THE GOLD STANDARD VS. GOLD CASH . . .
or Why Roger Ver’s BCash is Stuck at Sutter’s Mill
In my last article I outlined The Myth of Intrinsic Value and how BCash founder and apologist Roger Ver correctly argued there is no such thing as intrinsic value . . . rather value is determine solely by the marketplace.
THE MYTH OF INTRINSIC VALUE
I ran across the following article and found is fascinating . . . especially considering the source. . .
Based on this premise let’s examine The Gold Standard and Gold Cash and how this is relevant to Bitcoin and Bitcoin Cash. Granted, the analogy is not perfect, no analogy is . . . but there are enough similarities to make some valid comparisons.
Bitcoin is often considered unique in that at its beginning in January 2009 it had no value and thus was so for over one year. On May 17, 2010, the first known commercial transaction using bitcoin occurred when programmer Laszlo Hanyecz bought two Papa John’s pizzas for 10,000 bitcoin. . . the rest is history.
But if we go back in time, the same can be said of anything with value. Water had no value without human thirst, sheepskin had no value without human nakedness. . . and in the same way there was a day gold had no value., none, just like bitcoin. The value of these things is imputed in the marketplace for any number of reasons, even irrational ones!
Gold, much like bitcoin, emerged as money of choice because it had the longest history of a store of value that transcended generations and even civilizations, and the longer the history the more it has been relied upon as a store of value and standard for exchange.
There are certainly other inherent imputed qualities of gold that contributed to the emergence of gold as money, but my point is gold as a store of value and these other qualities are not intrinsic to gold, but are qualities or value imputed by the marketplace over time. Roger Ver is right on point.
While gold did not change, over time gold was imputed with more and more “moneyness”.
By definition then, this “moneyness” is not a constant. While gold is static, the “moneyness” of gold is not static. Gold was not stuck at its imputed initial value of “shininess”, but later acquired the imputed value of malleability, jewelry, decoration, electronics, fungibility, store of value, the standard of value, means of trade, and commercial banking.
Because there is no intrinsic value, but only imputed value, the “moneyness” of gold constantly changed. The norm was gold increased in “moneyness”. At other times it decreased in “moneyness” (like when it transcends civilizations).
This variant value, imputed by men, evolved at least 5,000 years prior to January 24, 1848, when James Wilson Marshall found flakes of gold near Sutter’s Mill in the American River at the base of the Sierra Nevada Mountains near Coloma, California launching the California Gold rush of 1849.
At the time the dollar was defined as 0.04837 troy ounce of gold or put in a different way one ounce of gold was worth $20.67.
While gold coins were minted, they were rarely used as cash and rarely circulated. Rather gold was used as a standard for settlement for bonds, specie, and contracts. The gold dollar was the standard to measure all things in the marketplace.
Circulating base metal coinage was minted by the U.S. government with a gold face value. The seigniorage (or difference between the base metal value and face value)provided the government income in return for providing useful coinage (cash) for its citizens that also brought into play Gresham’s Law.
While the coinage was redeemable in gold, it was not gold! Gold coins were held as a reserve! Coffee was not bought with gold! Coffee was purchased with coinage or other species based on The Gold Standard! Essentially coinage, cash, and 99.9% of all gold standard transactions were off-chain! (To use bitcoin lingo.)
Gresham's law - Wikipedia
Gresham's law states that any circulating currency consisting of both "good" and "bad" money (both forms required to be…
But not so for a period of time in California! In the early gold rush days gold nuggets could be easily panned and even found! This low hanging fruit created a new economy, a gold cash economy!
Those fortunate enough to live in California before January 24, 1848 are not unlike bitcoin’s earliest adopters. Gold was plentiful like early bitcoin, literally shiny rocks in a riverbed (the equivalent of early bitcoin mining on a laptop). The only difference was gold already had an established value, unlike bitcoin.
However, this established value was on the East Coast, not the primitive frontier society which was California in 1848 just recently acquired in the Mexican-American War.
