Bitcoin has a low risk of collapse Unlike traditional currencies that rely on governments. When currencies collapse, it contributes to hyperinflation or the wipeout of someone’s savings in an instant. Bitcoin exchange rate is not regulated by any government and is a digital money available globally.
Bitcoin is easy to carry. A billion Dollars in the Bitcoin can be stored on a memory stick and placed in one’s pocket. It is so simple to transport Bitcoins compared to paper cash.
The general idea is that Bitcoins Are ‘mined’… interesting expression here… by solving an increasingly difficult mathematical formula -harder as more Bitcoins are ‘mined’ into existence; again intriguing- to a computer. Once created, the new Bitcoin is set into a digital ‘wallet’. It is then feasible to exchange real goods or Fiat money for Bitcoins… and vice versa. Additionally, as there’s not any central issuer of Bitcoins, it’s all highly distributed, hence resistant to being ‘managed’ by authority.
Naturally proponents of Bitcoin, Those who benefit from the growth of Bitcoin, insist fairly loudly that ‘for sure, Bitcoin is money’… and not only that, but ‘it is the best money ever, the cash of their future’, etc.. . The proponents of Fiat shout just as loudly that paper money is money… and we all know that Fiat paper isn’t cash by any means, as it lacks the most important attributes of real cash. The issue then is does Bitcoin even qualify as cash… not mind it being the money of their near future, or the very best money .
Compared to Fiat, Bitcoin does not Do too badly as a medium of trade. Fiat is only accepted in the geographical domain of its issuer. Dollars are no good in Europe etc.. Bitcoin is approved internationally. On the flip side, not many retailers currently accept payment in Bitcoin. Unless the acceptance grows , Fiat wins… although at the cost of exchange between nations.
The primary condition is a lot Tougher; money must be a stable store of value… now Bitcoins have gone from a ‘value’ of $3.00 to about $1,000, in only a few years. That is about as far away from being a ‘stable store of value’; as you can get! Indeed, such gains are a perfect example of a speculative boom… like Dutch tulip bulbs, or junior mining companies, or even Nortel stocks. We are offering you solid pieces of info here, but do be aware that some are more important to understanding bitcoin revolution software. But in the end you are the only person who can correctly make that call. But we are not done, yet, and there is always much more to be uncovered. Continue reading to discover even more, and what we will do is add a few more critical topics and recommendations for you to consider. We think you will find them highly pertinent to your overall goals, plus there is even more.
Naturally, Fiat fails here as well; For example, the US Dollar, the ‘primary’ Fiat, has dropped over 95% of its worth in a few decades… neither fiat nor Bitcoin qualify at the most crucial measure of money; the capacity to store value and conserve value through time. Real money, that is Gold, has shown the capacity to maintain value not just for centuries, except for eons. Neither Fiat nor Bitcoin has this critical capacity… both neglect as money.
Ultimately, we come to the second Attribute; this of being the numeraire. This is actually intriguing, and we can see why the two Bitcoin and Fiat fail as cash, by looking closely at the question of the ‘numeraire’. Numeraire refers to the usage of money to not only store value, but to in a sense step, or compare worth. In Austrian economics, it’s deemed impossible to really quantify value; after all, value resides only in human comprehension… and how can anything else in understanding actually be measured? Nevertheless, through the principle of Mengerian market action, that’s interaction between offer and bid, market prices can be established… if just momentarily… and this industry price is expressed concerning the numeraire, the most marketable good, that is money.
So how do we establish the worth of Fiat… ? Through the idea of ‘purchasing power’… that is, the value of Fiat depends upon what it can be exchanged for… a so called ‘basket of goods’. But his clearly implies that Fiat has no value of its own, instead value flows from the value of their goods and services it may be traded for. Causality flows from the merchandise ‘bought’ to the Fiat number. After all, what difference is there between a 1 Dollar bill and a hundred Dollar invoice, except the amount printed on it… along with the buying power of this amount?