Why Bitcoin Shouldn’t Be Scaled: How Bitcoin Will Become A Commodity Money That Inspires Our…
Juice
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As usual, this article on the benefits of the original Bitcoin conflates the ideas of ‘commodity’ and ‘money’.

Commodities (like gold) have their own intrinsic value.

Money is simply information.

Contrary to the ideas behind Bitcoin, money works best when the token that represents it has no value itself.

Historically, money was (and remains) a ‘record of debt’, first transcribed on clay tablets and later as an amount (the face value) on metal coins (the token).

The debt (as evidenced by the face value of the token) is owed by society to the holder of the money.

When a person works or invests they are either directly or indirectly adding value to society. The measure of the value that they add is determined in negotiation between the buyer (who gets the value) and the seller (who provides it).

What the seller gets in return is nothing of value. They simply get a bit of metal or paper or an electronic record (that we call ‘money’) which is nothing more information about the value the seller has provided to a member of society.

It is issued under agreement of the community where it is accepted.

It records the debt that all members of the society then owe to the holder. In effect, we collectively promise to give back real value (in the form or goods and services), equal to the value that the seller has contributed — NOT MORE OR LESS.

As a corollary, it represents a right by the seller to claim resources from society. It also gives the seller the means to ‘vote’ for what they want produced to meet their needs.

For this to work, the token representing the ‘record of value’ (money) should be without value.

If you conflate the value of the token (say gold) with the value of the debt (the face value of the money), it can lead to hoarding (where the value of ‘material’ of the token exceeds its face value).

Worse, it completely negates the principle of money that you should only be able to take out of society what you put in. It also makes it impossible to account the profit and loss on the sale of goods and services.

That a few years ago someone paid $40 for a couple of pizzas (the real value in the transaction) and today (for doing nothing but holding the record of value: 10,000 bitcoins) the seller could take back out of society $20 million of goods and services is a preposterous idea.

If the seller contributed $40 value, they should get to take out $40 value (in real terms) whether they spend it immediately or at any time in the future.

On the other hand, if the ‘value’ of Bitcoin again collapses (as it surely will), those who gave good value for it, will find they cannot get back the same value from society.

Society cannot function on this basis.

Bitcoin and its ilk are a disaster waiting to happen.

This is not to say the current monetary system is without major flaws.

Fortunately, a new crypto-currency is evolving that will act as true money, that will have none of the flaws of the current system or of the existing crypto-currencies.

The value of these new electronic tokens will be zero.

What they will do is act as a stable ‘record value’ for each transaction, so people can take out of society what they put in (not more or less). It will enable everyone to confidently account the profit and loss on the goods and services they buy and sell, without having to consider the impact of currency trading. They will also be assured that their record cannot be counterfeited, lost, stolen, destroyed, duplicated or negated — making collapse of the payments system impossible. But that’s another story in the making :)