In California gold was plentiful but mining equipment and other supplies, like coffee and jeans, were dear! The arbitrage between the two coasts was huge! Essentially the early adopters in California were able to pick up shiny rocks and sell them for $20.47 per troy ounce, with just one caveat, to be redeemable they had to get these rocks around South America or across the isthmus of Panama when there was no transportation going in that direction!
The “moneyness” of gold drastically decreased in California and hardly at all on the East Coast. Coffee prices in New York were essentially unchanged while coffee in California sold for as much as $40 per pound or nearly two ounces of gold! Over $2,000 per pound in today’s dollar!
Exchanges were often done with gold dust. Scales were prevalent. There was even a demand for gold coinage met by the private sector since gold was plentiful but gold coins few.
My point is simply under The Gold Standard (which was prevalent on the East Coast) cash was layered on gold! While cash in California was gold!
In bitcoin lingo, Gold Cash in New York was off-chain, while Gold Cash in California was on-chain.
One was not more or less “moneyish”. Each served its own purpose depending upon the locale. Just as the price and uses of bitcoin varies widely depending on locale. (For example, Bitcoin is far more useful as a means of exchange in the third world countries where efficient payment systems are deficient and not very useful as a means of exchange like in first world countries.)
In the more advanced areas of civilization (the East Coast and Europe) gold rarely circulated as cash! It could, but it did not because, unlike California, it was not necessary or convenient.
Gold cash in California gold rush days was a regression, not an advancement of the gold standard. But it was a regression necessary to meet the economy in that time and place.
For a few years in a specific location during the California gold rush gold was widely used as cash for coffee and Levi’s where coffee and jeans were dear and gold plentiful. But elsewhere in the world, coffee and clothes were purchased by specie or coinage based on the gold standard. Gold coins did not circulate, they were hodled and treasured as a store of value. It was this known and trusted store of value that later created the most advanced non-inflationary monetary system ever known to mankind with the development of commercial banking and non-inflationary self-liquidating commercial paper. Specie was not only redeemable in gold, but all other goods being offered in the marketplace.
The Lost Art of Commercial Banking
By E.C. Harwood | Economic Education Bulletin Vol. XIV, no. 6 | June, 1974
Gold evolved into the financial standard to settle accounts and provided a store of value upon which all transactions, including cash transactions, were settled. Gold was rarely used as cash, but the gold standard was universally used to settle accounts, including cash.
In California those wise and frugal gold hodlers who supplied the miners and those miners who hodled their gold strike, forsaking luxury until the California frontier caught up with civilization, made out like gangbusters! Those who spent their Gold Cash for coffee went broke.
THE BITCOIN STANDARD IS DYNAMIC . . . BITCOIN CASH IS STATIC
My point is that Gold Cash was static while The Gold Standard was dynamic! In the same way, The Bitcoin Standard is Dynamic! Bitcoin Cash is static.
BCash founder and apologist Roger Ver proclaims BCash is more “bitcoinish” than Bitcoin. His argument centers around his personal BCash vision of what bitcoin is, a vision which is based on a bitcoin economy equivalent to the gold cash during the California Gold Rush, an economy where gold was used primarily as a means of exchange, an economy where Ver profited greatly for being at the right place at the right time and recognizing bitcoin’s future value as money. A time when Papa John’s Pizza was worth 10,000 bitcoin This is not to diminish Roger Ver’s accomplishment, but simply to identify where Roger Ver is coming from.
Roger Ver does not understand the difference between the dynamic Bitcoin Standard and the static Bitcoin Cash. Yes, Bitcoin is used as peer-to-peer cash but not to the degree or manner that satisfies Roger Ver.
To succeed in proclaimed goals of being a peer-to-peer cash system Ver’s vision must be built on top of The Bitcoin Standard which is the longest chain, with most proof of work. In the alternative, if Roger Ver’s BCash succeeds in the proclaimed goal on becoming the new standard (by scaling on a new chain) BCash will no longer act as cash but will be the standard for all financial transactions, including cash. It doesn’t work both ways. To claim otherwise is a fallacy. To claim otherwise “pushes the string.”
