Skip to content

Bitcoins…a currency created mostly for Anarchists!

March 31, 2013

What is a Bitcoin and can this virtual (imaginary) currency actually work for the longer term as a global ‘money unit’? The idea of a Bitcoin makes a lot of sense if you adopt an Anarchist view of reality. Anarchists desire to eliminate all Government and all Central Banks. This means that a currency that is generated autonomously via a mathematical algorithm(s) makes a lot of sense…philosophically. Just what is a Bitcoin, however,  and what is its destiny as a currency? Can it replace a physical commodity as money like a silver coin or a gold coin?

Bitcoin definition:  Bitcoin is a decentralized digital currency based on an open-source, peer-to-peer Internet protocol. Bitcoin users purchase the currency online and hold it in a digital wallet. A bitcoin’s value is based on the U.S. dollar, but it can be converted into any global currency. We might further define this virtual coin as an image within the computer screen which can be traded on-line and also exchanged for other National currencies based on daily fluctuating exchange rates. In 2009, 1 Bitcoin had a value of $7. Today (3/2013) this same 1 Bitcoin has a value of $80. So why is it currently popular?

My sense is that the idea of a currency that could be generated independently of any human policymakers (Central Bankers, et al) is very appealing to many traders, investors, and a fearful public (as in Cyprus). Bitcoins are generated via an algorithm and this algorithm is structured so that a limited supply of these coins are created for the marketplace. This limited coin supply (currently some 11 million coins) does create an emotional/psychological ‘value’ for these virtual coins (in the mind’s of many). Also, if I desire to launder some money so that the political Authorities can be avoided, then this currency makes a lot of sense. If I am a drug dealer and desire to avoid the National regulators, I might also desire to use this currency as it is autonomous.

Given that all our National currencies are now mostly virtual units (similar to the Bitcoin) it makes sense that this currency appeals to many who have an Anarchist or similar philosophy.  I, also, don’t like any of our existing National currencies as they do not fit within the historical philosophy of Capitalism. Money, however, to be viable as a ‘pricing/valuing’ medium must have some VALUE independent of one’s emotional psychology. The history of money demonstrates that it must fulfill three main functions:  standard of value, store of value, and unit of account for trading. The Bitcoin, being virtual and imaginary has no independent ‘value’. The coin can not be held in one’s hand.

Also, the Bitcoin has no real ‘store’ of value as it can not be stored outside one’s computer screen. The only function that this coin fulfills is as a medium or exchange or a unit of account for trading. This limited function means that the Bitcoin can not survive for the longer run. Capitalism demands that any money unit have some intrinsic value (independent of one’s emotion or psychology). The whole purpose of money is to serve as a proxy for valuation. How can one ‘value’ other units of production with pure emotion and/or psychological hubris? It’s impossible over the longer run!

If the marketplace desires money for the purposes of valuation (its role under Capitalism), then history demonstrates that this money unit (currency) must be independent of the human mind (in other words money can not be virtual or imaginary). The only real alternatives for real valuation of assets is a money unit that is perceived as having intrinsic value (say like silver or gold coins). I realize that the concept of ‘value’ is subjective, however, and this means that virtual currencies can work temporarily during a transition period. All our currencies, including Bitcoin, are now mostly virtual currencies. These units are created via the human mind and then displayed within a computer screen. Virtual reality has now mostly replaced Space/time reality!

Bits and bytes become images within the computer screen to deceive the public and most public policymakers. At some point all this emotion and imagination will lead to psychological collapse. We see the beginning of this in Cyprus today. We will likely witness this phenomena in all Nations as more traders and investors become AWARE of the ‘nature’ of our currencies. The Bitcoin phenomena is an attempt to circumvent the political/banking system. I do like the effort of those who desire this reality. I sense, however, that this currency has a limited lifespan as it does not fulfill any of the key functions of money. The core concept of Capitalism and Money is the concept of ‘value’. Valuation is the purpose of any currency. Virtual currencies are ‘valueless’ as independent items. Their psychological appeal does allow them to function in the short run. The Bitcoin may last for a couple of years at the most. It will then vanish into computer screen heaven (as will all other virtual currencies)!

Watch the markets for continuing change and volatility. The destiny for all currencies seems dire. The coming collapse of Keynesian economics is drawing near! Debt, deficits, accounting gimmicks, and a growing public awareness will bring our present HOUSE OF CARDS to a sudden halt. We should see this trend quite clearly as 2013 continues to evolve. The best advice for the transition period (now) is to store some of your hard-earned savings in physical silver and gold. The other alternative is physical cash (actual paper notes that are legal tender). At the end of the day, however, ALL is psychological and spiritual! I am:  https://kingdomecon.wordpress.com.

3 Comments leave one →
  1. August 3, 2014 5:49 pm

    naturally like your website but you have to test the spelling on quite a few of your posts.
    Several of them are rife with spelling issues
    and I to find it very bothersome to inform the
    truth on the other hnd I will surely come again again.

    Like

Trackbacks

  1. Soon, whether via Bitcoin or whatever comes next, it will be possible to strip banking away from bankers, and money away from governments. |

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: