Bitcoin has a reduced risk of collapse Unlike traditional monies that rely on authorities. When currencies collapse, it leads to hyperinflation or the wipeout of someone’s savings in an instant. Bitcoin exchange rate isn’t regulated by any government and is a digital currency available globally.
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 is so simple to transport Bitcoins compared to paper money.
The general Notion is that Bitcoins Are ‘mined’… intriguing term here… by solving an increasingly hard mathematical formula -harder as more Bitcoins are ‘mined’ into existence; again interesting- to a computer. Once established, the new Bitcoin is set into a digital ‘wallet’. It is then possible to exchange actual goods or Fiat money for Bitcoins… and vice versa. Additionally, since there is not any central issuer of Bitcoins, it is all highly dispersed, hence resistant to being ‘managed’ by authority.
Naturally proponents of Bitcoin, Those who benefit from the development of Bitcoin, insist rather loudly that ‘for certain, Bitcoin is cash’… and not only that, but ‘it is the best money , the cash of the future’, etc.. . Well, the proponents of Fiat shout just as loudly that paper currency is money… and we all know that Fiat paper isn’t cash by any means, as it lacks the most important attributes of real cash. The issue then is does Bitcoin even be eligible as cash… never mind it being the money of the future, or the best money ever.
Compared to Fiat, Bitcoin doesn’t Do too badly as a medium of trade. Fiat is only accepted in the geographical domain of its own issuer. Dollars aren’t any good in Europe etc.. Bitcoin is approved internationally. On the flip side, very few retailers currently accept payment in Bitcoin. Until the acceptance grows geometrically, Fiat wins… although in the cost of exchange between nations.
The first condition is a great deal Tougher; cash must be a stable store of value… today Bitcoins have gone from a ‘value’ of $3.00 to about $1,000, in only a couple decades. This 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… like Dutch tulip bulbs, or junior mining companies, or Nortel stocks. As we have just stated, bitcoin revolution is something that cannot be ignored – or at least should never be ignored. We do understand very well that your situation is vital and matters a great deal. So we feel this is just an excellent time to take a break and assess what has just been covered. We are highly confident about the ability of what we offer, today, to make a difference. Our final few items can really prove to be powerful considering the overall.
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 few 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, that is Gold, has shown the ability to hold value not only for centuries, except for eons. Neither Fiat nor Bitcoin has this critical capacity… both fail as cash.
Finally, we return to the next Attribute; this of being the numeraire. This is really intriguing, and we can see why both Bitcoin and Fiat fail as cash, by looking closely at the question of the ‘numeraire’. Numeraire describes the usage of money to not only save worth, but to at a way measure, or compare value. In Austrian economics, it is deemed impossible to really measure value; after all, significance resides only in human consciousness… and how can anything else in understanding actually be quantified? But through the principle of Mengerian market action, that’s interaction between offer and bid, market prices can be established… if only briefly… and this market price is expressed concerning the numeraire, the most marketable good, that is money.
So how do we set the value of Fiat… ? Through the idea of ‘purchasing power’… which is, the value of Fiat is determined by what it can be exchanged for… a so called ‘basket of goods’. However, 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 exchanged for. Causality flows from the merchandise ‘bought’ to the Fiat number. After all, what difference is there between a one Dollar invoice and a hundred Dollar invoice, except the amount printed on it… along with the purchasing power of this amount?