(Pushing the string is a metaphor for the limits of monetary policy and the impotence of central banks. Monetary policy sometimes only works in one direction because businesses and households cannot be forced to spend if they do not want to.)
My point is Bitcoin Cash is not Bitcoin Cash, it is BCash. BCash is not built on Bitcoin. What distinguishes Bitcoin is that it is the longest chain with the most proof of work. Even Roger Ver recognizes this.
BCash scales on a new chain. It is a hard fork created by Roger Ver, Bitmain, and a few others. As Jimmy Song has put it so eloquently in the video below, BCH is private fiat money (not to be confused with government fiat money or legal tender) that is a private centrally promoted and controlled money created in the Keynesian tradition. To borrow a phrase from Milton Friedman, BCash is a Pseudo Bitcoin Standard, representing Roger Ver’s static vision of what bitcoin should be.
It should be noted Roger Ver strongly objects to Jimmy Song’s use of the term “fiat” applied to BCash. Yet fiat money means money by decree. That decree may be by governments and/or private interests. That decree has ranged from gold, silver, paper, and most recently thousands of alts and ICO’s, including BCash. By the same token, Roger Ver loudly cries that he is being “censored” on a bitcoin private website having no problem applying the word “censorship” to the private sector [more accurately known as shunning] when it suits his purposes.
Such a double standard comes as no surprise as Roger Ver’s mentor is Murray Rothbard who advocated a government fiat 100% peer-to-peer gold dollar which is unable to meet the credit demands of an industrialized society much like Roger Ver’s private fiat 100% peer-to-peer BCash.
The Case for a 100 Percent Gold Dollar | Murray N. Rothbard
Rothbard shows how money must originate from a commodity. In an ideal system, a dollar would be a unit of weight, and…
After reading this Rothbard work in the early 1980’s this author referred to Rothbard as a “gold socialist” which interestingly raised quite a stir in the Austrian economics world in its day and got a response from Milton Friedman who referred me to his Real and Psuedo Gold Standards.
Real and Pseudo Gold Standards on JSTOR
Milton Friedman, Real and Pseudo Gold Standards, The Journal of Law & Economics, Vol. 4 (Oct., 1961), pp. 66-79
Now I am no fan of monetarism, and hold the creation of self retiring non-inflationary purchasing media representing new goods coming into the market developed by private banks in the late 19th Century marks the high point of monetary development, nevertheless Friedman’s criticism of Pseudo Gold Standards is on point, just as today criticism of Pseudo Bitcoin Standards such as BCash and other wannabees is on point.
Further, the dishonest methods to hijack bitcoin by Roger Ver should come as no surprise to the diligent observer.
Roger Ver’s world view is based on individual sovereignty or voluntarism which is his underlying political view of anarcho/capitalism and non-aggression principle also described by Roger Ver’s mentor Murray Rothbard.
Anarcho-capitalism — Wikipedia
Anarcho-capitalism is a political philosophy and school of anarchist thought that advocates the elimination of…
Roger Ver holds three basic tenants.
- All taxation is theft.
- The draft is the equivalent of kidnapping and slavery.
- All war is mass murder founded by theft
While on the surface anarcho/capitalism and the non-aggression principle are seductive, in fact, and in its clearly stated purpose, the philosophy is anathema by replacing the Judeo/Christian concept of the Sovereignty of God with the lie of the sovereignty of the individual. In simple terms it places man above God which has been the big lie since the Garden of Eden.
Essentially, Ver blames the evils in this world on governments . . . exempting individual responsibility. . .and ignoring the fact that governments are simply institutions reflecting the corruption of individuals. This also explains why fundamentally Roger Ver opposes limited government in favor of anarchy.
While taxation can certainly be theft, all taxation is not theft. As the earlier example of seigniorage demonstrates, governments can derive an income by providing its citizens an honest standard to conduct daily life.
Ver’s second point is well taken, but his conclusion that all war is mass murder founded by theft falls apart with his first premise.
