Bitcoin is fundamentally sound

I would hardly call giving the standard definition of sound money, and a paraphrased anecdote, from libertarians, a strawman argument. You’ve insisted that your definition is following the historical definition of sound money. What sound money is, or is supposed to be, is integral to this debate so allow me to enlighten you on the historic, and current definition. Historically “At the same time it must be an equally complete presentation of the arguments in favor of what we believe, under present conditions, to be the only sound money - gold, and a currency based upon that most stable of all values. ” [1] Currently “ money not liable to sudden appreciation or depreciation in value :stable money; specif : a currency based on or redeemable in gold — compare paper money, soft”[2] The definition of Sound Money hasn’t changed much over the years. It’s easy to see that to be sound money only has to have one property. It must retain its value. What it means for a currency to retain its value is revealed in why Gold is prefered as backing. “An ounce of gold would have bought you a nice suit 100 years ago and it will still buy you a nice suit today. ”[3] In other words, gold is chosen because it is believed to be immune to inflation, and deflation. The definition that you’ve chosen is only that of currency. Since anything can be used as a currency, even sea shells, it would be pointless to contest bitcoins use as a currency, but you singled out sound money. Are bitcoins resistant to deflation? By your own admission they are a deflationary currency, and thus cannot meet the historic, or current, definition of sound money. Do you honestly believe that I’m arguing the Black Markets are less efficient than the Market? I don’t care about its efficiency, or inefficiency. The Government intrusion that you’re complaining about is the Currency Transaction Report that’s triggered anytime someone does a transaction for $10,000 or more[4]. The Government doesn’t care about your purchase of some cheap camera, and never did. Human trafficking, on the other hand, is a serious issue, and can easily hit that $10,000 trigger[5]. If you want to defend the right of sickos to purchase virgin slaves without the prying eyes of law enforcement that’s your own business, but the public would hardly see this as an advantage over a government controlled currency. Austrian Economists are hardly embracing of deflation. It is, perhaps, the only thing that can convince the laissez-faire that maybe, just maybe, government intervention is necessary[6], and that’s from an Austrian Economics Journal. Maybe the opinion of Austrian Economist John M. Keynes would be a better source. “Thus inflation is unjust and deflation is inexpedient. Of the two perhaps deflation is, if we rule out exaggerated inflations such as that of Germany, the worse; because it is worse, in an impoverished world, to provoke unemployment than to disappoint the rentier. But it is necessary that we should weigh one evil against the other. It is easier to agree that both are evils to be shunned. ”[7] There is a good form of deflation which the tech industry is familiar with. Prices falling because your efficiency in production has improved is good deflation. Lowering prices because you’re able to produce more food with the same work is good deflation. Lowering prices because there is fewer people per coin is money supply deflation, and is the destructive form of deflation. Bitcoins have nothing to do with the good form of deflation, and is only deflation of the money supply. Just because people are foolish enough to accept bitcoins now is hardly evidence that they are a superior currency, or even sound money. In the 1630s there was a commodity that the Dutch thought would never lose its value, and could only gain value. Speculative pressure began a form of Hyper-Deflation. This continued for years until February 1637 when this commodity, a tulip bulb, failed to sell[8]. You could no longer use a single tulip bulb to buy a house, and instead couldn’t even trade it for a loaf of bread. You believe that the value of a bitcoin mostly appreciates. Unfortunately, that’s not a property of a deflationary commodity or currency. They only appear to increase in value until enough people catch onto the con and panic causing its value to rapidly collapse. On June 8th 2011 bitcoins were trading at a high of 32$, but by August they were trading for as little as 7$[9]. That alone, makes it look more like a highly volatile commodity, and less like a stable currency. In the real economy if I transfer money to another bank, and the place I transferred it to says “I’m sorry we don’t see the 1000$ you say you sent”. I can call up my bank, and request a trace. They will either confirm that the money was received, that there was a problem and correct it, or roll the transaction back so that I have the money back in my account. This is all possible thanks to the roll the Federal Reserve plays in our banking system. On July 26th 2011 Biomate, a bitcoin exchange, announced that their wallet. dat file had become corrupted. What this means is that Biomate had effectively lost 17,000 bitcoins. These coins are unusable, and there is no backup or rollback option to recover them. As bad as the Madoff Ponzi Scheme was, Madoff is in jail. Some people who made money off of the scam have returned it to lessen the blow to the victims at the end of the scam. Instead of being a total loss over 5 Billion Dollars have been recovered[11]. This is all thanks to our banking system. We know who received the money, and can trace where it was sent to. There have been a number of Ponzi Schemes with bitcoins, and because of the anonymous nature of bitcoins no one knows who received the money for Bitcoin Savings & Trust, and no one ever will[12]. All thanks to the miracle of bitcoins. The biggest advantage the USD has over Bitcoin is the ability to evolve and change. If it becomes too easy to counterfeit then the Government can update it. If a mathematical breakthrough happens, or computers get powerful enough to break the security on Bitcoin who is going to be able to shut it down long enough to update the system? No one, because it has no way of changing the algorithms governing its use. Since I am nearing the end of my character limit I will have to elaborate further in the final round. [1]Fraser, John Arthur. , Charles H. Sergel, and W. H. Harvey. Sound Money. 1895. Print. books. google. com/books? id=Xy05AAAAMAAJ&dq=Sound%20Money%20%201895. &pg=PA7#v=onepage&q&f=false[2]"Sound Money" Merriam-Webstermerriam-webster. com/dictionary/sound%20money[3]"Gold Investing. "contrarian-investor. com/gold-investing. html[4]"Currency Transaction Reporting. "www. ffiec. gov/bsa_aml_infobase/pages_manual/olm_017. htm[5]"Human Traffickers Prices. " Havocscope Black Market RSShavocscope. com/black-market-prices/human-trafficking-prices[6]Bagus, Philipp. "Deflation: When Austrians Become Interventionists. " The Quarterly Journal of Austrian Economics 6.4 (2003): 19-35. Print. mises. org/journals/qjae/pdf/qjae6_4_3. pdf[7]Keynes, John Maynard. Essays in Persuasion. New York: Norton, 1963. Print. [8]Farrell, Chris. Deflation: What Happens When Prices Fall. 2004. Print. pg 57[9]Lee, Timothy B. "The Bitcoin Crash. " Forbesforbes. com/sites/timothylee/2011/08/07/the-bitcoin-crash/[10] "Third Largest Bitcoin Exchange Bitomat Lost Their Wallet, Over 17,000 Bitcoins Missing. " SiliconANGLE. siliconangle. com/blog/2011/08/01/third-largest-bitcoin-exchange-bitomat-lost-their-wallet-over-17000-bitcoins-missing/[11] "Money to Be Returned to Madoff Investors Tops $5 Billion. " CNBC. comcnbc. com/id/100454360[12]Mott, Nathaniel. "Bitcoin: How a Virtual Currency Became Real with a $5.6M Fraud. "PandoDaily. pandodaily. com/2012/08/31/bitcoin-how-a-virtual-currency-became-real-with-a-5-6m-fraud/