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; again intriguing- to a computer. Once created, the new Bitcoin is set into a digital ‘wallet’. It is then feasible to trade real goods or Fiat money for Bitcoins… and vice versa. Furthermore, since there is not any central issuer of Bitcoins, it is all highly distributed, thus resistant to being ‘managed’ by authority.
Naturally proponents of Bitcoin, Those who profit from the growth of Bitcoin, insist fairly loudly that ‘for sure, Bitcoin is money’… and not just that, but ‘it’s the best money , the money of their future’, etc.. . Well, the proponents of all Fiat shout as loudly that paper currency is cash… and most of us know that Fiat paper is not money by any means, as it lacks the main attributes of real money. The question then is does Bitcoin even qualify as money… not mind that it being the money 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 geographic 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 trade between countries.
The first condition is that a great deal Tougher; money must be a stable store of value… now Bitcoins have gone out of a ‘value’ of $3.00 to around $1,000, in only a couple decades. That is about as far from being a ‘stable store of value’; since you can buy! Truly, such profits are a perfect example of a speculative boom… such as Dutch tulip bulbs, or junior mining companies, or Nortel stocks. We want to say a fast word about our discussion re bitcoin revolution app. Take a look at what is occurring on your end, and that may help you to perfect what you need. Even though it is important to everybody concerned, there are important variables you should keep in mind. You realize that you are ultimately the one who knows which will have the greatest impact. The latter half of our talk will center on a few highly pertinent issues as they concern your possible situation.
Naturally, Fiat fails here as well; As an example, the US Dollar, the ‘primary’ Fiat, has dropped over 95 percent of its worth in a couple of decades… neither fiat nor Bitcoin qualify in the most crucial measure of money; the capacity to store value and preserve value through time. Actual money, that 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 neglect as money.
Ultimately, we come to the second Attribute; this of being the numeraire. This is really intriguing, and we can see why both Bitcoin and Fiat neglect as cash, by looking closely at the question of the ‘numeraire’. Numeraire refers to the use of cash to not only store value, but to at a sense step, or compare worth. In Austrian economics, it’s considered impossible to actually measure value; after all, significance resides only in human comprehension… and how can anything in consciousness really be quantified? 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 market price is expressed concerning the numeraire, the most marketable good, that is money.
So how do we set the worth of Fiat… ? Through the concept of ‘purchasing power’… which 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 the goods and services it might be traded for. Causality flows from the merchandise ‘bought’ into the Fiat number. After all, what difference is there between a 1 Dollar invoice and a hundred Dollar invoice, except the amount printed on it… along with the purchasing power of the amount?
Gold, on the other hand, is not Measured by what it deals for; instead, uniquely, it’s measured by a different physical standard; from its weight, or mass. A gram of Gold is a gram of gold, and an ounce of Gold is an oz of Gold… no matter what amount is engraved on its surface, ‘face value’ or differently. Causality is the opposite to that of Fiat; Gold is measured by weight, an intrinsic quality… maybe not by purchasing electricity. Now, have you any notion of the value of an oz of Dollars? No anything. Fiat is just ‘measured’ by an ephemeral quantity… the amount printed on it, the ‘face value’.
Bitcoin is further away from being The numeraire; not only is it a few, much as Fiat… but its value is quantified in Fiat! Even though Bitcoin becomes internationally recognized as a medium of trade, and even though it succeeds to replace the Dollar as the accepted ‘numeraire’, it can never have an intrinsic measure like Gold has. Gold is exceptional in being quantified by a real, unchanging physical quantity. Gold is exceptional in preserving value for thousands of years. Nothing else in touch of humankind has this exceptional combination of qualities.