Our topic is bitcoin here, so I don’t want to wander too far afield. But Ver proclaims his philosophy to end all wars and save dying babies while trashing the path of bitcoin and promoting his vision, BCash, as the real bitcoin because it has what he terms more “bitcoiness”, so it must be mentioned, as no one has yet challenged him on these core beliefs which are fundamental to understand where Ver is coming from and too many bitcoin maximalists are easily taken in by this bullshit for fear they may be labeled opponents of peace, limited government, free markets, and babies!
Through BCash Roger Ver promises to end war, bank the unbanked and save dying babies throughout the world. While these are noble causes and are accomplished to a degree with monetary freedom, it does not follow that BCash provides that monetary freedom to accomplish this. Quite the opposite is true, BCash is a regression of bitcoin, not an advancement. These are the words of a carnival barker or snake oil salesman.
Finally, Ver lives by the “non-aggression principle” which holds aggression is inherently wrong. Aggression being defined as initiating or threatening any forcible interference with an individual or individual’s property.
Deception is not included in forcible. Fraud is not included in forcible. A double standard is not included in forcible. So essentially the ends justify the means so long as there is no interference with an individual’s body or property. It is this very view that has acted as a catalyst for ICO’s stealing billions from the unwary, so long as the theft is clearly stated in the white paper.
This is why Roger Ver must redefine the word fiat to be solely government fiat, legal tender, and the use of force like that used against my good friend and one-time competitor Bernard von NotHaus.
Bernard von NotHaus - Wikipedia
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So What About Bitcoin? Does Roger Ver Interfere With Other People’s Bitcoin?
Not according to Roger. You see bitcoin is what Roger Ver decrees it to be. Bitcoin is fiat. Bitcoin is the alternate hard fork BCash. BCash has Roger Ver’s imputed qualities, not the imputed qualities of The Bitcoin Standard which are dynamic and varies in time and place. According to Roger Ver, BCash has more “bitcoiness” than bitcoin because it more closely meets his vision of his fiat bitcoin.
BCash is a regression of bitcoin, not an advancement. BCash is fiat. As Bitcoin marches on to become The Bitcoin Standard, BCash decrees Bitcoin to be something it once was, but is not today. BCash decrees a new chain, which may be nostalgic for early adopters like Roger Ver, but does not provide the trustlessness, level playing field, and freedom required for a smooth transition into sound money.
But that’s not all. BCash is dishonest.BCash is very much like Gold Cash during the California gold rush without the underlying anchor to gold while deceptively putting on the appearance as though it is gold.
BCash deceptively puts on the appearance it is anchored to Bitcoin, but it is not anchored to Bitcoin. BCash is Fool’s Bitcoin in the same way Pyrite is Fool’s Gold.
BCash is a fraud.
This is why Ver is so offended when someone accurately calls his fiat creation BCash to distinguish it from Bitcoin.
By the same token Roger Ver repeatedly refers to Bitcoin as “bitcoin core” when no such coin exists and sees no reason why those holding bitcoin should be equally offended when he uses the term “bitcoin core” to refer to bitcoin. This double standard is consistent with his underlying philosophy.
The sad part is too many Bitcoin Maximalists have caved into Roger Ver’s antics and are adopting Roger Ver’s twisted definitions of terms.
THE DANGER OF BCASH IS NOT THE FALLACIOUS CASH MODEL OR THAT IT WILL SUCCEED, BUT DECEPTIVE AND FRAUDULENT BAIT AND SWITCH MARKETING SUCKERING THE UNWARY INTO THE SCHEME AS THOUGH BCASH IS BITCOIN
Roger Ver has been labeled Bitcoin Jesus, as well as Bitcoin Judas neither of which I believe, are accurate portrayals. Roger Ver was an early adopter with a vision to see what bitcoin could be and is deserving of the subsequent rewards for such foresight. The problem as I see it is he is stuck at a time and a place that no longer exists. Unfortunately is confusing many newbies in the bitcoin space through deceptive and fraudulent marketing.
