[LINK] ASX CHESS and Blockchain

[Roger Clarke]

>On 07/12/2017 13:41, Roger Clarke wrote:
>> Value-authentication of the $5 note is performed by inspecting it and comparing its appearance against people's expectations (a good forgery being worth as much as one printed by the official Mint).

At 20:14 +1100 8/12/17, David Lochrin wrote:
>Yes, but a valid $5 note has an inherent asset value determined by what it can buy in goods & services.  However the inherent value of a bitcoin is determined almost solely by what someone is prepared to pay for it, which is why its value fluctuates so widely, and trading in the current bubble is probably mostly speculative.

You (and I) have been fortunate to live in places and times when your statement has been true.

Try Germany 1918-1924, Zimbabwe in more recent times.

Try using your (and my) $5 note overseas, especially if it was issued in, say, Argentina in the late 1980s.

Try using it if it's issued by a bank that's in significant financial difficulties.  

In Australia, we have a form of insurance, in that (a) notes are not issued by for-profit banks incorporated under the Corporations Act and subject to the Banking Act, but by a government agency with a number of special features in its constitution, and (b) we have the sustained mythology of the 'four pillars', whereby the major financial institutions are 'too big to fail' and would therefore be supported by public funds if needed.

'Bank'notes issued by several UK banks remained in circulation in large volumes at the same time as UK banks were acting fast and loose a dozen years ago and were ill-prepared for a significant jolt that resulted in several institutions requiring very substantial bail-outs with taxpayer's funds - in order to sustain the not-so-inherent "asset value" in banknotes.

Coming at it from a different angle, Breton Woods' gold standard was a 30-year arrangement, and now we depend on 'fiat money', which is (Wikipedia definition, but sounds fine to this amateur) "a currency without intrinsic value established as money by government regulation".

Governments are increasingly weak in comparison with supra-national corporations, and increasingly manipulated by them.  So-called 'public-private' arrangements are burgeoning, with corporations extracting ever-more concessions, 'consultants' are taking over a lot more than water, electricity grids, ports and airports, and governments are losing the limited operational competence they had and becoming ever-more dependent on the corporations that they outsource to. 

Among other things, see Monks (2008) on 'Corpocracy' (or 'Corporatocracy') and Schmidt & Cohen (2014) 'The New Digital Age' (No, not Helmut, but Eric).  And remember that (1) Bunker Hunt almost got control of the world silver market, and (2) many currencies are more vulnerable than silver.

Do I lose sleep at night over the rapid emergence of the hypercorps that cyberpunk sc-fi envisioned?  

Yes.  But fortunately I have ways to deal with that.

Do I lose sleep at night about the not-so-inherent value of my $5 notes?

Nope.

Precisely because very few people lose sleep at night about the not-so-inherent value of their $5 notes.  As with a lot of other things in life, as long as lots of us keep our arms flapping, we probably all stay airborne.

As an occasional betting-man, I reckon I'll serve my time without having a problem relating to the not-so-inherent value of banknotes.

And I'm pretty hopeful that my kids might too - although they hold and will hold an even smaller proportion of their money in *actual* banknotes.  But don't ask me about how all this will work, and work out, for my grandkids.

</glass of red, off for a refill>

-- 
Roger Clarke                                 http://www.rogerclarke.com/
			             
Xamax Consultancy Pty Ltd      78 Sidaway St, Chapman ACT 2611 AUSTRALIA
Tel: +61 2 6288 6916                        http://about.me/roger.clarke
mailto:Roger.Clarke at xamax.com.au                http://www.xamax.com.au/ 

Visiting Professor in the Faculty of Law            University of N.S.W.
Visiting Professor in Computer Science    Australian National University