Very good article!
Anne Ominous
While many economists like to say that gold was an "unstable" currency, actual history shows otherwise. Situations like the one in Spain were exceedingly rare, and today's knowledge of economics is more than enough to deal with it. The concept of currency inflation was not exactly common knowledge 400 years ago. It is today, precisely because we do have fiat money which is habitually inflated.
And contrary to what you write here, Bitcoin does have an "intrinsic value", but I mean that in the old economic sense of "intrinsic value"... which is an unfortunate name for the property because technically it is literally "intrinsic" nor does it have much to do with any subjective "value". Nevertheless, it does have "intrinsic value" in the old sense of that phrase, because it has a cost of production and distribution. But again I want to emphasize this intrinsic value has NOTHING to do with what people normally think of as "value".
Commodity prices (and unlike fiat dollars, Bitcoin is very much a commodity) tend to gravitate toward this "intrinsic value", which is equal to the cost of production and distribution, for a very simple reason: supply and demand. If the price is much higher, more people will produce, which increases the supply, in turn bringing the price back down. If the price is too low, people will stop producing (obviously: there is no profit in it) lowering the supply which again raises prices. (It should be self-evident that nobody in a free market will produce at a loss for very long.)
So by that older meaning of "intrinsic value", Bitcoin very definitely has one. It is by no mean fixed, however, because the cost of Bitcoin mining does go up with time, and eventually will no longer be possible.
And again, just to drive the point home: that property which old economists labeled "intrinsic value" is not "intrinsic" to the good, in the current economic sense (rather it is due to a collection of outside factors), nor is it a "value" in the sense most people mean. Technically speaking, it is a cost. The term "value" was used because it is a point around which prices in a free market tend to gravitate. Just as Bitcoin will, when the market becomes sane again.
What's the difference between 'illegal' gold and the 'legal' gold? Gold is gold in this material plane, pure metal with a history going back thousands of years. Gold is an element that cannot be divided.
OK, so some will attempt to divide it along moral grounds. Gold was and is a corruption in the grand scheme.. Manna, scruples, currency...
Bitcoin is at least a worthy challenge to the old corrupted gold.
Jan Davel
As a matter of interest, I suggest the term "Inflation" is wrong, because if I need more units of the fiat currency to purchase a specific item, the value of that currency has "deflated"
In most cases it is the value of the fiat currency that "deflates". over time.
In the shorter term the value of commodities can inflate due to higher demand and short supply and then deflate again as supply meets demand.
There's $7billion dollars worth of these sitting in 1 million bitcoin wallets. That represent a huge number of people, with a lot of wealth, and as we all know - everyone is greedy.
I think any other crypto-currency has less chance of success at toppling bitcoin, than does any new search engine at toppling google.
Since bitcoin, more than a thousand other new crypto currencies have sprung up. I have never seen even one of those in media yet.
Everyone who wants to get into crypto currency already has - in bitcoin. You've got less of a chance of convincing them to move to something else, than you have of convincing a mac bigot to switch to windows.
Bitcoin isn't going away.
Whenever there's a con, there are pros working it.
Again, an excellent article with a few surprises. I'm an anthropologist and precious few people know about the rai stone, and even fewer are aware of the popularity of Spam throughout Oceania.
Expanded Viewpoint
Here's about all you need to know about it; it's really BitCONJOB. There's virtually NO human labor behind the creation of these fictitious electronic bookkeeping entries, and so they will NEVER attain let alone maintain any significant stability as to perceived purchasing power. Case in point; say today that you want to sell your goods or services at some rate of BitCONJOB (or LiteCONJOBs, or MaxCONJOBS or any of the other 40+ "digital currencies" out there) coins because you feel that it's a good, fair exchange. OK, so now you got your X amount of Satoshies or whatever you may want to call them in trade for something. But then tomorrow, you discover that almost everyone else like you is providing the exact same service or goods for TWICE as much as you just got for yours! Whatcha gonna do when you got screwed?? WHERE is the yardstick (or scale or measuring cup, etc) by which you are measuring the perceived purchasing power of your TOTALLY fiat electronic currency against?? There isn't one, Bub! What do you do when the "exchange" goes bankrupt like Mt. Gox or someone steals the contents of your cyber wallet? If Silk Road could be shut down and it's "assets" purloined by the feds, who's to say that it can't happen to you too? With these "digital" currencies, you will NEVER even have two electrons to rub together, no matter how many electronic bookkeeping entries may be showing in your account!! Oh yeah, that sure is a real confidence builder right there, isn't it? Money is an idea backed by confidence, and the less the amount of confidence there is in a medium of exchange, the less it is a money.
Robert in Vancouver
There is no way that major world governments are going to let BitCoin displace their currencies.
Governments need control of their currency so they can print more, issue debt to borrow money, and play politics with voters and other nations.
Right now BitCoin is such a small threat that only a few countries have either banned it or made it very difficult to use - Russia, China, Taiwan, Iceland, India, Indonesia, Vietnam, and a few others.
Canada's gov't recently issued a statement saying BitCoin will be regulated under the existing 'Terrorist Financing Act' which means it will be nearly impossible to use BitCoin in Canada.
If BitCoin grows any more, all governments will simply pass laws banning the use of BitCoin or will not allow BitCoin to be converted into any currency.
Don Duncan
"Fiat currencies are not intrinsically evil." Really? It is not evil to force a product or service on people at the point of a gun? You must be confusing common practices of govt. as proof of good. Govt. does not define what is good or evil. Although, from personal experience (at 71), I tend to assume if the govt. does it, it must be immoral. At least, the means of govt. are immoral, being brute force, not reason or logic. It begs the question: If a thing is necessary, why can't it be sold on its merits, rather than forced on us at gun point, e.g., legal tender law? No one had to force gold or silver money on society. It was used for centuries because it worked. It was replaced by fiat paper because no choice was given, e.g., gold was outlawed and the "promise to pay" gold/silver was broken. People had accepted the paper currency as a receipt for money, not as money. Out of convenience, the paper became money, but its tie to precious metal (promise to remit) was still a limiting factor on the new paper money creation, i.e., printing. This kept paper money honest (scarce) by allowing for redemption. Mining is a lot more work than printing. When govt. broke its promise to remit metal the new paper money had to be protected from competition by giving it a monopoly. The bankers in bed with govt. knew the market would not accept paper money otherwise. Why? Paper money is not scarce. It violates a prime requirement of money. In doing so, it allows the international banking cartel to steal wealth by legal counterfeiting.
This is not just evil, it is evil on a global scale.