Article Image
News Link • Bitcoin

Mises: Is Bitcoin Money of the Future or Old-Fashioned Bubble?

• Daily Paul.com
 The stuff, or lack thereof, runs on peer-to-peer technology, is fully decentralized, has no patents, and is open source. Currently, there are almost 11 million bitcoin units in existence and the maximum amount of bitcoin units that will ever be created by the logic of its design are 21 million. For more details on how they work, see the recent Mises Daily “The Money-Ness of Bitcoins” by economist Nikolay Gertchev. The Issue

While bitcoins are designed so that they cannot be hyperinflated in name, they certainly can be hyperinflated in substance. Already, there are numerous knockoffs such as litecoin, namecoin, and freicoin in place.

1 Comments in Response to

Comment by Ed Price
Entered on:

The ONE AND ONLY benefit that central-system-currencies have is a certain kind of stability. Imagine for a little, that there was NO money - absolutely none at all. People did all their transacting through trade and barter.

Now suppose you had a washer/dryer combo that you were looking to trade for a refrigerator. Finally you find someone who has a refrigerator that he wants to trade for a washer/dryer combo. You both evaluate each others items, you find that the items are all satisfactory and what you both want, so you make the trade.

The next day the former refrigerator owner finds a washer/dryer combo up for trade - one exactly like you traded to him - and along with it goes an electric range. You, on the other hand, have found a refrigerator just like the one you received in trade yesterday. But this one has a computer desk to go along with it. Look at the hassle involved with re-trading your stuff back, so that the both of you can go get the better deal.

The point is, for a long while, with Bitcoin, you are going to be able to find individuals and exchanges trading the exact same number of Bitcoins for greatly varying amounts of fiat currencies.

To see what I mean, all you need to do is open up two browser pages at the same time. In one of them open the main Mt.Gox webpage at https://mtgox.com/. In the other one, open the main Bitfloor page at https://bitfloor.com/. Then over the next 15 minutes, refresh both pages, see the differences, and watch them change... radically at the time of this writing.

Another thing you might do is compare two pages at Bitcopia - http://www.bitcopia.com/index.php. Bitcopia is a company that is trying to take the hassle out of buying and selling Bitcoin. But because of the currently tremendous fluctuation in Bitcoin prices against fiat currencies, Bitcopia has roughly a $50US spread between their buy and sell prices. To see it, compare their two pages at http://www.bitcopia.com/buy.php and http://www.bitcopia.com/sell.php. And they HAVE to do this to keep from getting burned in the price fluctuation.

Now, these are Bitcoin growing pains. And it might dissuade many people from using Bitcoins. And, hopefully, it will persuade a whole lot of entrepreneurs into opening Bitcoin exchanges to help stabilize the price of Bitcoin.

Imagine what it must have been like the first 5 years after Government started coining money. Imagine what it was like way back when people still traded things for gold by weight. Once Bitcoin gets past the growing pains, I think we will have a stable currency that will truly reflect the natural market regarding trade.


Join us on our Social Networks:

 

Share this page with your friends on your favorite social network:


Free Talk Live