Well, I'm glad Satoshi got right to the point. So many defenders come up with these roundabout counterarguments. "There's value in the system" "As I understand, its intrinsic value come from being so easy to spend across the world"
The bottom line is, there is a belief that there can be a currency bootstrapped into an exchange rate, with no compelling reason to have it other than to pass it on to the next. It's a hard one to argue either way, but I'm still holding out in camp "no".
Here's a simple engineering analogy since I'm among engineers. In both cases, valuation is based on some sort of subjective valuation (advocates love to point this one out, which is why I don't use the phase "intrinsic value" anymore, they're right that there's really no such thing). In both cases, prices can swing wildly. This is because there is a positive feedback loop constantly pushing prices in either direction, from people subjectively reacting to previous prices and wanting to follow suit. However the consumable commodity has an additional negative feedback loop, from people always ready to buy if prices get low enough, without regard to future expected prices, because they just want a pretty ring.
Correct. Not only because they want a pretty ring, also because it's what their culture demands and has demanded for century's. (India, Asia, heck even Germany with it's 'hard money'-policy finds it's roots in a defense against a debasement of the currency). We should not forget we are the generation that has never seen a currency connected to something intrinsic like gold. (I'm referring to the closing of the gold-window by Nixon in the 70's). We are viewing this through our own culture.
The biggest thing that makes me doubt my position is the fact that the gold window was closed and the US hasn't collapsed in 40 years. Even if there's a slow debasement, that's not what I expect to happen to Bitcoin, [edit to clarify] I expect it to collapse very quickly. I know there's the "you need dollars to pay taxes" argument. But that doesn't sit right with me. It's not a fixed amount of dollars, it's a percentage of your salary. Exchange rates of the dollar can go down, people's real salaries go down, and the real amount of taxes they pay go down. There's no negative feedback loop.
Yes, the gold window was closed (as was predicted by The Triffin Dillema http://en.wikipedia.org/wiki/Triffin_dilemma ). It was replaced by the petrodollar. Oil could only be paid for in US dollars. Lately we have seen more and more counties trading in their own currency amongst one another. (Mainly China and BRICS). The fact that the EURO does revalue gold's price to it's market price and the dollar does not is also very interesting.
The bottom line is, there is a belief that there can be a currency bootstrapped into an exchange rate, with no compelling reason to have it other than to pass it on to the next. It's a hard one to argue either way, but I'm still holding out in camp "no".
Here's a simple engineering analogy since I'm among engineers. In both cases, valuation is based on some sort of subjective valuation (advocates love to point this one out, which is why I don't use the phase "intrinsic value" anymore, they're right that there's really no such thing). In both cases, prices can swing wildly. This is because there is a positive feedback loop constantly pushing prices in either direction, from people subjectively reacting to previous prices and wanting to follow suit. However the consumable commodity has an additional negative feedback loop, from people always ready to buy if prices get low enough, without regard to future expected prices, because they just want a pretty ring.