The general idea is that bitcoins are 'mining' ... interesting words here ... by solving an increasingly difficult mathematical formula - is more difficult because bitcoins are 'mining' in existence; Interesting on a computer again Once created, the new bitcoin has been inserted into electronic 'wallet'. Bitcoin is possible to trade real stuff or Fiat currency ... and vice versa. Apart from this, since bitcoin has no central issuer, so all of it is highly distributed, thus it is resistant to being 'managed' by the authority.
Naturally supporters of Bitcoin, who benefit from the development of Bitcoin, emphasize that 'Surely, Bitcoin is money' ... and not only this, but 'this is the best money, the future money 'Etc. ... Well, the pro-Fiat supporters shout aloud that paper currency is money ... and we all know that Fiat Paper is not money through any means because it lacks the most important properties of real wealth. The question is, bitcoin also qualifies as a money ... never regards the future money or the best money ever.
To find out, let's look at the properties that define the money, and see whether bitcoin is eligible or not. There are three essential properties of money;
1) Money is a steady store of value; The most essential feature, failure of the numeraire function, or value unit of value, without the stability of value fails.
2) Money is numeraire, account unit.
3) Money is the medium of exchange ... but other things can accomplish this task i.e. the direct barter, the exchange of goods 'netting out'. Apart from this, 'trade goods' (chips) that temporarily value; And finally exchange of mutual credit; I.e. eliminate the value of the promise made by the exchange of bill or IoU.
Compared to Fiat, Bitcoon does not do very badly in the form of exchanges. Fiat is only accepted in the geographical domain of its issuer. Dollar is not good in Europe. Bitcoin is accepted internationally. On the other hand, very few retailers currently accept payments in bitcoin. As long as acceptance grows geometrically, Fiat wins ... although on the cost of exchange between countries.
The first situation is very difficult; Money should be a steady store of value ... In just a few years, Bitcoin has gone from $ 3.00 to 'worth' to nearly $ 1,000. It is close to being a 'stable store' value; As you can get! Indeed, such benefits are a perfect example of a speculative surge ... such as Dutch tulip bulbs, or junior mining companies, or Nortel stock.
Of course, Fiat also fails here; For example, the US dollar, 'main' Fiat, has lost more than 95% of its value in a few decades ... neither Fiat nor Betquin qualifies in the most important measure; The ability to store value and preserve value through time. Real money, it is gold, has shown the ability to keep value for centuries, not for centuries. Neither Fiat nor Bitcoin has this significant potential ... both fail as money.
Finally, we come into second feature; to be numeraire. Now it is really interesting, and we can see that seeing the question of 'numeraire', why both Bitcoin and Fiat fail in the form of money. Numerier not only refers to the use of money to store the value, but rather in a measure measurement, or compare the value. In Austrian economics, in reality, value is considered impossible to measure; After all, the value remains only in human consciousness ... and how can anything really be measured in consciousness? Nevertheless, through the principle of the market market action, it is a dialogue between the bid and the proposal, market prices can be established ... if only transient ... and this market value is expressed in terms of number So, the most marketable good money is.
So how can we establish the value of Fiat ...? Through the concept of 'purchasing power' ... ie, the value of Fiat is determined by how it can be traded ... a so-called 'goods basket'. But they clearly mean that Fiat does not have its own value, but the price flows from the value of goods and services for which it can be traded. The edible 'bought' stuff flows on the Fiat number. After all, what is the difference between a dollar bill and a hundred dollar bills, except the printed number on it ... and the purchase power of the number?
On the other hand, gold is not measured by the measurements it makes; Rather, in particular, it is measured by another physical standard; Its weight, or the mass One gram of gold is one gram of gold, and ounces of gold is ounces of gold ... It does not matter whether it has 'face value' on its surface or otherwise carved. Reason is contrary to Fiat; Gold is measured with weight, an internal quality ... not by purchasing power. Now, do you have any idea of ??the value of ounce of dollars? No such thing. Fiat is 'measured' by only one transient quantity ... printed number, 'face value' on it.
Bitcouine is far from being numerical; Not only this is only a number of fiat ... but its value is measured in Fiat! Even if Bitcoin is accepted internationally as the medium of exchange, and even if it manages to convert the dollar into acceptable 'numeraire', then in the internal like gold There can not be an underlying solution. Being unique in gold being measured by a real, irreversible physical quantity. Gold is unique in value stores for thousands of years. It is not a unique combination of the qualities of humanity and anything else.
Finally, Bitcoin has some advantages over Fiat, i.e. anonymous and decentralization, it fails in its claim of having money. Its advantages are also suspicious; Its aim is to limit the 'mining' of Bitcoin to 26,000,000 units; That is, the 'mining' algorithm becomes difficult and difficult to solve, then 26 million bitcoins becomes impossible after mining. Unfortunately, this announcement may be very good for Bitcutine's death bell; Already, some central banks have announced that bitcoins can become 'reserve' currency.
Wow, looks like a major step for Bitcoin, right? After all, 'big banks' accept the actual value of bitcoin, no? What exactly does it mean that the bank believes that they can do Fiat business for bitcoin ... and in fact to spend 26 million bitcoins, it will cost at least 26 billion fiat dollars. FITT Printer is not even small changes in dollar dollars; It is worth a week of printing alone by the US Fed. And, once Bitcoin bought and closed in the Fed's 'Wallet' ... what useful purpose could they serve?
Will not leave any bitcoins in circulation; An ideal corner If there is no bitcoin in circulation, how can it be used on the earth as the medium of exchange? And, what can the issuer of Bitcoin possibly do to defend against such a fate? Change algorithm and increase 26 million ... 52 million? Up to 104 million? Join the Fiat Printing Parade? But again, by quantity theory of money, bitcoine will start losing value, such as Fiat is believed to be lost through over-printing ...
We come to the main issue; When we already have the best money, why search for 'new money' for gold? Fear of seizing gold? An infiltration lack of anonymity from the government? Cruel taxation? Fiat Money Legal Tender Law? All of the above The answer is not in a new form of money, but in a new social structure, without Fiat, without the official espionage, without the drones and swat teams ... without the irs, the border guards, the TSA thieves ... without and running. The world of freedom is not oppression. Once this is complete, Gold will resume its ancient and important role as honest money ... and not a moment ago.
Rudy J. Fritz was born in Hungary in 1947, and ran away from socialist persecution during the Hungarian Revolution of 1956. His family lived through WWII and as a result of Hungarian hyperinflation, thus he had close experiences with financial destruction.
As an engineer and entrepreneur, he ran a successful family business in Canada for decades, employing more than 100 workers at its peak, until the economic turmoil did not destroy profitability of North American manufacturing. After leaving the business, he decided to study economics for the discovery of the reason for this unhappy situation.
He did not understand the mainstream economics "The Dissal Science", he studied Austrian economics, the only school of economics based in the realities of the humanities. When he discovered the work of Professor Antal Fekete, he came to appreciate it and made a firm commitment to help preserve and circulate the legacy of the professor.
On the other hand, gold is not measured by the measurements it makes; Rather, in particular, it is measured by another physical standard; Its weight, or the mass One gram of gold is one gram of gold, and ounces of gold is ounces of gold ... It does not matter whether it has 'face value' on its surface or otherwise carved. Reason is contrary to Fiat; Gold is measured with weight, an internal quality ... not by purchasing power. Now, do you have any idea of ??the value of ounce of dollars? No such thing. Fiat is 'measured' by only one transient quantity ... printed number, 'face value' on it.
Bitcouine is far from being numerical; Not only this is only a number, as much as Fiat ... but its value
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