Does money have to have a different use before it can be money? 💰

Salt had other uses before it was used as a medium of exchange. Gold also.

Peter Schiff (and in general the "gold is money, Bitcoin is stupid" crowd) will say Bitcoin can't work because it doesn't have any kind of usefulness besides as a medium of exchange.

They allege that for something to be money, it has to be useful in some other way (whether it's pretty to look at or you can build something out of it, or whatever), and then it can be money.

I'm not sure what I think about that.

Historically that's what did happen.

Everything that worked as money (salt, sea shells, gold) also had some other use.

But, obviously. Money was always a physical object. And everything that exists would have something you can use it for.

Now that, for the first time, we have the question of if money can exist in digital form, are you sure it still needs some other use?

It's like if it's always been winter and you've always needed to wear a coat when you go outside, okay. Since it's always been winter, it keeps making sense when people say you need a coat. But that experience doesn't necessarily mean anything or prove how it works after it stops being winter.

So what do you base that on?

I wonder why Peter etc. think it needs to first have another use case, other than they observe that that's how it worked before, or Murray Rothbard or someone said so once and they're sticking with it.

But regardless..

Bitcoin I think does have utility in its own right before it becomes money.

It has utility as a way to send a message or information or store a record to anyone, without a third party's oversight.

Technically, that's the inherent utility.

It's that fundamentally. And because it's that is why people come to regard it as a suitable medium of exchange and store of value.

Peter would maybe roll his eyes 🙄 and believe that doesn't count as a use case.

And sure, its use outside of money might be tiny compared to salt or gold, but it's still there. And degree shouldn't matter, if there's any objectivity to this standard or idea of his. (It can't be based on whether you subjectively consider it a good enough use.) It would just need any use, to satisfy that criteria.

So there you go.

(And personally I consider being able to communicate information without the risk of censorship to be a really great inherent use, even if hopefully you never need it.)

And from there it evolves value and a use as money.

And having the least possible use outside of money is actually the ideal..

Because now you don't need to hodl and speculate on commodity and industrial value at the same time you hodl and speculate on monetary value.

It's like you don't need your car to also be a shovel.

It's good to be able to separate the two, and hodl money when you want money, and the other thing when you want the other thing.

When you buy gold, you're also paying for its jewelry and industrial value. When you buy Bitcoin, you aren't.

So while gold won't go to zero even if its perception of being money went away, that's because you already paid for the jewelry and industrial value when you acquired it. (You had no ability to speculate on only its monetary value.)

If you were forced to buy $20 worth of cement every time you bought $50 worth of bitcoins, then your speculation in bitcoins couldn't ever go to zero either.

And so despite the way Schiff would criticize Bitcoin's value as being based on nothing more than perception or hope that someone will pay you in the future, it's the exact same thing for gold.

It's just that with gold you had no ability to hodl only its monetary value, so you had to also speculate on its jewelry and industrial use on top of that. (You had to buy the cement, basically.)

It's a drawback and not a feature, that you can't hodl and speculate on money in its own right.

Not to mention that anyone who wants jewelry or to use gold industrially can't do so without speculating on money.

Which leads to, imo, the best irony of the Schiff incorrectness on this stuff.

He'll insist Bitcoin is too volatile to work as a currency.

But it's actually gold that's fundamentally flawed in this way.

Gold's value and fluctuations will always be influenced by changes in the jewelry market and various industries. Whereas Bitcoin doesn't have this added layer to worry about, and can reduce to just whatever monetary fluctuations need to occur.

(Plus changes and uncertainty with regard to supply and how much remains in the Earth is a guessing game that exists with gold, whereas with Bitcoin the supply is always more perfectly knowable.)

So you can imagine that how Bitcoin has behaved as an infant in its first 10 years of discovery is just how it will always be, and markets just inherently won't be able to price it.

But ultimately it's Bitcoin who has the high ceiling in terms of not fluctuating, and gold is fundamentally shoddy and compromised at it.

---

The projection is awesome. It's kind of like the way SJWs call other people racist and intolerant.

If you want to know the shortcomings of using gold as money, just listen to its advocates talk about Bitcoin, and they'll tell you. Lol.

You're on the wrong side of history, Mr. Schiff.

You're not a confused control-freak Keynesian who thinks it won't work for totally backwards reasons. You go down coherently.

But still no cigar.

---

Aside: I'd suggest to Mr. Schiff that he stops thinking of Bitcoin as an attempt to reinvent gold.

(I mean, maybe he doesn't think of it that way. Seems like he does, so I'm going with it.)

Bitcoin is just its own thing and isn't actively concerned with gold in any way.

The link between the two is essentially that for the thousands of years leading up to a digital and modern world like we have now, gold approximated what an even better currency would eventually be able to do.

So there are some natural similarities and carryovers.

Because whatever emerged as the best form of money in a brick and mortar economy will naturally resemble and approximate whatever emerges in a digital economy.

But the people who created and use Bitcoin aren't attempting to be like gold.

Bitcoin just exists. (It's the wonderful discovery of being able to send information anywhere without 3rd party control or the risk of censorship.) And the reasons why it makes a good money in today's economy will naturally parallel the reasons why gold made a good money in brick and mortar.

If it didn't mirror those things, it wouldn't be bid up and talked about.

So the way the two resemble each other is emergent, rather than it was anyone's deliberate plan.