Some economists take property 5 literally. Actually, nearly every dollar except quantitative easing, i. Scarceity in the form of a fixed cap is the most fundamental quality of what is needed for a fair, transparent, international currency.
And therein lies the problem. But dollars have nothing to do with gold. Individuals and organizations that accept either one, trust that they can spend or exchange it—at least in the immediate future. This should be a must read for researchers and pundits alike.
Bitcoin is entirely based on scarcity, much like hard metals. Gold is an industrial metal widely used in jewelry, electronics and chemistry. But Bitcoin proponents point to a far more alarming concern with dollars.
Although the value floats especially relative to government issued currencies , it is reasonably immune from long term manipulation by governments, institutions or individuals. In fact, dollars have no production cap at all. A Bitcoin has ethereal value only because some individuals seek to stake a claim to something that is scarce and the dollar has value only because the US government says so and accepts it for taxes and debts. For example, you can trade 30, dollars worth of gold for a new automobile.
Easy to transmit from person to person, buyer to seller, business to business, or for debts, settlement, gifts, taxes, etc. How can intrinsic value mean anything other than real, honest-to-goodness portable value? That is, the money itself must be a thing of very dense value, like gold. It is difficult to find and to refine.
But with Bitcoin, you know exactly where you stand. Ellery reads all feedback. That is, they assume that someone else will value it within the time frame that they possess it. Individuals and organizations that accept either one, trust that they can spend or exchange it—at least in the immediate future. The second function has been underserved:
Each transaction is simply the trade of two things with equal value. He lived from to BCE. So in the jargon of economists, both Bitcoin and paper currencies have no intrinsic value. In the absence of bonding a currency with underlying assets like gold , a scarce and or provably capped supply is a far better assurance of value than the oversight of a government or bank.