The general Notion is that Bitcoins Are ‘mined’… interesting expression here… by solving an increasingly hard mathematical formula -harder as more Bitcoins are ‘mined’ into existence; again intriguing- on a computer. Once created, the new Bitcoin is set into a digital ‘wallet’. It is then feasible 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, hence resistant to being ‘managed’ by authority.
Naturally proponents of Bitcoin, Those who profit from the development of Bitcoin, insist fairly loudly that ‘for certain, Bitcoin is money’… and not only that, but ‘it’s the best money ever, the cash of the future’, etc.. . Well, the proponents of all Fiat shout just as loudly that paper money is cash… and we all know that Fiat newspaper is not cash by any means, as it lacks the main attributes of genuine cash. The issue then is does Bitcoin even qualify as money… not mind that it being the cash of the future, or the best money ever.
Compared to Fiat, Bitcoin doesn’t Do too badly as a medium of trade. Fiat is only accepted in the geographical domain of its own issuer. Dollars aren’t any good in Europe etc.. Bitcoin is accepted internationally. On the flip side, very few retailers now accept payment in Bitcoin. Until the acceptance grows geometrically, Fiat wins… although at the cost of trade between countries.
The primary condition is a lot Tougher; money has to be a stable store of value… now Bitcoins have gone out of a ‘value’ of $3.00 to about $1,000, in only a couple decades. This is about as far away from being a ‘stable store of value’; as you can get! Truly, such profits are an ideal example of a speculative boom… such as Dutch tulip bulbs, or real mining companies, or even Nortel stocks. As we have just mentioned, bitcoin revolution app is something that cannot be ignored – or at least should never be ignored. No one really can adequately address all the different situations that could arise with this particular topic. We will commence the rest of our conversation right away, but sometimes you have to stop and let issues sink in a little bit. In light of all that is available, and there is a lot, then this is a great time to be reading this. The last remaining areas for discussion may be even more important.
Of course, Fiat fails here as well; For instance, the US Dollar, the ‘primary’ Fiat, has dropped 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. 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 cash.
Ultimately, we return to the next Attribute; this of being the numeraire. This is really intriguing, and we can see why both Bitcoin and Fiat neglect as cash, by looking closely at the question of their ‘numeraire’. Numeraire describes the use of cash to not only save worth, but to in a sense measure, or compare worth. In Austrian economics, it’s deemed impossible to actually measure value; after all, significance resides just in human consciousness… and how can anything in consciousness really be measured? But through the principle of Mengerian market action, that is interaction between offer and bid, market prices can be established… if only momentarily… and this industry price is expressed concerning the numeraire, the most marketable good, that is money.
So how do we set the worth of Fiat… ? Through the idea of ‘purchasing power’… that is, the worth of Fiat depends upon what it can be traded for… a so called ‘basket of goods’. But his clearly implies that Fiat has no value of its own, instead value flows from the worth of the goods and services it might be traded for. Causality flows from the goods ‘bought’ to the Fiat number. After all, what difference is there between a one Dollar bill and a hundred Dollar bill, except the amount printed on it… along with the buying power of this amount?
Gold, on the other hand, isn’t Measured by what it deals for; instead, uniquely, it’s quantified by a different physical benchmark; 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… regardless of what amount is engraved on its surface, ‘face value’ or differently. Causality is the opposite to that of Fiat; Gold is measured by weight, an intrinsic quality… maybe not by buying power. Now, have you any notion of the worth of an ounce of Dollars? No anything. Fiat is just ‘quantified’ with an ephemeral quantity… the amount printed on it, ‘ the ‘face value’.
Bitcoin is further away from being The numeraire; not only can it be simply a number, much as Fiat… but its value is quantified in Fiat! Even though Bitcoin becomes internationally accepted as a medium of trade, and even though it manages to replace the Dollar as the approved ‘numeraire’, it can never possess an intrinsic measure like Gold has. Gold is exceptional in being measured by a true, unchanging physical quantity. Gold is unique in preserving worth for centuries. Nothing else in touch of humanity has this exceptional blend of qualities.