Bitcoin has a low risk of collapse Unlike traditional currencies that rely on authorities. When currencies fall, 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 money available globally.
Bitcoin is easy to carry. A billion Dollars in the Bitcoin can be stored in a memory stick and placed in one’s pocket. It’s that easy to transfer Bitcoins compared to paper cash.
The general idea is that Bitcoins ‘ are ‘mined’… interesting 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 a digital ‘wallet’. It’s then possible to trade actual goods or Fiat currency for Bitcoins… and vice versa. Furthermore, as there is not any central issuer of Bitcoins, it is all highly distributed, thus 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 cash’… and not just that, but ‘it’s the best money , the cash of their future’, etc.. . The proponents of all Fiat shout just as loudly that paper currency is cash… and we all know that Fiat newspaper isn’t money by any means, as it lacks the main attributes of real money. The issue then is does Bitcoin even qualify as money… not mind that it being the money of their near future, or the very best money .
Compared to Fiat, Bitcoin doesn’t Do too badly as a medium of exchange. Fiat is only accepted in the geographical domain of its issuer. Dollars are no good in Europe etc.. Bitcoin is approved internationally. On the other hand, very few retailers currently accept payment in Bitcoin. Unless the approval grows , Fiat wins… although in the cost of trade between countries.
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 around $1,000, in only a few decades. This is about as far from being a ‘stable store of value’; as you can buy! Truly, such profits are a perfect illustration of a speculative boom… like Dutch tulip bulbs, or real mining companies, or even Nortel stocks. There is so much for you to discover about bitcoin revolution, and we certainly can guide you in this area. One thing we tend to think you will discover is the correct info you need will take its cues from your current predicament. There are probably more than a few specifics you have to pay close attention to on your side. The best strategy is to try to envision the effects each point could have on you. The latter half of our talk will center on a few highly relevant issues as they concern your possible circumstances.
Of course, Fiat fails as well; As an example, the US Dollar, the ‘primary’ Fiat, has dropped over 95% of its worth in a few decades… neither fiat nor Bitcoin qualify in the most crucial measure of cash; the capacity to store value and preserve value through time. Actual money, which is Gold, has shown the ability to hold value not only for centuries, but for eons. Neither Fiat nor Bitcoin has this critical capacity… both fail as cash.
Finally, we return to the next Attribute; that of being the numeraire. Now this is really interesting, and we can see why the two Bitcoin and Fiat fail as money, by looking closely at the question of their ‘numeraire’. Numeraire describes the usage of money to not just save value, but to at a sense measure, or compare value. In Austrian economics, it is deemed impossible to actually measure value; after all, value resides just in human consciousness… and how can anything in understanding really be measured? Nevertheless, through the principle of Mengerian market action, that is interaction between offer and bid, market prices can be established… if just briefly… and this market price is expressed concerning the numeraire, the most marketable good, that is money.
So how do we establish the value of Fiat… ? Through the idea of ‘purchasing power’… which is, the value 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, rather appreciate flows from the worth of their goods and services it may be traded for. Causality flows from the merchandise ‘purchased’ into the Fiat number. After all, what difference is there between a 1 Dollar bill and a hundred Dollar invoice, except that the number printed on it… and the buying power of this number?