Nic Carter

Nic Carter’s curious gold claim

A recent writing by a preeminent bitcoin commentator presents the proposition that bitcoin, unlike gold, is standardized, and is therefore money because it is “elemental” in its form (unlike gold, which is “elementally disorganised”, before being “rendered into coinage”).

This is a curious understanding of bitcoin, not least because there are many similarities between gold and bitcoin, suggesting bitcoin was influenced by gold being available as a medium of exchange, and by (bitcoin) mimicking the process of “mining” in bringing its supply out into the open, among other things.

The lessor consideration of game theory in scaling bitcoin

The idea of a bitcoin standard is well publicized among bitcoin advocates, where the founding principle of bitcoin is presented as serving as a medium of exchange redeemable or linked to an underlaying asset, just as paper and metal coinage were once upon a time linked to metal quantities, and where the world was on a “gold standard” — akin to an analogy about reversing the Nixon shock in a digital equivalent: in other words, a decentralized and computerized alternative to central banking.

Not so considered is gold as an inflation mechanism protecting those trading in (gold) from fluctuations in the value of sovereign tender through contractual consideration, which was once known as the gold clause.

Through game theory, the cooperation induced by contractual arrangements means indexing to a gold like digital equivalent introduces new possibilities: bitcoin supply inflation is steady and constant, and standardizing inflation in this manner, can latently assume general application to any variety of contract by influencing rational anticipation and expectation to complete contractual fulfillment (trustworthiness).

Comparing bitcoin “elemental” to gold, excludes the evolutionary logic:

“5.555 It is clear that we have a concept of the elementary proposition apart from its special logical form.

Where, however, we can build symbols according to a system, there this system is the logically important thing and not the single symbols.

And how would it be possible that I should have to deal with forms in logic which I can invent: but I must have to deal with that which makes it possible for me to invent them.” Ludwig Wittgenstein, Tractatus Logico-Philosophicus, 1922

Where Satoshi Nakamoto enquired how everyone felt about the bitcoin logo, there is still standardization in gold: it has a symbol (Au), it has an ISO currency code, and still represents wealth and timelessness.

The fact bitcoin further standardizes inflation to the extent it excludes gold as money, reads as unclear and curious: it ignores the facet of language in its media drawing comfort from indexing a common form, rather than audience satisfaction by laboring prosaic definitions of what may or may not be, money!

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