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Bitcoin: Better than Gold

May 9, 2012 Leave a comment

Many proponents of bitcoin come to the technology with the belief that the ultimate currency is gold, or some other commodity with intrinsic value.  This is usually because they correctly realize that the centralized control of the supply of money is too dangerous a power to bestow on anyone.

However, currencies which are based upon an item of intrinsic value have an inherent problem. This problem stems from the same feature that gives it the benefits that they seek. Items or rather commodities, with an intrinsic value cannot be transmitted over distances easily. Whether gold, or silver, or gemstones, or cigarettes or wheat, these must be first converted into a form suitable for transmission over distances if one wants to efficiently do so.

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The Hoarding Myth

April 29, 2012 Leave a comment

Many times we hear the modern academic economist lament about the detriments of sound currency concepts. This often occurs when discussing the topic of bitcoin with the uninitiated. Their disdain usually stems from two commonly held misconceptions regarding sound currencies and their effects.

The first misconception is that people will hoard an appreciating currency, and the second is that sound currencies have no elasticity. Normally the method attempted to eradicate these misconceptions is to explain the fallacy of both points of view individually by using evidence in the argument from effect, often with futility. However this is not as easy as exposing the the truth sitting in plain sight, as I learned while contemplating my failure to be convincing in a debate with an economist.

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