If you do not understand what Bitcoin is, then Do a bit of research online, and you’ll receive lots… but the short Narrative is that Bitcoin was made as a medium of exchange, with no central bank Or bank of issue being involved. Furthermore, Bitcoin transactions are supposed To be private, that is anonymous. Most interestingly, Bitcoins Don’t Have Any real World existence; they exist only in computer software, as a sort of virtual reality.
The general Notion is that Bitcoins Are ‘mined’… intriguing expression 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 an electronic ‘wallet’. It is then feasible to trade actual goods or Fiat money for Bitcoins… and vice versa. Furthermore, since there is no central issuer of Bitcoins, it is all highly dispersed, hence resistant to being ‘handled’ by authority.
Naturally proponents of Bitcoin, Those who benefit from the development of Bitcoin, insist fairly loud that ‘for sure, Bitcoin is money’… and not just that, but ‘it’s the best money ever, the cash of the future’, etc.. . The proponents of all Fiat shout as loudly that paper currency is money… and we all know that Fiat paper isn’t money by any means, as it lacks the most important attributes of genuine cash. The question then is does Bitcoin even qualify as cash… never mind that it being the cash of their future, or the very best money . Has what you have found added to your previous knowledge? Bitcoin Revolution app is a massive area with many additional sub-topics you can read about. It is really similar to other related issues that are important to people. You should take care about making too many assumptions until the big picture is more clear. So what we advise is to really try to find out what you need, and that will usually be determined by your circumstances. You will find out the rest of this article adds to the foundation you have built up to this point.
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 flip side, not many retailers currently accept payment in Bitcoin. Until the acceptance grows , Fiat wins… although in the cost of trade between nations.
The first condition is that a lot Tougher; cash must be a stable store of value… today 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’; since you can get! Truly, such profits are a perfect illustration of a speculative boom… such as Dutch tulip bulbs, or junior mining companies, or Nortel stocks.
Naturally, Fiat fails here as well; For 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 at 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.
Finally, we come to the next Feature; that of being the numeraire. Now this is actually intriguing, and we can see why both Bitcoin and Fiat fail as money, by looking closely at the question of their ‘numeraire’. Numeraire describes the usage of cash to not just save worth, but to at a way step, or compare value. In Austrian economics, it is deemed impossible to really quantify value; after all, value resides only in human consciousness… and how can anything in consciousness really 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 concerning the numeraire, the most marketable good, that’s 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 implies that Fiat has no value of its own, but rather value flows from the worth of their goods and services it may be exchanged for. Causality flows from the goods ‘purchased’ into the Fiat number. After all, what difference is there between a one Dollar bill and a trillion Dollar invoice, except that the amount printed on it… and the purchasing power of the amount?
Gold, on the other hand, is not Quantified by what it trades for; rather, uniquely, it is quantified by a different physical standard; by its own weight, or mass. A g 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 contrary to that of Fiat; Gold is measured by weight, an intrinsic quality… maybe not by purchasing electricity. Now, have you any idea of the worth of an ounce of Dollars? No such thing. Fiat is just ‘quantified’ with an ephemeral quantity… the number printed on it, ‘ the ‘face value’.