If you don’t know what Bitcoin is, Do a bit of research on the internet, and you’ll receive lots… but the short Narrative is that Bitcoin was made as a medium of exchange, without a central bank Or bank of difficulty being involved. Furthermore, Bitcoin transactions are supposed To be private, anonymous. Most interestingly, Bitcoins have no real World existence; they exist only in computer applications, as a sort of virtual reality.
The general idea is that Bitcoins ‘ are ‘mined’… intriguing term here… by solving a hard mathematical formula -more difficult as more Bitcoins are ‘mined’ into existence; again intriguing- on a computer. Once created, the new Bitcoin is set into an electronic ‘wallet’. It is then feasible to exchange real goods or Fiat money for Bitcoins… and vice versa. Additionally, since there is no central issuer of Bitcoins, it is all highly distributed, hence resistant to being ‘managed’ by jurisdiction.
Naturally proponents of Bitcoin, Those who profit from the growth of Bitcoin, insist rather loud that ‘for certain, Bitcoin is cash’… and not only that, but ‘it’s the best money , the cash of the future’, etc.. . The proponents of all Fiat shout just as loudly that paper money is money… and most of us know that Fiat paper is not money by any means, as it lacks the most important attributes of real money. The question then is does Bitcoin even qualify as money… never mind that it being the money of the future, or the best money . Well, just what do you feel about that so far? You may already have guessed that bitcoin revolution richard branson is a vast field with much to find out. A lot of people have found certain other areas are beneficial and contribute good information.
You won’t ever really know about any one aspect because there are a lot of diverse situations. So what we advise is to really try to find out what you need, and that will usually be determined by your circumstances. You have a solid base of a few essential points, and we will make that much stronger for you as follows.
Compared to Fiat, Bitcoin does not Do too badly as a medium of exchange. Fiat is only accepted in the geographic domain of its own issuer. Dollars aren’t any good in Europe etc.. Bitcoin is approved internationally. On the flip side, very few retailers currently accept payment in Bitcoin. Until the approval grows , Fiat wins… although at the cost of trade between nations.
The first condition is a great deal Tougher; cash must be a stable store of value… now Bitcoins have gone from a ‘value’ of $3.00 to around $1,000, in only a couple years. That is about as far away from being a ‘stable store of value’; as you can get! Indeed, such profits are an ideal illustration of a speculative boom… like Dutch tulip bulbs, or real mining companies, or Nortel stocks.
Naturally, Fiat fails as well; As an example, the US Dollar, the ‘main’ Fiat, has lost over 95 percent of its value in a few decades… neither fiat nor Bitcoin qualify in the most crucial measure of money; the capacity to store value and conserve value through time. Actual money, that is Gold, has shown the capacity to hold value not just for centuries, except for eons. Neither Fiat nor Bitcoin has this critical capacity… both neglect as money.
Finally, we come to the second Feature; this of being the numeraire. This is actually interesting, and we can see why both Bitcoin and Fiat neglect as money, by looking closely at the question of their ‘numeraire’. Numeraire describes the usage of money to not just store value, but to at a way measure, or compare value. In Austrian economics, it’s deemed impossible to actually quantify value; after all, significance resides just in human consciousness… and how can anything else in understanding actually be quantified? Nevertheless, through the principle of Mengerian market action, that’s interaction between offer and bid, market prices can be established… if only briefly… and this industry price is expressed in terms of the numeraire, the most marketable good, that is money.
So how do we establish the value of Fiat… ? Through the idea of ‘buying power’… that is, the value of Fiat depends upon what it can be traded for… a so called ‘basket of goods’. But his clearly suggests that Fiat has no significance of its own, rather value flows from the worth of their goods and services it may be traded for. Causality flows from the goods ‘purchased’ to the Fiat number. After all, what difference is there between a one Dollar invoice and a hundred Dollar bill, except the amount printed on it… along with the purchasing power of the number?
Gold, on the other hand, is not Measured by what it trades for; instead, uniquely, it is measured by a different physical benchmark; by its weight, or mass. A gram of Gold is a gram of gold, and an ounce of Gold is an oz of Gold… regardless of what amount is engraved on its surface, ‘face value’ or otherwise. Causality is the opposite to that of Fiat; Gold is measured by weight, an inherent quality… maybe not by buying electricity. Now, have you really any notion of the value of an ounce of Dollars? No such thing. Fiat is just ‘quantified’ by an ephemeral quantity… the amount printed on it, ‘ the ‘face value’.