If you do not know what Bitcoin is, Do a bit of research online, and you’ll receive plenty… but the brief Story is that Bitcoin was created as a medium of trade, with no central bank Or bank of issue being involved. Moreover, Bitcoin transactions are supposed To be private, that is anonymous. Most significantly, Bitcoins Don’t Have Any real World existence; they exist only in computer applications, as a sort of virtual reality.
The general idea is that Bitcoins Are ‘mined’… intriguing expression here… by solving a difficult mathematical formula -more difficult as more Bitcoins are ‘mined’ into existence; again intriguing- to a computer. Once established, the new Bitcoin is put into an electronic ‘wallet’. It’s then possible to exchange actual goods or Fiat currency for Bitcoins… and vice versa. Furthermore, as there is no central issuer of Bitcoins, it’s all highly dispersed, thus resistant to being ‘managed’ by authority.
Naturally proponents of Bitcoin, Those who profit from the development of Bitcoin, insist rather loudly that ‘for sure, Bitcoin is cash’… and not just that, but ‘it is the best money ever, the money of their future’, etc.. . The proponents of all Fiat shout just as loudly that paper currency is money… and most of us know that Fiat paper isn’t cash 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 it being the money of their near future, or the very best money ever. As you can plainly see, what you will discover about bitcoin revolution richard branson is some points are far more important than others.
But that can vary slightly, and it really just will depend on how you want to use the information. As you know, there is much more to the story than what is offered here. Still have more big pieces of the overall picture to offer to you, though. It is all about giving information that builds on itself, and we believe you will value that.
Compared to Fiat, Bitcoin does not Do too badly as a medium of exchange. Fiat is only accepted in the geographic domain of its issuer. Dollars are no great in Europe etc.. Bitcoin is approved internationally. On the other hand, very few retailers currently accept payment in Bitcoin. Until the approval grows , Fiat wins… although in the cost of exchange between countries.
The primary condition is that a great deal Tougher; money has to be a stable store of value… today Bitcoins have gone out of a ‘value’ of $3.00 to around $1,000, in just a few decades. That is about as far away from being a ‘stable store of value’; since you can buy! Truly, such gains are an ideal example of a speculative boom… like Dutch tulip bulbs, or real mining companies, or Nortel stocks.
Naturally, Fiat fails as well; For instance, the US Dollar, the ‘primary’ Fiat, has dropped over 95 percent 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, which is Gold, has shown the ability to maintain value not only for centuries, but for eons. Neither Fiat nor Bitcoin has this critical capacity… both neglect as money.
Ultimately, we return to the second Feature; this of being the numeraire. Now this is really interesting, and we can see why both Bitcoin and Fiat neglect as cash, by looking closely at the question of the ‘numeraire’. Numeraire describes the usage of money to not only save value, but to at a sense measure, or compare value. In Austrian economics, it’s considered impossible to really measure value; after all, value resides just in human consciousness… and how can anything in consciousness really be quantified? Nevertheless, through the principle of Mengerian market action, that is interaction between bid and offer, market prices can be established… if only momentarily… and this market price is expressed concerning the numeraire, the most marketable good, that is money.
So how do we establish the value of Fiat… ? Through the concept of ‘buying power’… that is, the value of Fiat depends upon what it can be exchanged for… a so called ‘basket of goods’. But his clearly suggests that Fiat has no value of its own, but instead value flows from the value of their goods and services it might be traded for. Causality flows from the goods ‘purchased’ to the Fiat number. After all, what difference is there between a 1 Dollar invoice and a hundred Dollar bill, except that 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; rather, uniquely, it’s measured by a different physical standard; from its own weight, or mass. A gram of Gold is a gram of gold, and an ounce of Gold is an ounce of Gold… no matter 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… not by purchasing electricity. Now, have you really any idea of the value of an oz of Dollars? No anything. Fiat is only ‘quantified’ by an ephemeral quantity… the number printed on it, ‘ the ‘face value’.