Bitcoin is fundamentally sound

I respectfully disagree with my opponent but let me first thank him for stepping up to the challenge, having a polite tone, and raising some good points, despite the fact that said points do not sufficiently invalidate my stance which is that Bitcoin is a fundamentally sound money. My opponent has created a straw man argument by using a false definition of sound money. He has invited me to correct him and so I will. "Sound money" has been traditionally defined as being a store of value, a unit of account and a medium of exchange. There are also lesser qualities which are preferred, but not necessary, in sound money. Such fringe qualities include divisibility, lowered transaction costs, intrinsic value, and others. My opponent has not argued that Bitcoin is incapable of any of these. He has tried to malign Bitcoin due to its deflationary nature but has unknowingly strengthened the case in doing so. I also argued that Bitcoin is better than the competition. My opponent has advised that the competition would include gold or a Gold Certificate. Certainly these would qualify as "commodity money" as any economist knows. However commodity money is rarely used as money anymore. Nearly all money in the world is fiat money such as the USD or Euro. Nonetheless I will address commodities as though they were a competitor although they really aren"t and most of my opponent"s argument is therefore moot. Gold has extreme transaction costs which make it unworthy as money. Gold does have some intrinsic value which makes it a good store of value, but I would argue that such intrinsic value is very minimal indeed. I would argue that water has a higher intrinsic value than Gold does. Water is necessary to life whereas Gold is not. It is worth noting that these days the market prefers fiat to Gold or commodity for transaction purposes. The primary drivers of this preference are transaction costs and law. The primary reason for Gold"s use as a store of value is that it is rare, not that it has intrinsic value, although both are contributing factors. Bitcoin is rare as well. For that reason it has already far surpassed the market value of silver and I believe it will far surpass the market value of Gold over time as well. Bitcoin, however, has negligible transaction fees. For this reason carrying and using Bitcoin in transactions is preferable to using gold. Bitcoin also has intrinsic value. A series of unrealized features in Bitcoin lay dormant and they are called "contracts." See the following video: https://www.youtube.com... The abilities inside of contracts, as well as the ability to transact with less cost than the competition, give Bitcoin an intrinsic value. Just as the service of lawyers and such establishing contracts has a value, Bitcoin can act as an automatically self-enforcing contract service and that has value to people. Bitcoin has no central bank which can print money, giving it a store of value advantage over fiat. The recent incident in Cyprus reveals other ways in which this is beneficial. Law prevents people from using Gold certificates as money. If people started using Gold or certificates as money the government could simply cease the Gold, rendering the certificates mere fiat anyway. Bitcoin"s anonymity allows that the government cannot tell who is using it or who to punish. Additionally, even if they could tell, Bitcoin"s distributed nature makes it impossible for seizure to occur. If you take my computer away there is still a distributed record across the internet which holds the same data my computer did, that is the Bitcoin block chain. Bitcoins are still moderately unstable but the instability decreases as its use, and therefore market liquidity, increases. Additionally, Bitcoin instability is mostly unidirectional. In other words while its price may change it is mostly just appreciation. Business can still be transacted in such an environment. Bitcoin does favor tax evasion and black market transactions, but what is the effect of that? Weakening of government, which is an economically destructive entity to begin with. The black market which is simply the economy outside of the law is a fundamentally freer and therefore more productive economy. Bitcoin already has a "real economy." There are people getting paid in Bitcoin. There are producers and consumers in Bitcoin. Deflation is an essentially good thing as any Austrian knows. I will not address his specific examples, but the general point he made is that deflation is bad because it encourages "being a miser" and "hoarding." Many Keynesian economists would agree with my opponent. However a Keynesian economist is an oxymoron anyway. "Being a miser" and "hoarding" are simply malignant words for "saving money." According to Austrian economics economies grow better through saving than through monetary injection, which my opponent seems to support by complaining about Bitcoin"s "monetary choke." My opponent claims that Bitcoin is uniquely vulnerable to loss. Actually the loss due to theft, etc pale in comparison to the credit fraud, money counterfeiting and other costs of the traditional money system. This is strength of Bitcoin not a weakness. Yes there is some exposure to theft, just like there is with regular fiat but such exposure is minimal and easily avoided. I will look up data if I have to but this is a well known fact on any Bitcoin reddit or forum. My opponent also claims that the average user will be burdened by maintaining the transactional database of Bitcoin. Such a thing would already be burdensome. However it is automated by the software. No such point is valid. My opponent has attempted to argue that black markets are less efficient or legitimate than the Market Overt. That is an easy point to break if he wants to push it. My opponent has argued that the Federal Reserve is a good thing. This is disturbingly wrong. The decentralized nature of Bitcoin makes it superior, not inferior, to fiat. The Fed, like most other central banks, has been making bad decisions for most of their history.