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 a minute. Bitcoin exchange rate is not controlled by any government and is a digital currency available globally.
Bitcoin is easy to carry. A billion Dollars in the Bitcoin can be saved in a memory stick and placed in one’s pocket. It is so simple to transfer Bitcoins compared to paper money.
The general Notion is that Bitcoins ‘ are ‘mined’… interesting expression here… by solving a hard mathematical formula -more difficult as more Bitcoins are ‘mined’ into existence; again intriguing- on a computer. Once created, the new Bitcoin is put into a digital ‘wallet’. It’s then feasible to trade real goods or Fiat money for Bitcoins… and vice versa. Furthermore, since there’s no central issuer of Bitcoins, it’s all highly dispersed, hence resistant to being ‘handled’ by authority.
Naturally proponents of Bitcoin, Those who profit from the growth of Bitcoin, insist rather loud that ‘for certain, Bitcoin is cash’… and not just that, but ‘it is the best money , the cash of their future’, etc.. . The proponents of Fiat shout just as loudly that paper money is money… and we all know that Fiat newspaper isn’t cash by any means, as it lacks the main attributes of genuine money. The question then is does Bitcoin even qualify as money… not mind it being the cash of their near future, or the very best money .
Compared to Fiat, Bitcoin does not Do too badly as a medium of exchange. Fiat is only accepted in the geographical domain of its own issuer. Dollars are no good in Europe etc.. Bitcoin is approved internationally. On the flip side, not many retailers currently accept payment in Bitcoin. Until the acceptance grows geometrically, Fiat wins… although at the cost of exchange between countries.
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 around $1,000, in only a couple years. This is about as far from being a ‘stable store of value’; since you can get! Indeed, such gains are an ideal example of a speculative boom… like Dutch tulip bulbs, or real mining companies, or even Nortel stocks. We want to say a fast word about our conversation re bitcoin revolution app. What I have found is it really just will depend on your goals and needs as it relates to your particular situation. There are possibly more than a few specifics you have to pay close attention to on your side. Exactly how they effect what you do is something you need to carefully consider. Here are several more equally important highlights on this important topic.
Naturally, Fiat fails as well; For instance, the US Dollar, the ‘primary’ Fiat, has lost over 95% of its worth in a few decades… neither fiat nor Bitcoin qualify in the most important measure of cash; the capacity to store value and conserve value through time. Actual money, which is Gold, has shown the capacity to hold value not only for centuries, but for eons. Neither Fiat nor Bitcoin has this crucial capacity… both fail as cash.
Ultimately, we return to the next Attribute; that of being the numeraire. This is really intriguing, and we can see why both Bitcoin and Fiat neglect as money, by looking closely at the question of the ‘numeraire’. Numeraire describes the use of cash to not only store worth, but to in a sense step, or compare worth. In Austrian economics, it’s considered impossible to really measure value; after all, value resides just in human consciousness… and how can anything in understanding actually be measured? 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 industry price is expressed concerning the numeraire, the most marketable good, that is money.
So how do we establish the value of Fiat… ? Through the concept of ‘buying power’… which is, the worth of Fiat depends upon what it can be exchanged for… a so called ‘basket of goods’. However, his clearly suggests that Fiat has no value of its own, but instead appreciate flows from the value of the goods and services it might be traded for. Causality flows from the goods ‘bought’ to 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… and the purchasing power of the amount?