Bloomberg reports today that Bitcoin is not currency. There is nothing wrong with this assertion, other than the reasons submitted where fore are based on the baseless. But, before all that, I’d like to say that, no, Bitcoin is not just a currency. Bitcoin is not merely money. Bitcoin is something totally beyond the scope of monetary history. For 7000 years since the official discovery of silver, man’s monetary exchanges have been on a course for total centralization. Maybe you’ve learned about it in church as “The Great Work.” Maybe you heard about in your history books in school as “progress.” Or, maybe even more recently, you’ve heard about this tendency towards mandated centralization known as the “New World Order” via the “web.”
Bitcoin is all the “trillions” of dollars worth of pirated material on the internet – music, movies and so on –being exchanged voluntarily. There’s no power any power structure can claim over this peer-to-peer technology. It floats in the digital ether above-and-beyond man’s modern pre-conceived notions of the way things should be. But, Bloomberg doesn’t go into any philo-historical questions. Instead this article stays sitting upright in Economics 101 right after the Pledge of Allegiance. “Unlike Bitcoins, real currency can be used to buy stuff.”
Real currency? This guy is an idiot. People use Bitcoin to buy things. People use it as a medium of exchange. It doesn’t matter if everyone does. Anything people use to transact as such is linguistically a currency. It’s the “artificial currency,” according to the Bloomberg Grunt. Bitcoin is “a form of cash that doesn’t need government backing” apparently, as if it is God-Given that cash is government backed. This guy did not ditch enough public school or university. This guy was probably on his high school government-board. We call that “ASB” in the US. What does your country call it? It’s pretty dumb, huh?
What a model citizen this pundit-journalist is, arguing that “Bitcoin’s rise as a tool for financial speculation underlines the failure of the virtual currency idea” a mere four years into its inception. Somehow, this guy just knows it is over for virtual currency. Even though anyone who has studied culture or history knows that distance is needed in order to understand the full scope of a phenomenon or time period, this guy is calling it endgame for virtual currencies. By the way, that, basically, is a bet against the Internet. Maybe not a bad bet if people read this guy’s rubbish and believe it to be journalism or academic in the least bit. “One place where your money is not safe is in Bitcoin.” Ok, Bloomberg slave-writer, where is one’s money safe today? Stocks? Bonds? Treasuries? Ponzi Schemes? In Central bank inflated fiat currencies?
Sure, the stock market has had a heroic return since its 2008 lows, but what has this run really been based on and why is nobody really buying that this bull market is here to stay? If Bitcoin collapses in price, its transactional ease will keep it alive. Even if you want to keep this argument that Bitcoin is currency, then take Max Keiser’s lead, in which he does demonstrate that Bitcoin is money. Why does Max Keiser’s opinion matter? Well, because he actually made money working in finance. Instead of just going to public school, going to University, and then getting a job for someone who doesn’t respect him and calling it a lifetime, Keiser went out into the world as an Ent-re-pre-neuer (sound it out, journalist schmuck) and made something of himself.
According to Aristotle, for something to be considered money, is has to fulfill four characteristics:
1) It must be durable. It can’t fade, corrode. 2) It must be portable. It has to be ‘dense’ so that you can take it with you when you travel to the market. 3) It must be divisible or, ‘fungible.’ This means that if you break it up into smaller pieces each smaller piece when you add them up will equal the value of the original piece. 4) It must have intrinsic value. This means it must have value whether or not it’s used as money per se. Let’s look at these four characteristics and see if they apply to Bitcoin.
1) Durability. Bitcoin is a peer-to-peer, decentralized form of money; as durable as the Internet itself. Remember, the Internet or DARPA as it was originally called, was created as a fail-safe, global network with no ‘single point of failure.’ If one part goes down, data takes another route and nothing is lost. So on this point the answer is “Yes,” Bitcoin is durable.
2) Portability. Bitcoin is probably the most portable money in the history of the world. I can download any amount onto a thumb drive and walk across any border without any problems.Or, I could commit to memory a line of code that I can then input into the network and save or spend Bitcoins. So on the point of portability, Bitcoin gets an Aristotelian “Yes.”
3) Fungibility. Bitcoin is probably the most fungible currency ever created. You can break it down by 10,000 decimal places and trade it just as easily without it changing in value so on this point the answer is also “Yes.”
4) Intrinsic Value. This is probably the characteristic that most people find difficult to comprehend. The intrinsic value of Bitcoin is very 21st century. If you think about it, what’s the one thing that has become extremely scarce over the past thirty years that has grown in desirability? Privacy. Privacy is an age of universal email collection and spying, with millions of CCTV camera’s, and warrantless spying pervasive; privacy has become virtually non existent and therefore extremely scarce and desirable. Bitcoin can be a completely anonymous transaction that maintains the user’s privacy beyond the reach of any authority. So on this point too, the answer is “Yes,” Bitcoin fulfills Aristotle’s need for having intrinsic value. Privacy is a desirable human right and people would want it even if it wasn’t encoded as Bitcoins.
In conclusion, using Aristotle’s four characteristics of money, Bitcoin fulfills all four. So then according to an Aristotelian definition, the answer is ‘Yes.’ Bitcoin is money. Bloomberg needs to get the memo: people are ditching state currencies. Their confidence has collapsed in them. Perhaps Bloomberg’s target market is ignorant of the debt loads tied to fiat currencies, but this target market will go extinct what’s society’s exchange breaks down do to centuries of manipulation.