Bitcoin CANNOT function as Both a Gold AND Cash and it’s Rhetoric to Suggest it Can
Here is an ignorant piece on bitcoin by Tuur Demeester Bitcoin: digital gold or digital cash? Both. and here is a fake news story perpetuating the absurdity.
I’m just going to be brief about this. You can render perspectives and definitions of discussions, debates, and inquiries, such that you can always be right and any other persons perspective can be wrong.
This easy and it is what Tuur has done. But there is an escape from such madness, and that is to suggest that some ways in which we frame things are more (COLLECTIVELY) useful. Tuur’s perspective is not useful, and I want us to understand what perspective is.
There is a REASON the debate about whether bitcoin is to be a gold or a cash exists. It does NOT solve the problem to redefine the perspectives and to conclude that they CAN be co-existent states for bitcoin.
That is to say it is semantics to argue over whether or not Tuur is correct or my perspective is correct. What I mean to explain is why my perspective is valuable and his is not.
Firstly the engineers of bitcoin are constantly trying to weigh bitcoin’s evolve-ability versus the security of the design. If you push the evolution you can make mistakes that have to do with bitcoin’s security. And part of this security directly speaks to bitcoin’s value on the market (ALL of the security related issues indirectly speak to bitcoin’s value on the market).
In a meaningful and valuable dialogue when we speak of bitcoin as a gold or a cash, we are speaking to whether or not bitcoin will be a stable asset in times of fiat uncertainty. This is the MEANINGFUL AND USEFUL definition of “gold”. There are many such definitions, but they are not on topic in regard to the bitcoin debate about whether it should be a gold or a cash.
In regard to a “cash” we are referring to the optimization of bitcoin as a payment network, which implies the possibility for a high frequency of transactions at a low cost.
It’s a very important definition to lock down, because it is what a lot of very loud and ignorant people are arguing bitcoin should be, while everyone that understands the problem the developers are faced with, realize that its a logical absurdity to make a goal of.
Furthermore, you cannot target the quality of a money in the same way you cannot stir mud enough to separate the dirt from the water. Money that is targeted is not valuable IN THE SENSE OF THE USEFUL DEFINITION OF GOLD. Notice I cannot make this point if I am using the Tuurian perspective and his implied definitions of gold and cash.
The reason you cannot target a quality money is because it would require repeated intervention from a third party, and this is the exact reason our fiats are of low quality today. Any rational person will understand this and stop trying to target the quality of bitcoin immediately. Roger Ver is a perfect example of someone who’s argument is based on the belief that we MUST target bitcoin’s quality.
Ver has never read a book on economics in his life.
GOLD however CAN be targeted. Let me re-phrase this so we are clear. We CAN target a money to behave like gold. And so such an endeavor is NOT irrational and in fact John Nash gave us the perfect formula for it in his defining life’s work Ideal Money and bitcoin happens to be a perfect representation of Nash’s formula.
Lastly, some will try to equate a system of bitcoin as a settlement layer with layer two solutions as an example that bitcoin can be both. Although this is the obvious future for the system this is NOT an observation of bitcoin functioning as both. From the meaningful perspective this is exactly bitcoin functioning as a gold and not as a cash.
If we are being rational and having meaningful dialogue then I assert that bitcoin CANNOT be both Gold and a cash.
