Bitcoin has a reduced risk of collapse Unlike traditional currencies that rely on governments. When currencies fall, it leads to hyperinflation or the wipeout of one’s savings in an instant. Bitcoin exchange rate is not regulated by any government and is an electronic money available worldwide.
Bitcoin isn’t hard to carry. A billion Bucks in the Bitcoin can be saved in a memory stick and placed in one’s pocket. It’s that simple to transfer Bitcoins compared to paper cash.
The general idea is that Bitcoins Are ‘mined’… intriguing term here… by solving a difficult mathematical formula -harder as more Bitcoins are ‘mined’ into existence; yet again interesting- to a computer. Once established, 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. Additionally, as there’s not any central issuer of Bitcoins, it’s all highly distributed, thus resistant to being ‘handled’ by jurisdiction.
Naturally proponents of Bitcoin, Those who profit from the growth of Bitcoin, insist fairly loud that ‘for certain, Bitcoin is money’… and not only that, but ‘it’s the best money , the cash of the future’, etc.. . The proponents of all Fiat shout just as loudly that paper currency is money… and we all know that Fiat newspaper is not cash by any means, as it lacks the main attributes of real money. The issue then is does Bitcoin even qualify as money… not mind it being the cash of their future, or the best money .
Compared to Fiat, Bitcoin does not Do too badly as a medium of trade. Fiat is only accepted in the geographic domain of its issuer. Dollars are no great in Europe etc.. Bitcoin is accepted internationally. On the flip side, very few retailers now accept payment in Bitcoin. Until the approval grows geometrically, Fiat wins… although at the cost of trade between nations.
The primary condition is that a great deal Tougher; cash must be a stable store of value… today Bitcoins have gone from a ‘value’ of $3.00 to around $1,000, in just a couple years. That is about as far from being a ‘stable store of value’; as you can buy! Indeed, such gains are an ideal illustration of a speculative boom… such as Dutch tulip bulbs, or real mining companies, or even Nortel stocks. As you can clearly see, what you will find out about bitcoin revolution is some points are far more important than others. What is more important for you may be less so for others, so you have to consider your unique circumstances. But we are not done, yet, and there is always much more to be revealed. The balance of this read contains much more that will help your specific situation. Even after what is next, we will not stop there because the very best is yet to come.
Of course, Fiat fails here 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 in the most important measure of money; the capacity to store value and preserve value through time. Actual money, that is Gold, has shown the capacity to maintain value not just for centuries, except for eons. Neither Fiat nor Bitcoin has this crucial capacity… both neglect as money.
Ultimately, we return to the second Attribute; that of being the numeraire. Now this is actually interesting, and we can see why the two Bitcoin and Fiat neglect as money, by looking closely at the question of the ‘numeraire’. Numeraire refers to the usage of cash to not only store worth, but to at a sense measure, or compare value. In Austrian economics, it’s deemed impossible to really quantify value; after all, significance resides just in human consciousness… and how can anything else in understanding really be quantified? Nevertheless, through the principle of Mengerian market action, that is interaction between bid and offer, market prices can be established… if just momentarily… and this market price is expressed in terms of the numeraire, the most marketable good, that’s money.
So how do we establish the value of Fiat… ? Through the idea of ‘buying power’… that 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, instead value flows from the value 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 invoice and a hundred Dollar invoice, except that the amount printed on it… along with the buying power of this amount?