Bitcoin has a low risk of collapse Unlike traditional monies that rely on governments. When currencies collapse, it leads to hyperinflation or the wipeout of one’s savings in a minute. Bitcoin exchange rate is not regulated by any government and is an electronic currency available globally.
Bitcoin isn’t hard to carry. A billion Dollars in the Bitcoin can be saved on a memory stick and placed in one’s pocket. It is that easy to transfer Bitcoins compared to paper cash.
The general Notion is that Bitcoins Are ‘mined’… intriguing term here… by solving an increasingly difficult mathematical formula -more difficult as more Bitcoins are ‘mined’ into existence; yet again intriguing- 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, as there is not any central issuer of Bitcoins, it’s all highly dispersed, thus resistant to being ‘managed’ by jurisdiction.
Naturally proponents of Bitcoin, Those who benefit from the development of Bitcoin, insist rather loudly that ‘for certain, Bitcoin is cash’… and not just that, but ‘it’s the best money , 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 newspaper is not cash by any means, as it lacks the most important attributes of genuine cash. The issue then is does Bitcoin even qualify as money… never mind that it being the cash of their near future, or the 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 good in Europe etc.. Bitcoin is accepted 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 exchange between nations.
The first condition is that a lot Tougher; cash has to be a stable store of value… today Bitcoins have gone out of a ‘value’ of $3.00 to about $1,000, in just a couple decades. That is about as far from being a ‘stable store of value’; since you can get! Indeed, such gains are an ideal illustration of a speculative boom… such as Dutch tulip bulbs, or junior mining companies, or Nortel stocks. We have covered a few basic things about bitcoin revolution software, and they are important to consider in your research. But is that all there is? Not by a long shot – you actually can expand your knowledge greatly, and we can help you. We know they are terrific and will aid you in your quest for solutions. However, we always stress that anyone takes a closer look at the overall big picture as it relates to this subject. The rest of the document will provide you with a few more important factors to bear in mind.
Of course, Fiat fails as well; For instance, the US Dollar, the ‘primary’ Fiat, has lost over 95% of its value in a few 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 hold value not only for centuries, but for eons. Neither Fiat nor Bitcoin has this critical capacity… both fail as money.
Ultimately, we return to the next Feature; that of being the numeraire. This is really interesting, and we can see why both Bitcoin and Fiat fail as money, by looking closely at the question of the ‘numeraire’. Numeraire describes the usage of cash to not only store value, but to in a sense measure, or compare value. In Austrian economics, it is considered impossible to really measure value; after all, value resides only in human comprehension… and how can anything else in consciousness really be measured? Nevertheless, through the principle of Mengerian market action, that’s interaction between bid and offer, 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 set the value of Fiat… ? Through the concept of ‘purchasing power’… that is, the value of Fiat is determined by what it can be traded for… a so called ‘basket of goods’. However, his clearly suggests that Fiat has no value of its own, but instead appreciate flows from the worth of the goods and services it may be exchanged for. Causality flows from the merchandise ‘purchased’ to the Fiat number. After all, what difference is there between a 1 Dollar bill and a trillion Dollar bill, except the amount printed on it… and the buying power of this number?