Notes of Note from John F. Ince

“So, is Bitcoin actually money?”It’s a fair question and, with the intense scrutiny directed at the “crypto-currency” of late, an increasingly common one. But the real question is not whether Bitcoin functions as money today, nor whether Bitcoins themselves are a good speculative investment. The real question – and the only important question when considering whether Bitcoin could be a viable alternative currency – is, “can Bitcoin ever function well enough as money to matter?”And that answer, I fear, is no.Whether something is “money” has nothing to do with the source of production, whether it’s issued by a government or a private company or spontaneously generated by a community, whether it’s minted or mined or printed or issued electronically.Money is … well, money … to the degree to which it enables transactions, to the degree that you can use it to purchase things. No matter how efficient or liquid a market is, unless it can be used to purchase things, it’s not money; it’s a commodity.By that measure, Bitcoin is unquestionably money.It just happens to be terrible at it.Wheres the marketplace?Even the most vocal supporter of the system acknowledges that the number of merchants accepting Bitcoins is miniscule and the number of large merchants embracing it is almost nil.But is that unfair, or at least premature?Perhaps it’s just a question of time, business development, marketing … of scale. One hears the term “critical mass” a great deal when this question is posed, the implication being that the ecosystem just needs enough merchants to buy in for Bitcoin to become useful as money and to become self-sustaining.But it is not quite so simple.

via Bitcoin Is Money … It’s Just Terrible At It | The Exchange – Yahoo! Finance.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: