Bitcoin has a reduced risk of collapse Unlike traditional currencies that rely on authorities. When currencies fall, it leads to hyperinflation or the wipeout of someone’s savings in an instant. Bitcoin exchange rate isn’t regulated by any government and is a digital currency available globally.
Bitcoin is easy to carry. A billion Bucks in the Bitcoin can be saved on a memory stick and placed in one’s pocket. It’s that easy to transfer Bitcoins compared to paper money.
The general Notion is that Bitcoins ‘ are ‘mined’… interesting term here… by solving an increasingly hard mathematical formula -harder as more Bitcoins are ‘mined’ into existence; again interesting- on a computer. Once created, the new Bitcoin is put into a digital ‘wallet’. It’s then feasible to exchange actual goods or Fiat currency for Bitcoins… and vice versa. Furthermore, since there’s 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 growth of Bitcoin, insist fairly loudly that ‘for sure, Bitcoin is money’… and not just that, but ‘it’s the best money , the money of the future’, etc.. . The proponents of all Fiat shout just as loudly that paper currency is money… and we all know that Fiat newspaper isn’t cash by any means, as it lacks the most important attributes of real cash. The question then is does Bitcoin even qualify as cash… never mind it being the money of the future, or the best money .
Compared to Fiat, Bitcoin does not Do too badly as a medium of trade. Fiat is only accepted in the geographic domain of its issuer. Dollars are no great in Europe etc.. Bitcoin is accepted internationally. On the flip side, very few retailers now accept payment in Bitcoin. Unless the approval grows geometrically, Fiat wins… although in the cost of trade between nations.
The first condition is that a lot Tougher; cash has to be a stable store of value… now Bitcoins have gone out of 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! Truly, such profits are a perfect example of a speculative boom… such as Dutch tulip bulbs, or real mining companies, or Nortel stocks. Well, just what do you feel about that so far? You may already have guessed that bitcoin revolution software is a vast field with much to find out. Yes, it is correct that so many find this and other similar subjects to be of great value. You should be careful about making too many presumptions until the big picture is more clear. It is always a good idea to determine what your situations call for, and then go from that point. You will find out the rest of this article adds to the foundation you have built up to this stage.
Of course, Fiat fails as well; As an example, the US Dollar, the ‘main’ Fiat, has dropped over 95% of its value in a couple of decades… neither fiat nor Bitcoin qualify at the most important measure of cash; the capacity to store value and conserve value through time. Real money, which is Gold, has shown the ability to maintain value not just for centuries, except for eons. Neither Fiat nor Bitcoin has this crucial capacity… both neglect as money.
Ultimately, we come to the next Feature; that of being the numeraire. Now this is actually intriguing, and we can see why the two Bitcoin and Fiat fail as cash, by looking closely at the question of their ‘numeraire’. Numeraire refers to the usage of money to not just save value, but to in a sense step, or compare worth. In Austrian economics, it is deemed impossible to really quantify value; after all, significance resides only in human comprehension… and how can anything in understanding really be quantified? But through the principle of Mengerian market action, that is interaction between offer and bid, market prices can be established… if just momentarily… and this market price is expressed in terms of the numeraire, the most marketable good, that is money.
So how do we set the value of Fiat… ? Through the concept of ‘buying power’… that is, the worth of Fiat is determined by what it can be exchanged for… a so called ‘basket of goods’. But his clearly implies that Fiat has no significance of its own, but instead value flows from the worth of the goods and services it might be traded for. Causality flows from the goods ‘purchased’ into the Fiat number. After all, what difference is there between a 1 Dollar invoice and a hundred Dollar bill, except the amount printed on it… and the buying power of the number?