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After a week of turbulence, the value of Bitcoin on Friday is still around $40,000. This is still very valuable, and Bitcoin enthusiasts have been eager to point it out.
However, there is nothing in the code that controls the cryptocurrency to answer the following question: If Bitcoin becomes so valuable that you don’t want to spend it, how can Bitcoin become currency?
Indeed, even from this week’s decline, in the long run, the value of Bitcoin has appreciated. In 2008, a PDF containing only one idea. The spot price of PDF is zero, which is much lower than the current level. For any asset, this is an impressive 13-year performance. It should be Amazon or Apple level ground performance. I first explained Bitcoin to me in a loft in Malmö by a group of Swedish hackers in 2011, and then let me tell you: I am sorry.
However, Bitcoin should not be just an asset. It should be global money. Depending on what you require, it will either become the standard medium of exchange for all transactions, or the final settlement medium for other types of currencies, just like the U.S. dollars that banks can hold in the Federal Reserve’s reserve account. This means that it cannot just gain value. As money, it must also become more useful to more people. This is not the quality of Apple stock you are asking about.
Whether Bitcoin is money is an academic custom. For some people, it’s money now. There are transactions that are suitable for it and have been used. On the day I was in Sweden in 2011, there were only 12,000 transactions per day. By May 2017, this number had increased to 300,000 transactions per day. Since then, it has entered a band around that level-with greater fluctuations, but sideways. However, the value of Bitcoin continues to rise from less than $2,000 in 2017-fluctuating, but you know it has risen. As money, Bitcoin has become more and more valuable, but it has no more use.
Its use may be limited by design. Those who advocate Bitcoin as the future of money like to say that unlike the U.S. dollar, no central bank can answer Bitcoin questions or screw up Bitcoin. However, there is a governance structure behind Bitcoin, which is as real and clear as the governance structure of the Federal Reserve.
The code followed by the Federal Reserve is called Statement on long-term goals and monetary policy strategyIt is updated about every ten years, when its internal cultures of MIT, Harvard and Berkeley macroeconomists begin to have different views on money. Currently, the Federal Reserve’s rules and culture believe that the long-term value of the US dollar against other commodities should lose an average of 2% per year.
The code that generates Bitcoin limits its total to 21m. This means that they should always become more valuable through design. You can change the code, but just like at the Federal Reserve, to change the code, you must change the culture-you must convince many people to use the new code. Here, the culture of Bitcoin is also fixed on the stability of money, because they believe that the best money will only become more valuable over time. People encourage each other and “hug” each other-insist on using their own bitcoins and never sell them. If you are Hoddle, then you have the hand of diamonds. If you sell, you have paper hands. If you get nothing, we encourage you to live in poverty.
When you hold stocks, you become richer, but you are not trading. This is good for Bitcoin assets, but it is problematic for Bitcoin currency, because you keep your own things out of the door. This is a challenge as old as money. Theognis, a Greek poet in the 6th century BC, wrote that savvy people know bad gold and silver, and no one will “exchange for worse when they have something better.” The Athens satirist Aristophanes pointed out: “When ordinary brass coins go hand in hand, the full coin that is the pride of the Athenians has never been used.”
Robert Mundell, a Nobel laureate who died a month ago, recorded such quotations through a single thought for centuries, and finally came up with what is usually attributed to Thomas Gresham (Thomas Gresham). Gresham’s motto, Thomas Gresham (Thomas Gresham) was a British businessman and official adviser in the 16th century: the poor’s high-quality money drove the high-quality money circulation. Why are you spending something that is becoming more and more valuable?
In the long run, both the code and the Bitcoin culture are designed to drive it out of the market. This put the hozishou into the problem of collective action. By selling or changing the code, the value of the asset drops and becomes more useful. Hodl, keep the code and your assets will appreciate. Monetary culture is monetary policy. The diamond hand is Gresham’s hand.
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