2012-10-03

Beware the Bull about Bitcoin



There is a lot of sloppy thinking going around these day concerning digital currency.

Any unethical or amoral use of any unit of exchange says absolutely nothing about the unit itself and everything about the user and the person reporting on that use. Cash, silver, gold, diamonds & digital currencies are all units of value that can be used to purchase things.

The fact that you can buy drugs, porn and assassinations with most currencies is utterly beside the monetary point. No real currency was designed for such a single purpose. Even Canadian Tire 'money' can get you a discount on thousands of different products. A trusted currency can be used to buy everything from socks, to computers, to mining shares. It is only intended to flow through efficient networks of exchange, secured by the trust of the parties.

Reliable money also maintains its value through an economic crisis, offering an indirect critique of weaker alternatives and even of our whole banking system, but no currency, in and of itself, expresses a moral position, or advocates more ethical behaviour.

The best monetary agreements strive for the following characteristics: (1). Transactions can be anonymous (2). Sending money is instantaneous and free (3). Users can memorize and keep secret the information needed to access their money, or store it on paper in a vault (4). No change or transaction in that currency can shut down the entire global economy.

This all seems reasonable and works very well providing each of us is free to choose and use whichever currency we trust most.

That is why it is going to become crucial over the next few years that we all realize that only weak currencies, weak governments, or weak banks feel threatened by any currency more trusted than their own.

So, next time you hear Chuck Schummer, Joe Lieberman, Hillary Clinton, or any purported defender of national security or morality argue that digital currencies such as Bitcoin, or the Canadian Mint's proposed new MintChip, are dangerous or need to be outlawed, know beyond a shadow of doubt they are only trying to prop up their own cash, or vested interests in a mistrusted or collapsing currency.

(Adapted from a blog post by 'Daniel' at: http://moneydick.com)

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