Bitcoin's promise: a financial revolution the web's been waiting for

Comments (3)
Jabulon wrote:

A few thoughts on Digital Currency:
Perhaps some of you heard about Warren Buffett’s recent dismissal of Bitcoin as ‘a mirage’. Funny, my first reaction to that was that he’s just too old to understand what it is and what it may imply for the future of money. Now I’m pondering whether he actually had to reject it, vehemently, because of the extent to which he feels threatened by it. Most people, himself included, are very invested in the illusion of the dollar and/or their own respective government-backed currencies. The more people there are who understand what Bitcoin is, the more that illusion frays at the edges and begins to come undone.
I’ve been reading up a little on Gresham’s law. Fascinating stuff. Sir Thomas Gresham was a sixteenth-century financial agent of the English Crown. The ‘law’ had been formulated a generation earlier by Copernicus, in a treatise called Monetae Cudendae Ratio. This is the crux of it: “bad (debased) coinage drives good (un-debased) coinage out of circulation.” Gresham used this to explain to the Queen (Elizabeth 1) the reason for the miserable state into which the English Shilling had fallen. To quote a historian whose name I didn’t happen to note down:
“The statement was part of Gresham’s explanation for the “unexampled state of badness” England’s coinage had been left in following the “Great Debasements” of Henry VIII and Edward VI, which reduced the metallic value of English silver coins to a small fraction of what it had been at the time of Henry VII. It was owing to these debasements, Gresham observed to the Queen, that “all your fine gold was conveyed out of this your realm.”
The connection I’m proposing here is that Bitcoin is, and is increasingly perceived to be, ‘good’ currency, while the dollar and other fiat currencies are increasingly perceived as ‘debased’. This kind of thinking is still not widespread enough to have the disruptive impact it might have someday soon. But it has gained a lot of ground lately, enough to cause (in combination with a few other factors) Bitcoin valuation to rise from $25 to as high as $1,200 within a year.
Some may object that the parallel I’m drawing doesn’t hold because where(for instance)gold has ‘intrinsic value’, Bitcoin does not have it (or is presumed by Buffet and others not to). But what is ‘intrinsic value’? I mean, yes, gold may have uses in old-school dentistry and in the making of pretty objects, but that hardly justifies the notion of value independant of the subjective, emotional consensus, “gold is precious”. Still less does it confer any substance on the dollar, whose relationship to gold is but a distant memory. One might actually make a better argument that Bitcoin and its digital offspring, the ‘altcoins’, e.g., Litecoin, Blackcoin, Vertcoin etc., have more ‘real’ or ‘intrinisic’ value. Digital does what it does extremely well. The utility of it is tremendous. The intelligence and other resources that allow it to exist and function are tremendous (computing-power, among other things). And it cannot be minted arbitrarily in endless reams of paper at the whim of a central Bank.
Others may object that while Gresham was speaking about currency, i.e., different grades of shilling within the realm, Bitcoin and the ‘alts’ are not currency. But his is just semantic quibbling. The mindless refrain of newspaper columnists lately has been that currency must be mandated by government, a qualification Bitcoin and the others lack. Meaning, it’s not currency unless government says it is. I would say that it becomes currency in virtue of being used as such. Which it already is. By real people, in real commerce.
Anyway, we’ll see how it all plays out. We may see a time when people try as hard as possible to palm off their dollars to anyone who still tolerates them in exchange for goods and services, while seeking to receive digital currency whenever possible — to collect or spend in international trade where it’s the only currency-form that is taken seriously at all. I believe we may be heading that way.

Mar 23, 2014 11:40am EDT  --  Report as abuse
moderndezigns wrote:

A new cheaper Eco friendly coin that I found recently is Mintcoin it seems to have alot of growth potential. I believe these new currencies coming to the marketplace will eventually take the place or at least a market share from credit card companies. It’s important to embrace change and accept it as eventually the cart will tip and apples will fall

Mar 24, 2014 5:43pm EDT  --  Report as abuse
Jabulon wrote:

And speaking of Warren Buffet again, here’s a bit from today’s Coinsummit event in San Francisco, closing remarks in an interview with Marc Andreessen and Balaji Srinivasan from investment firm Andreessen Horowitz:

Moderator: “If you guys wouldn’t mind addressing Warren Buffett, who recently made this comment, that Bitcoin is a mirage, and encouraged investors to run away from it”.

Srinivasan: “I’m pretty sure Bitcoin outperformed Berskshire Hathaway by a lot, during the last year”.

Andreessen: “The historical track record of old white men crapping on new technology they don’t understand, I’m pretty sure is 100%”.

Mar 25, 2014 2:03pm EDT  --  Report as abuse
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