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April 01, 2013, 05:43:56 AM |
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I never resisted or dismissed Bitcoin, which so many people seem to do, I was just very skeptical before I did some research and thinking. I couldn't get past the fact that gold and silver are tangible and that money emerges in a market from a tangible commodity. Anyone that is familiar with Mises' Regression Theorem might have had the same reservations. (MRT is actually an excellent description of how money emerges in a market and required reading if you're interested in money theory).
I remember exactly what I was thinking about when it clicked and any reservations I had remaining were shredded. I was considering ancient markets that used salt as money and wondering what would happen when gold was introduced into this market, I never actually got far down the path because I was distracted by the realization that salt and gold are very different commodities with very different properties. What followed from that was one of those rare moments when understanding comes all at once. Golds trade value as a commodity is pitiful compared to golds trade value as a money. As gold took over salt as money the trade value of salt would have dropped dramatically even if the uses and consumption of salt remained the same. All of the extra value added to gold or salt because of their use as money is no more "real" than a fiat dollar. Gold is money because it's good at being money and that's the only reason gold is money.
The market absolutely will select Bitcoin or some alternative as money because crypto-currencies are superior to all other monies that came before them, gold is horrible as a money in comparison. What a backwards stone age money gold seems to me right now. How archaic it is to build giant steel vaults, buy armored trucks, lug your money from one vault to another, have it physically weighed and audited and assayed.
My head is still spinning with the possibilities of a money like bitcoin, all thoughts I have of the future will be shaped by these possibilities. In the meantime, I'll be buying Bitcoin, knowing it is still volatile, knowing it might not be the one and keeping my eyes on alternative monies or complementary currencies and doing everything I can to support and establish the markets on which they will thrive.
P.S. For the other adherents of the austrian school, yes, I talked a lot about value. It's nearly impossible to talk about value correctly without being very specific with you guys but just go with the flow will you? I have a koolaid rush.
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