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Aside from the obvious, is the BITCOIN any different to that a Dutch tulip in the 17th Century?
I must say, I thought this was a REALLY ignorant question, but this answer was awesome!
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Tulips are a very poor choice as an alternative to currency or as a holder of value. Any particular tulip will ultimately whither and die - whatever value it does hold will be temporary at best. There is no real practical limit to the supply of tulips because they can be cultivated in such a manner that new ones are grown far faster than existing ones die. This makes tulips an inherently inflationary form of "currency," meaning that over time it will take more and more tulips to buy the same items...and eventually it would take so many that they would be essentially worthless.
Before moving on to Bitcoin, let me speak about gold.
Gold is a particularly good alternative to currency or as a holder of value. Gold is in very limited supply, and the only way to put more into the available supply is to mine it, which is a very expensive and risky process. This expense and risk serves to keep the price of newly found gold high...in other words, because it was expensive and risky to mine, it would be unlikely to be sold at a low price, even if the high price of other gold was not a factor (which it is). Individual pieces of gold do not "wither and die" like tulips, nor will they rust, tarnish, or become physically diminished in any way, thus they can be used to hold value essentially forever. Because gold is so limited it tends to be deflationary as a form of currency as compared to government-issued "fiat" money.
Bitcoin is like gold in that there is a limited supply. There are only about 12 to 14 million bitcoins in existence right now and there will only ever be a maximum of 21 million bitcoins. The way to increase the available supply (until that 21 million maximum is reached) is through a very expensive process of cryptographic "mining." (This is an expensive process because it requires expensive, specialised computers and a LOT of electricity.) Also like gold, Bitcoins do not "wither and die," nor do they rot or tarnish or become physically diminished in any way, thus they can be used to hold value essentially forever. Like gold, Bitcoin is a deflationary "currency" due to its limited nature.
Bitcoin is similar to fiat currency in that its only real use is as a holder or transmitter of value. That hasn't stopped anyone from using fiat currency, nor has it made people say that dollars, for example, cannot be used for anything "real;" likewise it will not be a factor preventing the greater adoption of bitcoin, nor will it prevent any thinking person from saying that bitcoin has no "real" use. Being a holder or transmitter of value is a very important and real use indeed. And because it is impossible to counterfeit bitcoin, it is even better than fiat currency in this regard.
In fact, as a transmitter of value, bitcoin is actually BETTER than gold in that, unlike gold, bitcoin can be transmitted electronically anywhere in the world, whereas gold has to be physically transported--and that makes it VERY useful indeed!
Let me also add as a further indication of the ultimate value of an individual Bitcoin: there are several billion people in the world, but will only ever be 21 million Bitcoins. Eventually it will become prohibitively expensive for an individual to purchase one whole Bitcoin, as there just are not enough to go around. It would be wise to look at the supply and demand facts regarding bitcoin, and also the utility of bitcoin, and try to get your hands on some now, before the price goes into the hundreds of thousands of dollars, as will ultimately happen. While bitcoin is very volatile in the short-term, and there have been many calling bitcoin a "bubble" investment, it is still in the early stages of its adoption and growth in value. In the long-term each bitcoin will be worth hundreds of thousands of dollars...if not more...very much unlike tulips, and ultimately surpassing the price of gold by orders of magnitude.
Due to the distributed, peer-to-peer network nature of bitcoin, it cannot be "shut down" by any government. Governments can make it more difficult or easier to exchange bitcoin for fiat currency, but they can never stop it...the "genie is already out of the bottle." It would be wise for them to simply regulate bitcoin exchanges so they can make a bit in capital gains or sales tax. By making bitcoin illegal they will simply be missing out on this tax revenue, and individuals will simply exchange bitcoins for cash in person, or online in other jurisdictions, or through the anonymoust tor network.
So, there you have it: Bitcoin is superior to fiat currency, to gold...and even to tulips.
