Bitcoin: My Evolution

                                                             

     Originally posted on my website, TheLibertyAdvocate.com. 

     When I first heard about BitCoin, I  thought it was an interesting experiment that would never pan out. I  pretty much ignored it for a couple of years, until I came across an  article explaining why BitCoin couldn’t possibly be money. The article  stated that because BitCoin doesn’t have value outside of being money,  it cannot be money according to the Austrian Regression Theorem. It made  sense to me, so I became anti-BitCoin, because I believed that BitCoin  would eventually collapse, leaving those who were bullish on it  devastated.

      However, BitCoin didn’t go away, but  grew, and more and more voluntaryists were coming out in favor of it.  This astonished me, leading me to think that there was some kind of  “BitCoin Bubble” going on. I eventually decided that I had to look more  into the arguments in favor of BitCoin. Jeffrey Tucker is/was my go-to  man on the subject. The more I learned, the more I found that BitCoin can be  considered money (even in the eyes of the Regression Theorem), and  offers a wonderful alternative to Federal Reserve Notes, and when that  money system fails, may possibly become the most accepted medium of  exchange.

      I will now attempt to address the  Austrian Economic critique of BitCoin and put forward my theory as to  why BitCoin may become in the (perhaps distant) future the most commonly used money.

      The criticism of BitCoin goes  something like this: BitCoin has no value prior to being money. In order  for something to become a true money, it must have a commodity value  previous to becoming a medium of exchange. BitCoin is used only as a  money, and has always been used purely as a money. Therefore, BitCoin  cannot be considered a real money, and when faced with the competition  of a true money like gold and/or silver, will be discarded as worthless.

      This is a powerful argument. However, this argument is wrong because BitCoin does have  value prior to being money — just not as a commodity. The value of  BitCoin independent of being money is derived from the fact that it is information  (code) that is infinitely divisible, decentralized, anonymous, scarce,  and instantly and directly transferable. The code, by itself, is  worthless. It is the qualities that this code possesses that has value.  These code qualities give the BitCoin value, but only for use as a money  — prior to being used as money! Thus, there is nothing wrong  with BitCoin, and there is nothing wrong with the Regression Theorem —  the only thing that is wrong is some people’s application of the  Theorem, and their incomplete knowledge of BitCoin.

      Now, you may be thinking, so what? Even if BitCoin could become a money, what makes you think that it actually will?  Gold has already been proven to be the most prevalent money in history,  so why won’t it be the same way in the future, after the collapse? The  answer is that gold was money when most commerce was physical, taking  place in person, as opposed to the mostly digital commerce that takes  place today, and will take place to a greater extent in the future. The  exact features that make BitCoin money are the precise features that  characterize the perfect form of money — that’s the whole reason BitCoin  is a money in the first place! This, and the fact that money gets value  from its being used as money means that BitCoin will have affn  advantage over other forms of money because it is already being used as  such. Gold, on the other hand, is not the perfect form of money, it has just been the most perfect form  of money in history — until now. Gold also does not have the advantage  of currently being used as money. BitCoin already being used as money  will add value to it as such.

      This is not to say that gold will not  be used as money, although there is a tendency for there to be only one  money in existence (although I wonder if that would only come to be in  an evenly rotating economy), but rather that BitCoin is the preferable  money. I believe that gold will be used as money, because it  does have many favorable qualities, along with having a “tried and true”  status. After the collapse of fiat currency, I believe that their will  be many different monies, all competing with each other, with a small  handful winning out. My bet is on gold, silver, and BitCoin. I think  that it is unlikely, but there is a possibility that a new  crypto-currency will come about that will outdo or match BitCoin, but as  of right now, the only one that I can think of as even plausible is a  crypto-currency called Steemit, which is something like pieces of  ownership of popular content (like articles).

       In any case, be sure to get your cash  out of Federal Reserve Notes and into a real money before it’s too late and your Notes become worthless!