When I read "Bitcoin is backed by nothing", I immediately stop further reading. Bitcoin is backed by cryptography and will of the people to use it as a medium of exchange.
When you buy a bitcoin what are you getting for your money? You only are getting some digits. If you buy gold coin you are getting gold, a commodity or wealth. bitcoin does not meet the definition of wealth below. It only has value, like the dollar as a collectible. The equity coin I propose is similar to bitcoin, but it has one thing different a constant buying of the equity coin by the profits of the equity it represents.
http://www.henrygeorge.org/pchp2.htmMany of the ambiguities about capital derive from ambiguities in the use of the inclusive term wealth. In common use, wealth means anything having an exchange value. When used as an economic term, however, it must be limited to a much more definite meaning.
If we take into account the concept of collective or general wealth, we see that many things we commonly call wealth are not so at all. Instead, they represent the power to obtain wealth in transactions between individuals (or groups). That is, they have an exchange value. However, their increase or decrease does not affect the sum of wealth in the community. Therefore, they are not truly wealth.
Some examples are stocks, bonds, mortgages, promissory notes, or other certificates for transferring wealth. Neither can slaves be considered wealth. Their economic value merely represents the power of one class to appropriate the earnings of another. Lands or other natural opportunities obtain exchange value only from consent to an exclusive right to use them. This merely represents the power given to landowners to demand a share of the wealth produced by those who use them.
Increase in the amount of bonds, mortgages, or notes cannot increase the wealth of the community, since that community includes those who pay as well as those who receive. Slavery does not increase the wealth of a people, for what the masters gain the enslaved lose. Rising land values do not increase the common wealth, as whatever landowners gain by higher prices, tenants or purchasers lose in paying them.
All this relative wealth is undistinguished from actual wealth in legislation and law, as well as common thought and speech. Yet with the destruction of nothing more than a few drops of ink and a piece of paper, all this "wealth" could be utterly annihilated. By an act of law, debts may be canceled, slaves emancipated, land made common property. Yet the aggregate wealth would not be diminished at all — for what some would lose others would gain. Wealth was not created when Queen Elizabeth graced her favorite courtiers with profitable monopolies, nor when Boris Godunov declared Russian peasants to be property.
The term wealth, when used in political economy, does not include all things having an exchange value. It includes only those things that increase the aggregate wealth when produced or decrease it when destroyed. If we consider what these things are and what their nature is, we will have no difficulty defining wealth.
We speak of a community increasing its wealth. For instance, we say that England increased its wealth under Queen Victoria, or that California is wealthier than when it belonged to Mexico. By saying this, we do not mean there is more land or natural resources. We do not mean some people owe more debts to others. Nor do we mean there are more people. To express that idea, we speak of an increase in population — not wealth.
What we really mean is there was an increase of certain tangible goods — things that have an actual, not merely a relative, value. We mean buildings, cattle, tools, machinery, agricultural and mineral products, manufactured goods, ships, wagons, furniture, and the like. More of such things is an increase in wealth; less of them is a decrease in wealth. We would say the community with the most of such things, in proportion to its population, is the wealthiest.
What is the common characteristic of these things? They all consist of natural substances that have been adapted by human labor for human use. Wealth, then, may be defined as natural products that have been secured, moved, combined, separated, or in other ways modified by human exertion to fit them for the gratification of human desires. Their value depends on the amount of labor that, on average, would be required to produce things of like kind. In other words, it is labor impressed upon matter so as to store up the power of human labor to satisfy human desires, as the heat of the sun is stored in coal.
Wealth is not the sole object of labor, for labor is also expended to directly satisfy human desires. Wealth is the result of what we may call productive labor — that is, labor that gives value to material things. Wealth does not include anything nature supplies without human labor. Yet the result of labor is not wealth unless it produces a tangible product that satisfies human desires.
Capital is wealth devoted to a certain purpose. Therefore, nothing can be considered capital that does not fit within the definition of wealth.
But though all capital is wealth, all wealth is not capital. Capital is only a particular part of wealth — that part devoted to aid production. We must draw a line between wealth that is capital and wealth that is not capital. If we keep this in mind, we can eliminate misconceptions that have led even gifted thinkers into a maze of contradiction.
