Bitcoin Vs Goldcoin

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The three essential attributes of money are;1) money is a stable store of value; the most essential attribute, as without stability of value the function of numeraire, or unit of measure of value, fails.2) money is the numeraire, the unit of account.3) money is a medium of exchange... but other things can also fulfill this function ie direct barter, the 'netting out' of goods exchanged. Also 'trade goods' (chits) that hold value temporarily; and finally exchange of mutual credit; ie netting out the value of promises fulfilled by exchanging bills or IOU's.

Compared to Fiat, Bitcoin does not do too badly as a medium of exchange. Fiat is only accepted in the geographic domain of its issuer. Dollars are no good in Europe etc. Bitcoin is accepted internationally. On the other hand, very few retailers currently accept payment in Bitcoin. Unless the acceptance grows What Is Bitcoin And How To Learn About It? geometrically, Fiat wins... although at the cost of exchange between countries.The first condition is a lot tougher; money must be a stable store of value... now Bitcoins have gone from a 'value' of $3.00 to around $1,000, in just a few years. This is about as far from being a 'stable store of value'; as you can get! Indeed, such gains are a perfect example of a speculative boom... like Dutch tulip bulbs, or junior mining companies, or Nortel stocks.Of course, Fiat fails here as well; for example, the US Dollar, the 'main' Fiat, has lost over 95% of its value in a few decades... neither fiat nor Bitcoin qualify in the most important measure of money; the capacity to store value and preserve value through time. Real money, that is Gold, has shown the ability to hold value not just for centuries, but for eons. Neither Fiat nor Bitcoin has this crucial capacity... both fail as money.Finally, we come to the second attribute; that of being the numeraire. Now this is really interesting, and we can see why both Bitcoin and Fiat fail as money, by looking closely at the question of the 'numeraire'. Numeraire refers to the use of money to not only store value, but to in a sense measure, or compare value. In Austrian economics, it is considered impossible to actually measure value; after all, value resides only in human consciousness... and how can anything in consciousness actually be measured? Nevertheless, through the principle of Mengerian market action, that is interaction between bid and offer, market prices can be established... if only momentarily... and this market price is expressed in terms of the numeraire, the most marketable good, that is money.So how do we establish the value of Fiat... ? Through the concept of 'purchasing power'... that is, the value of Fiat is determined by what it can be traded for... a so called 'basket of goods'. But his clearly implies that Fiat has no value of its own, rather value flows from the value of the goods and services it may be traded for. If there are no Bitcoins in circulation, how on Earth could they be used as a medium of exchange? And, what could the issuers of Bitcoin possibly do to defend against such a fate? Change the algorithm and increase the 26 million to...