In addition to what @euansmith said, suspect that perhaps the stress here came not from the perceived size of the loot but from the percentage of net worth it probably represented. Even if Mark has another $30K in the bank, the prospect of losing half one’s family’s net worth has to be stressful. It’s all relative.
But at the same time, and this was what I was getting at with my snark about imagining if it was real money, is that @agies is right. Cryptocurrency isn’t money, it’s something people are willing to trade for money. An economy where cryptocurrencies entirely replaced legal tender would be a barter economy. Bitcoins are only valuable as long as someone will give you real money for it. In that sense it’s an asset, like a painting.
I disagree. I think your statement above gives too much magical status to ‘real money’ . Fundamentally all trade is barter.
All ‘money’ does is provide a handy means of exchange that most people will take because they know they can swap it for the actual items they want, thereby avoiding the whole “I’ve got some sheep and want some cows. You want sheep but only have timber to trade. The guy who has cows to trade wants timber but doesn’t want my sheep. So I have to trade my sheep to you for timber which I then trade to the third guy for his beeves”.
The beauty of ‘money’ is that it doesn’t matter what ‘money’ is as long as everyone is happy to take whatever it is in trade.
By that view, bitcoin is perhaps not ‘money’ at the moment but only because not enough places will accept it as such. If everyone agreed to accept bitcoin, then it is ‘money’.
Money’s a placeholder. Bitcoin is more like a stock.
Magic, no. But there is a difference or we wouldn’t use separate terms for money and the things money can buy. I mean sure, everything can be boiled down to barter if you abstract it enough. It’s all just trade. But that merely erases the distinctions of why we use the words in the first place. If money can mean anything, including a digital good like cryptocurrency, then there’s no point on having agreed upon definitions. And yes, definitions change over time. But I’m not ready to abandon the common usage of the word money just yet when cryptocurrency is a thing most of the world doesn’t and may never interact with.
That said, fiat currency is what people in the modern world usually mean by money, though it wasn’t always so. Niall Ferguson’s The Ascent of Money gives a pretty decent introduction to what it’s meant throughout its history.
That’s true. I’ll agree to that. But it’s a big if IMHO.
I literally lasered this quote into my wallet: “All money is a matter of belief.” ~ Adam Smith
As far as I know money is usually defined as ‘a medium of exchange’ and ‘a measure of wealth’.
Fiat currency is a subset of that.
Bitcoin, etc. are sort of crazy in that they have no intrinsic value as in you can’t do anything with bitcoin other than swap it for stuff and unlike government backed money it has nothing backing it other than public confidence (to be polite) or rank insanity (to be less polite ).
That’s why I agree with you that it’s a big if as to whether enough people will ever accept bitcoin.
I think blockchains used for smart contracts are more likely to become more of a thing, although I have serious reservations about those - mainly based on the fact that I am clear that I don’t understand how they work at all and I doubt most of the people talking about them in (for example) the legal industry do either.
I guess the line between insanity and public confidence is how many people believe in it. Alternatively, insert obligatory Why not both? meme.
I personally doubt Bitcoin will be normalized. It’s possible some kind of cryptocurrency will be, though I suspect any that will have yet to be invented.
I have a basic grasp of the underlying math because cryptography is tangential to my specialization. I do believe blockchains will change the world over time, but it’s early days and platforms like Ethereum have a long way to go. I agree most lawyers and VCs probably have a limited understanding of blockchains. It’s not really more complicated than public key crypto, but most don’t understand that either, not because it’s beyond them, but because our society instills a truly tragic phobia of math in most who don’t overcome it to enter STEM careers.
I’m sure that corporate leaders and politicians with less understanding of blockchains that you will rush to adopt them as a way to enhance their bonuses in the short term.
I think I can vaguely sort of grasp how blockchains work in the sense that I’m happy to accept that they do (don’t get me started on public key crypto and client communications. Apparently, it’s just ‘too complicated’).
Maths teachers don’t really help their cause any. By definition you only end up teaching maths if you like and understand maths the way it was taught to you.
So you end up with people who easily understand maths and enjoy abstract mathematics teaching people who don’t find it easy or understand why any of what they are being taught is relevant to anything.
Which is sort of weird given that mathematics is kind of relevant for everything.
That’s my worry. We’re getting lots of hype about blockchains in conveyancing and how it’s the coming wave of the future that will revolutionise conveyancing.
Which is fair enough as far as the straightforward part of transferring registered ownership of a parcel of land from one person to the other is concerned.
If that was all conveyancing involved, everyone’s life would be so much easier. Unfortunately, it doesn’t.
That is part of it. But also the way math is normally taught in public schools is extremely ineffective and alienating. By the time students get to uni, they’ve already been taught to fear it.
Actually no, real money has a special status because it is recognized as legitimate by the government. That recognition gives it a degree of stability and resistance to market-based fluctuations in value that no other barter object can have no matter how universally it is accepted.
Libertarians think “fiat money” is a bad thing because they have a warped view of government. They only see the government’s monopoly on legal violence and conclude that money has its status only because of the force of law. They object to the government’s ability to exert violence against themselves and regard its power as scary and illegitimate. So they see money as illegitimate and waste tons of time obsessing about the gold standard or about cryptocurrencies.
Non-libertarians understand the janus faced nature of government, that it is has a horrible power to commit violenc that must be checked by law and regulations and democratic processes, but that it also has an awesome power for good, for improving the circumstances of its citizens and the state of the world. Conservatives regard government as a tool to improve the status of the powerful and the wealthy, while leftists regard it as a tool to improve the status of everyone, rich and poor both.
But non-libertarians agree that there is no reason to obsess about the special status that government backed money has, as long as the monetary system is operated in a professional manner to ensure the currency retains its value and the economy remains healthy (they disagree sharply about what a healthy economy means, of course).
While I agree with your post, I feel obliged to point out that there are plenty of leftist anarcho-socialist types who would object strenuously to that paragraph.
I agree that government backed currency is better than bitcoin. It’s just that there isn’t some magic thing that makes government backed currency ‘real’ money as opposed to bitcoin.
It’s both as capable of being ‘money’ - it’s just that one is hopefully a sensible currency to use because it is backed by the entire economy of a major world power and the other is - umm, well, backed by nothing at all.
Anarcho-socialists are fooling themselves if they think they are in favour of eliminating government. They want to change its scope, many aspects of its nature, and the source of its power, but as long as you have human beings living in communities, you inevitably have government. It might be a government of and by the community as a whole instead of a government of and by a select group of powerful people, but you’re still going to have some structure, whether legal or informal and custom-bound, for pooling and allocating resources and labour, dealing with intolerable antisocial behaviour (murder, assault, etc), and so on.
how can people who routinely deal with millions of dollars of transactions possibly have anything like the same kind of psychologies as the rest of us?
It’s not their money.
I know a few people who trade at high levels (high volume, high amounts). I asked them if they do that and make money (and insane job-bonuses), why not do it with their own money too? They all say that it’s one thing to do it with someone else’s money, but they just couldn’t do it with their own.
Sure, you have people who do (solitary day-traders), but they just don’t deal with the volumes/amounts ‘real’ traders deal with.
HFT are another matter entirely: that’s networking/computer science problems utterly divorced from real money for those who write the code/construct the infrastructure.
Akin to a description of someone who used an oven to reflow their broken/high-end gfx card, or did any risky ‘hack’ (in the old-school sense of the word) to anything valuable. The high-worth aspect just added tension.
Well done and congrats on your $41.250,- recovery!
My biggest regret after not buying Google at it’s IPO is not buying BTC in 2013
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