B's warning and so I am treading lightly and I hope that what I
am about to write is not outside the bounds of what is permitted here. I
think it is inherently technical and not directly political.

One theory of money is that money is a placeholder for value (A) which does
not degrade over time and therefore can be stored (B) AND which cannot
easily be counterfeited (C). Gold works well for both of these requirements
because it is chemically mostly inert, it is rare enough that you would not
save yourself money by trying to mint your own gold coins as opposed to
using the officially-minted ones, and it has a unique combination of
density, chemical reactivity, and electrical properties which cannot be
duplicated by any material which is less rare than Gold.

Fiat money attempts to fulfill these requirements by using the authority of
the government to punish and deter counterfeiting (criterion C) and also by
continually printing new money to replace damaged or worn bills (criterion
B). On both of these counts it is imperfect.

It seems to me that bitcoin is an attempt to make a non-fiat currency which
is also non-material. I have a very imperfect understanding of how it works
but as I understand it, it does this by using three elements: first, a very
difficult class of mathematical problems which cannot be easily solved and
therefore prove that you or someone else had to go to a lot of effort to
solve the problem, second, a cryptographic signature method to attach a
particular ownership to this solution and, thirdly, a distributed database
to track changes in ownership. The cryptographic signature system attempts
to solve criterion C. The distributed database attempts to solve criterion
B because the failure of any one computer or group of computers does not
destroy the record of ownership. The fact that there is a method for
generating new bitcoin units which is difficult and not tied to authority
attempts to turn this system (crypto-signed distributed database) into a
non-fiat currency. There is no issuing authority. If you can prove that you
either did the work to find a new solution OR if you can prove through a
crypto-signed public transaction record that someone transferred this
solution to you, then everyone involved will agree that you are the owner
of that token. That does seem to me to satisfy the requirements of this
theory of money without an authority and therefore would not be fiat
currency.

Sean



On Wed, Dec 11, 2013 at 11:40 AM, Bob Axtell <engineer@cotse.net> wrote:

>
> Bitcoins are just another fiat currency that will shortly run out of gas
> and fail, just like the paper dollar will/is doing. No real wealth was
> ever accumulated using paper money, and none ever will, Bitcoins
> included. It is just another Ponzi scheme, like musical chairs, or
> casino gambling.
>
> In the glaring light of the failed world-wide banking system, the idea
> that ANOTHER fiat currency could gain popularity, simply boggles my
> fevered brow.
>
> Invest in something with a genuine return, such as a real education,
> land (in a country where one can actually OWN- not just rent- the land),
> gold dust or nuggets, platinum, or silver. Many good opportunities are
> being missed, and many are no longer possible in most Western countries,
> such as the USA.
>
> --Bob A
>
> --
>
> The only place success comes before work is in the dictionary.
>
> VINCE LOMBARDI
>
> --
> http://www.piclist.com/techref/piclist PIC/SX FAQ & list archive
> View/change your membership options at
> http://mailman.mit.edu/mailman/listinfo/piclist
>
--=20
http://www.piclist.com/techref/piclist PIC/SX FAQ & list archive
View/change your membership options at
http://mailman.mit.edu/mailman/listinfo/piclist
.