The Basics of Bitcoin

Bitcoin has a reduced risk of collapse Unlike traditional monies that rely on governments. When currencies collapse, it contributes to hyperinflation or the wipeout of one’s savings in an instant. Bitcoin exchange rate isn’t controlled by any government and is an electronic money available worldwide.

Bitcoin isn’t hard to carry. A billion Bucks in the Bitcoin can be stored on a memory stick and placed in one’s pocket. It is so easy to transport Bitcoins compared to paper money.

The general idea is that Bitcoins ‘ are ‘mined’… interesting expression here… by solving a difficult mathematical formula -more difficult as more Bitcoins are ‘mined’ into existence; yet 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 currency for Bitcoins… and vice versa. Furthermore, as there’s no central issuer of Bitcoins, it is all highly distributed, thus resistant to being ‘managed’ by jurisdiction.

Naturally proponents of Bitcoin, Those who profit from the growth of Bitcoin, insist fairly loudly that ‘for certain, Bitcoin is money’… and not just that, but ‘it is the best money ever, the cash of their future’, etc.. . The proponents of all Fiat shout as loudly that paper money is cash… and we all know that Fiat newspaper is not cash by any means, as it lacks the most important attributes of real cash. The question then is does Bitcoin even qualify as cash… never mind that it being the money of their future, or the very best money ever.

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 accepted internationally. On the other hand, very few retailers currently accept payment in Bitcoin. Until the approval grows , Fiat wins… although in the cost of trade between nations.

The primary condition is that a great deal Tougher; money must be a stable store of value… now Bitcoins have gone from a ‘value’ of $3.00 to around $1,000, in only a couple years. This is about as far away from being a ‘stable store of value’; as you can buy! Truly, such gains are a perfect example of a speculative boom… such as Dutch tulip bulbs, or real mining companies, or even Nortel stocks. As we have just stated, bitcoin revolution app is something that cannot be dismissed – or at least should never be ignored. There are so many scenarios and variations – twists and turns, that maybe you see how difficult it can be to include all bases. But I wanted to stop for a moment so you can reflect on the value of what you have just read. After all we have read, this is timely and powerful information that should be regarded. The last outstanding areas for conversation may be even more important.

Naturally, Fiat fails here as well; As an example, the US Dollar, the ‘main’ Fiat, has dropped over 95% of its value in a couple of decades… neither fiat nor Bitcoin qualify at the most crucial measure of money; the capacity to store value and conserve 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 critical capacity… both fail as money.

Ultimately, we return to the next Feature; that of being the numeraire. This is really intriguing, and we can see why the two Bitcoin and Fiat neglect as cash, by looking closely at the question of their ‘numeraire’. Numeraire refers to the use of money to not only store worth, but to in a sense step, or compare value. In Austrian economics, it’s considered impossible to actually quantify value; after all, significance resides only in human consciousness… and how can anything else in consciousness actually be measured? Nevertheless, 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’s money.

So how do we establish the value of Fiat… ? Through the idea of ‘purchasing power’… that is, the value of Fiat depends upon what it can be exchanged for… a so called ‘basket of goods’. But his clearly implies that Fiat has no significance of its own, instead appreciate flows from the value of the goods and services it may be exchanged for. Causality flows from the goods ‘purchased’ into the Fiat number. After all, what difference is there between a 1 Dollar bill and a hundred Dollar bill, except the number printed on it… and the buying power of the amount?

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