Bitcoin and Money: An Advocate’s View
Some refer to Bitcoin as the internet of money. Why? Because they believe Bitcoin will revolutionize the way we transact with each other the same way the internet revolutionized the way we communicate with each other. Some critics argue otherwise. But, quite interestingly some of Bitcoin’s biggest critics are the same institutions and industries that stand to be disrupted by Bitcoin. To some, the idea of Bitcoin replacing our current mediums of exchange is too far-fetched. I would argue that our mediums of exchange throughout history have suffered arguably more drastic changes. As a human race we went from bartering, to exchanging precious metals, to paper money, and most recently to plastic cards with magnetic strips. How do you think people reacted when they were told they would not be buying and selling goods with precious metals, but instead they would be using paper? This was a substantial aberration in the manner people transacted with each other, and it took hundreds of years for there to be consensus on this transition.
On that note, what is Bitcoin? Most people will say that Bitcoin is a digital currency. While at its essence this is not a false statement, if Bitcoin is simply a digital currency it would be inconsequential. Most of our currencies today are already digital. Bank accounts today are digital databases, and we use those bank account to transfer money to and from each other, in electronic form. That is digital money. The reality is that only about 8% of total world currencies exist in physical form. It would seem that if Bitcoin is as revolutionary as some claim, it would need to offer something beyond the digitalization of money, and it does. Let’s discuss some of these characteristics and possibilities.
