Bitcoin has a reduced risk of collapse Unlike traditional currencies that rely on governments. When currencies collapse, it contributes to hyperinflation or the wipeout of one’s savings in a minute. Bitcoin exchange rate isn’t controlled by any government and is an electronic money available worldwide.
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’s that simple to transport Bitcoins compared to paper cash.
The general Notion is that Bitcoins Are ‘mined’… interesting term here… by solving a difficult mathematical formula -harder 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 feasible to trade actual goods or Fiat money for Bitcoins… and vice versa. Furthermore, as there is not any central issuer of Bitcoins, it is all highly distributed, hence resistant to being ‘managed’ by authority.
Naturally proponents of Bitcoin, Those who benefit from the development of Bitcoin, insist rather loud that ‘for sure, Bitcoin is cash’… and not just that, but ‘it’s the best money ever, the cash of their future’, etc.. . Well, the proponents of all Fiat shout as loudly that paper money is cash… and most of us know that Fiat newspaper isn’t money by any means, as it lacks the most important attributes of real money. The issue then is does Bitcoin even qualify as cash… not mind that it being the cash of the near future, or the very best money ever.
Compared to Fiat, Bitcoin does not Do too badly as a medium of exchange. Fiat is only accepted in the geographical domain of its own issuer. Dollars are no great in Europe etc.. Bitcoin is approved internationally. On the other hand, very few retailers currently accept payment in Bitcoin. Unless the approval grows geometrically, Fiat wins… although in the cost of trade between nations.
The primary condition is that a lot Tougher; cash must be a stable store of value… today Bitcoins have gone from a ‘value’ of $3.00 to around $1,000, in only a few decades. This is about as far away from being a ‘stable store of value’; since you can buy! Indeed, such profits are a perfect illustration of a speculative boom… like Dutch tulip bulbs, or real mining companies, or even Nortel stocks. As we have just mentioned, bitcoin revolution software is something that cannot be dismissed – or at least should never be ignored. At times there is simply way too much to even try to cover in one go, and that is important for you to realize and take home. But I wanted to stop for a moment so you can reflect on the value of what you have just read. We are highly certain about the ability of what we offer, today, to create a difference. As usual, we generally save the very best for last.
Of course, Fiat fails as well; For instance, the US Dollar, the ‘primary’ Fiat, has dropped over 95% of its worth in a couple of decades… neither fiat nor Bitcoin qualify in the most important measure of money; the capacity to store value and conserve value through time. Actual money, that is Gold, has shown the capacity to maintain value not only for centuries, except for eons. Neither Fiat nor Bitcoin has this critical capacity… both neglect as money.
Finally, we come to the next Feature; this of being the numeraire. This is really 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 use of cash to not just save value, but to in a sense step, or compare value. In Austrian economics, it’s deemed impossible to really quantify value; after all, significance resides just in human consciousness… and how can anything in consciousness actually be quantified? Nevertheless, through the principle of Mengerian market action, that is interaction between bid and offer, market prices can be established… if just briefly… and this industry price is expressed in terms of the numeraire, the most marketable good, that is money.
So how do we set the worth of Fiat… ? Through the concept of ‘buying power’… that is, the worth of Fiat depends upon what it can be exchanged for… a so called ‘basket of goods’. However, his clearly suggests that Fiat has no significance of its own, instead appreciate flows from the worth of the goods and services it may be exchanged for. Causality flows from the merchandise ‘purchased’ into the Fiat number. After all, what difference is there between a one Dollar invoice and a trillion Dollar bill, except that the amount printed on it… along with the buying power of this number?