How can bitcoin be a currency if it is worth the expense?
After a week of volatility, the price of electricity was around $ 40,000 on Friday. This is still important, something bitcoin lovers have been eager to say.
There is nothing in the code that governs cryptocurrency, however, that provides the answer to this question: How can bitcoin be a currency if it is so expensive that you do not want to use it?
It is true that despite this week’s decline, over time the price tag has been appreciated. In 2008, it was nothing more than a PDF that had an idea. PDF sells at a low price of zero, much lower than at present. This is an exciting 13-year-old project in every respect. With Amazon or Apple level should be in-in-the-ground-performance. I was first introduced to a group of Swedes who hid in an upstairs room in Malmö in 2011 and let me tell you: I’m sorry.
Bitcoin doesn’t have to be just an asset, however. It should be a global currency. Depending on who you ask, they can be exchanged for all transactions, or a final way to set up other currencies, a bit like the dollars that banks can keep deposits held in the Fed. Which means it just won’t make a profit. It should also be of great benefit, like money, to most people. That’s not a situation you should ask for on your Apple shares.
Whether bitcoin is a currency is a game changer. It’s money now, for other people. There are scenarios that are relevant and are already in use. The week I stayed in Sweden in 2011 there were only 12,000 events a day. By May 2017, that number had risen to 300,000 sales per day. From there it has moved to a group around the scale – unstable, but moving sideways. The price of bitcoin, however, has continued to rise from under $ 2,000 in 2017- volatile but, you know, rising. Like money, bitcoin is becoming more valuable, but less effective.
It is possible that its value is limited by its design. People who claim that bitcoin is the future of money tend to say that, unlike the dollar, no major bank can respond to bitcoin currencies or shoot them. But there is a backward-looking bitcoin system, as real and tangible as in the Federal Reserve.
Money follows the number it calls Demonstration of long-term goals and financial strategies, which are modified, about once every decade, when their traditional MIT, Harvard and Berkeley macroeconomists begin to think differently about money. At present the Fed rules and regulations believe that the dollar should lose profits in the fight against certain assets for as long as 2% per year.
The code that makes bitcoins is numbered 21m. This means they have to be very important, forever, in production. You can change the number, but as with the Fed, to change the number you need to change the culture – you need to convince more people to use this new number. Once again, the nature of bitcoin is based on the soundness of the currency, and I believe that good money only becomes necessary over time. People encourage each other “hodl” – hanging on their houses without selling. If you can, you have diamond hands. If you sell, you have hands on paper. If you do nothing, you are encouraged to enjoy being poor.
As you grow older, you become rich, but you are not moving. This is good for the product to be normal, but it is difficult with bitcoin currencies, because you are keeping your preferences in the markets. This is as old as money. Theognis, a Greek poet from the sixth century BC, wrote that the wise men knew the evil gold and silver, and that no one could “exchange it for what could happen”. Aristophanes, an Athenian satirist, said that “all the Athenian capitalists have never spent money in the past.”
Robert Mundell, a Nobel Prize-winning economist who died last month, wrote a statement like this over a century of thought, which led to the famous Thomas Gresham, a 16th-century English businessman and adviser to the Crown: Poor – the same money they run very high costs. Why use something that would be more valuable?
All the codes and nature of bitcoin were created, over time, for disclosure. This leaves the firm with one problem. Sell, or change the code, and your goods drop in price, becoming as valuable as cash. Hodl, I keep the code, and your goods are appreciated. Financial culture and financial principles. Diamond hands and Gresham hands.