Bitcoin has a reduced risk of collapse Unlike traditional currencies that rely on governments. When currencies fall, it leads to hyperinflation or the wipeout of one’s savings in an instant. Bitcoin exchange rate is not controlled by any government and is a digital currency available worldwide.
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 expression here… by solving an increasingly hard mathematical formula -harder as more Bitcoins are ‘mined’ into existence; yet again intriguing- to a computer. Once established, the new Bitcoin is set into an electronic ‘wallet’. It’s then possible to exchange real goods or Fiat money for Bitcoins… and vice versa. Furthermore, as there’s not any central issuer of Bitcoins, it’s all highly dispersed, thus resistant to being ‘handled’ by jurisdiction.
Naturally proponents of Bitcoin, Those who profit from the growth of Bitcoin, insist rather loud that ‘for sure, Bitcoin is money’… and not just that, but ‘it’s the best money , the cash of their future’, etc.. . Well, the proponents of Fiat shout as loudly that paper currency is money… and we all know that Fiat paper is not cash by any means, as it lacks the most important attributes of real money. The issue then is does Bitcoin even be eligible as cash… never mind it being the money of their 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 geographic domain of its issuer. Dollars are no good in Europe etc.. Bitcoin is approved internationally. On the flip side, not many retailers currently accept payment in Bitcoin. Unless the acceptance grows , Fiat wins… although at the cost of trade between nations.
The primary condition is a lot Tougher; cash must be a stable store of value… today Bitcoins have gone out of a ‘value’ of $3.00 to around $1,000, in only a few years. That is about as far from being a ‘stable store of value’; since you can get! Truly, such gains are a perfect illustration of a speculative boom… such as Dutch tulip bulbs, or junior mining companies, or even Nortel stocks. Hopefully, just as with so many other areas regarding bitcoin revolution, you will need to pay more consideration to some things than others. However, the bottom line is how you want to make use of it, and how much of it will effect your situation. Yet you do understand there is much more to be discovered about this. Keep reading to discover even more, and what we will do is include a few more critical topics and recommendations for you to consider. It is all about offering information that builds on itself, and we believe you will appreciate that.
Of course, Fiat fails as well; As an example, the US Dollar, the ‘main’ Fiat, has lost over 95 percent of its value in a couple of decades… neither fiat nor Bitcoin qualify in the most crucial measure of cash; the capacity to store value and preserve value through time. Real money, which is Gold, has shown the capacity to maintain value not only for centuries, but for eons. Neither Fiat nor Bitcoin has this critical capacity… both neglect as cash.
Finally, we return to the next Attribute; this of being the numeraire. This is actually intriguing, and we can see why the two Bitcoin and Fiat neglect as money, by looking closely at the question of their ‘numeraire’. Numeraire refers to the usage of cash to not just save value, but to in a way step, or compare value. In Austrian economics, it’s deemed impossible to actually measure value; after all, value resides only in human consciousness… and how can anything else in consciousness actually be measured? But through the principle of Mengerian market action, that’s interaction between offer and bid, market prices can be established… if only momentarily… 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’… which is, the value 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 rather appreciate flows from the worth of the goods and services it might be traded for. Causality flows from the merchandise ‘bought’ to the Fiat number. After all, what difference is there between a one Dollar invoice and a trillion Dollar invoice, except that the amount printed on it… and the purchasing power of this number?