Bitcoin has a reduced risk of collapse Unlike traditional currencies that rely on governments. When currencies fall, it contributes to hyperinflation or the wipeout of one’s savings in an instant. Bitcoin exchange rate isn’t regulated by any government and is an electronic currency available worldwide.
Bitcoin isn’t hard to carry. A billion Dollars in the Bitcoin can be stored in a memory stick and placed in one’s pocket. It’s so easy to transfer Bitcoins compared to paper cash.
The general Notion is that Bitcoins Are ‘mined’… intriguing expression here… by solving an increasingly hard mathematical formula -harder as more Bitcoins are ‘mined’ into existence; again intriguing- to a computer. Once created, the new Bitcoin is set into an electronic ‘wallet’. It is then possible to trade real goods or Fiat currency for Bitcoins… and vice versa. Furthermore, as there’s not any central issuer of Bitcoins, it’s all highly distributed, thus resistant to being ‘managed’ by jurisdiction.
Naturally proponents of Bitcoin, Those who profit from the development of Bitcoin, insist fairly loud that ‘for sure, Bitcoin is cash’… and not only that, but ‘it is the best money ever, the money of their future’, etc.. . Well, the proponents of all Fiat shout as loudly that paper money is money… and we all know that Fiat newspaper isn’t money by any means, as it lacks the main attributes of real cash. The issue then is does Bitcoin even be eligible as money… not mind that it being the money of the near future, or the best money .
Compared to Fiat, Bitcoin doesn’t Do too badly as a medium of trade. Fiat is only accepted in the geographic domain of its own issuer. Dollars are no good in Europe etc.. Bitcoin is approved internationally. On the other hand, very few retailers currently accept payment in Bitcoin. Until the acceptance grows , Fiat wins… although at the cost of exchange between nations.
The first condition is that a lot Tougher; money must be a stable store of value… now Bitcoins have gone out of a ‘value’ of $3.00 to about $1,000, in only a couple decades. That is about as far from being a ‘stable store of value’; as you can get! Truly, such profits are an ideal example of a speculative boom… such as Dutch tulip bulbs, or real mining companies, or Nortel stocks. We have covered a few basic items about bitcoin revolution, and they are important to consider in your research. They are by no means all there is to learn as you will easily discover. We feel you will find them to be very helpful in a lot of ways. It really should not need to be said that you must conduct closer examination of all pertinent points. We are not finished, and there are just a couple of very strong recommendations and tips for you.
Naturally, Fiat fails as well; For example, the US Dollar, the ‘primary’ Fiat, has dropped over 95% of its value in a few decades… neither fiat nor Bitcoin qualify at the most important measure of money; the capacity to store value and preserve value through time. Real money, that is Gold, has shown the ability to maintain value not only for centuries, but for eons. Neither Fiat nor Bitcoin has this crucial capacity… both neglect as money.
Ultimately, we come to the second Feature; this of being the numeraire. 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 refers to the usage of money to not just save worth, but to in a sense measure, or compare worth. In Austrian economics, it’s considered impossible to really measure value; after all, value resides only in human consciousness… and how can anything in consciousness actually be quantified? Nevertheless, through the principle of Mengerian market action, that’s interaction between bid and offer, market prices can be established… if just momentarily… and this industry price is expressed concerning the numeraire, the most marketable good, that’s money.
So how do we set the worth of Fiat… ? Through the concept of ‘purchasing power’… which is, the worth of Fiat is determined by what it can be exchanged for… a so called ‘basket of goods’. However, his clearly suggests that Fiat has no significance of its own, but rather value flows from the value of the goods and services it may be exchanged 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… along with the purchasing power of this amount?