If Roger Ver’s BCash succeeds in the proclaimed goal on becoming the new standard, BCash will no longer act as cash but will be the standard for all financial transactions, including cash, which will be layered on his new standard. Something he either fails to see or is deliberately concealing.
If Roger Ver’s BCash succeeds in becoming the new standard, then it is foolish to use BCash to buy coffee. Just as the wise and frugal pioneers during the California Gold Rush saved Gold Cash and gave up coffee, if BCash is to be the new standard, BCash should be hodled, not spent.
Unlike Bitcoin, BCash is making a common central bank mistake of “pushing the string” spending millions promoting BCash in an effort to persuade others to buy and spend BCash. Yet as already illustrated if BCash is the new standard, it should be hodled, not spent. It is not clear if this promotion is done through Ver’s economic ignorance to replace Bitcoin or a deliberate effort to unload his stash. In either case while “pushing the string” in private money can cause a short-term pump, it is really a reflection of its long-term impotence.
If BCash succeeds as the standard, bitcoin and the blockchain fails, it fails because the trustlessness, level playing field, and hence, freedom. The freedom provided by bitcoin is replaced by a centralized vision promoted and advertised by a few who hold centralized control.
The danger of BCash is not the fallacious cash model or that it will succeed, but the deceptive and fraudulent bait and switch marketing suckering the unwary into the scheme as though BCash is Bitcoin. Not all altcoins do this. For example, Litecoin clearly distinguishes itself from Bitcoin and makes no claim it is “better than bitcoin.” But most do, and BCash is the worst offender.
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THE BITCOIN PHARISEES
A more accurate portrayal of Roger Ver is that of Caiaphas, the leading Pharisee who organized the plot to kill Jesus. But here, the plot is to kill Bitcoin.
While Christ fed the poor, healed the sick, and showed mercy to sinners, He had no mercy for the Pharisees who preyed upon the poor and ignorant in the name of righteousness. He called the Pharisees of His day “hypocrites”, “son of hell”, “serpents”, “blind guides”, “fools”, “ whited sepulchers”, “full of dead men’s bones and all uncleanliness” and “offspring of vipers”.
The new wave of bitcoiners will not be the unbanked promoted by the BCashers and ICO scammers and their useful idiot altruistic utopians. There will always be the poor among us, mostly for reasons of their own doing.
These bitcoin pharisees are lining their pockets on the backs of those they promise to help and are a curse on the honest bitcoin community. While I am not concerned about the death of bitcoin, I am concerned about the effect their shenanigans have on bitcoin and the emerging Bitcoin Standard.
Bitcoin maximalists are lumped together with these scam artists, fraudsters, liars, hypocrites and deceivers parading under the banner of bitcoin. It is important to distinguish bitcoin from crypto. Bitcoin alone is blockchain. Bitcoin stands alone, all other wannabees are crypto. Those promoting crypto are not friends of bitcoin if they ride on our coattails and it is time for bitcoin maximalists to stop pretending otherwise.
These bitcoin Pharisees shout, “Peace, Peace! We love bitcoin!” when there is no peace. Their actions belie the truth. Their actions belie their words!
Make no mistake. Bitcoin Pharisees hate bitcoin. They despise bitcoin. They deny this vehemently but they tolerate bitcoin and sound money only to the degree they can use its wonderful imputed qualities of trustlessness and a level playing field, and hence, freedom. BCash baits and switches innocent sheep into something they promote and advertise as “better than bitcoin”.
To quote a phrase from my mentor E. C. Harwood, “Stand still little sheep . . . to be shorn!”
As their false promises crumble into dust, these bitcoin Pharisees must be dealt with just as Christ dealt with the Pharisees of his day and exposed them for who and what they are.
Ad hominem argument is valid so long as it is true and relevant.
At the same time, Christ exhorted the saints to do as the Pharisees say, but not as they do. That is the task that lies ahead for Bitcoin Maximalists.
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PS: The Exthit (pronounced with a lisp and weak wrist) appears to be accelerating again. It is time to stay out or stay short . . . and keep a minimum balance on all exchanges.
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