If you want to thank me, just send me a bit of bitcoin here:
129E8sJFgGPRvFD6gcd2Bmkhrn46ec7QZh
I hope I helped!
Source(s):
https://en.bitcoin.it
Before moving on to Bitcoin, let me speak about gold.
Gold is a particularly good alternative to currency or as a holder of value. Gold is in very limited supply, and the only way to put more into the available supply is to mine it, which is a very expensive and risky process. This expense and risk serves to keep the price of newly found gold high...in other words, because it was expensive and risky to mine, it would be unlikely to be sold at a low price, even if the high price of other gold was not a factor (which it is). Individual pieces of gold do not "wither and die" like tulips, nor will they rust, tarnish, or become physically diminished in any way, thus they can be used to hold value essentially forever. Because gold is so limited it tends to be deflationary as a form of currency as compared to government-issued "fiat" money.
Bitcoin is like gold in that there is a limited supply. There are only about 12 to 14 million bitcoins in existence right now and there will only ever be a maximum of 21 million bitcoins. The way to increase the available supply (until that 21 million maximum is reached) is through a very expensive process of cryptographic "mining." (This is an expensive process because it requires expensive, specialised computers and a LOT of electricity.) Also like gold, Bitcoins do not "wither and die," nor do they rot or tarnish or become physically diminished in any way, thus they can be used to hold value essentially forever. Like gold, Bitcoin is a deflationary "currency" due to its limited nature.
Bitcoin is similar to fiat currency in that its only real use is as a holder or transmitter of value. That hasn't stopped anyone from using fiat currency, nor has it made people say that dollars, for example, cannot be used for anything "real;" likewise it will not be a factor preventing the greater adoption of bitcoin, nor will it prevent any thinking person from saying that bitcoin has no "real" use. Being a holder or transmitter of value is a very important and real use indeed. And because it is impossible to counterfeit bitcoin, it is even better than fiat currency in this regard.
In fact, as a transmitter of value, bitcoin is actually BETTER than gold in that, unlike gold, bitcoin can be transmitted electronically anywhere in the world, whereas gold has to be physically transported--and that makes it VERY useful indeed!
Let me also add as a further indication of the ultimate value of an individual Bitcoin: there are several billion people in the world, but will only ever be 21 million Bitcoins. Eventually it will become prohibitively expensive for an individual to purchase one whole Bitcoin, as there just are not enough to go around. It would be wise to look at the supply and demand facts regarding bitcoin, and also the utility of bitcoin, and try to get your hands on some now, before the price goes into the hundreds of thousands of dollars, as will ultimately happen. While bitcoin is very volatile in the short-term, and there have been many calling bitcoin a "bubble" investment, it is still in the early stages of its adoption and growth in value. In the long-term each bitcoin will be worth hundreds of thousands of dollars...if not more...very much unlike tulips, and ultimately surpassing the price of gold by orders of magnitude.
Due to the distributed, peer-to-peer network nature of bitcoin, it cannot be "shut down" by any government. Governments can make it more difficult or easier to exchange bitcoin for fiat currency, but they can never stop it...the "genie is already out of the bottle." It would be wise for them to simply regulate bitcoin exchanges so they can make a bit in capital gains or sales tax. By making bitcoin illegal they will simply be missing out on this tax revenue, and individuals will simply exchange bitcoins for cash in person, or online in other jurisdictions, or through the anonymoust tor network.
So, there you have it: Bitcoin is superior to fiat currency, to gold...and even to tulips.
If you want to thank me, just send me a bit of bitcoin here:
129E8sJFgGPRvFD6gcd2Bmkhrn46ec7QZh
I hope I helped!
Source(s):
https://en.bitcoin.it
I am TIRED of hearing people compare Bitcoin to Tulipmania. Give this guy's answer a positive vote, so that everyone can see that an overwhelming majority feel the same. I LOVED this answer! Go VOTE!
http://ph.answers.yahoo.com/question/index?qid=20131215013958AAG9I6g
