The developers of bitcoin are trying to show that money can be successfully privatized. They will fail, because money that is not issued by governments is always doomed to failure. Money is inevitably a tool of the state.
Though I agree that bitcoin is currently following a speculative trend and its future is uncertain, the basis for the author's thesis could equally be applied to government currencies! Namely: "Bitcoin exemplifies some of the problems of private money: Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith."
Exhibit A: Mark/Rentenmark/Reichsmark of Germany in the 1920s, and Zimbabwean dollar of the 2000s, among many others.
Commodity-based currencies (e.g., gold, silver, etc) are essentially non-government currencies and are said to have some "intrinsic" value, but they are really subject to normal economic laws - they are worth what someone will pay for them. Yet I'd say over the years, gold and silver, though suffering from occasional speculative runs, have been pretty successful as non-governmental currencies. Why not bitcoin?
Though I agree that bitcoin is currently following a speculative trend and its future is uncertain, the basis for the author's thesis could equally be applied to government currencies! Namely: "Bitcoin exemplifies some of the problems of private money: Its value is uncertain, its legal status is unclear, and it could easily become valueless if users lose faith."
ReplyDeleteExhibit A: Mark/Rentenmark/Reichsmark of Germany in the 1920s, and Zimbabwean dollar of the 2000s, among many others.
Commodity-based currencies (e.g., gold, silver, etc) are essentially non-government currencies and are said to have some "intrinsic" value, but they are really subject to normal economic laws - they are worth what someone will pay for them. Yet I'd say over the years, gold and silver, though suffering from occasional speculative runs, have been pretty successful as non-governmental currencies. Why not bitcoin?