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Bitcoin: Magic internet money or the future of finance? For many, it’s easily dismissed – a digital novelty unworthy of their time. “I’ll just ignore it until it disappears,” they say. But what if ignoring it isn’t an option? What if Bitcoin’s not just some fleeting trend? The initial reaction is often disbelief, a scoff at exchanging “real money” for this digital creation. Yet, Bitcoinisreal money. In fact, it’s a superior form of money compared to anything we’ve experienced. And it’s far more than just currency; it’s a revolution waiting to unfold.
Imagine a single invention that dared to be a superior form of gold, a revolutionary digital currency, and a global payment network all rolled into one. That invention is Bitcoin. More than just a digital dollar, Bitcoin reimagines everything: your savings, your transactions, even how money traverses borders. It’s a monetary reset button, challenging not just hard currency but also the systems, politics, and institutions that control it. Bitcoin isn’t simply an upgrade; it’s a completely new financial paradigm.
Want to grasp Bitcoin? First, confront the enigma it challenges: money itself. We swim in it daily, yet rarely ask: Whatisit? To decode Bitcoin, we must unravel this fundamental mystery.
In the most fundamental form, money is any object that is used for some combination of the following purposes:
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A medium of exchange (folks can buy stuff with it);
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A unit of account (folks can reliably use it to price stuff); and
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A store of value (folks can buy stuff with it later).
From seashells and salt to hefty stones and gleaming gold, humanity has always found creative ways to trade and store value. Even that humble $20 bill nestled in your wallet represents just the latest chapter in this ongoing story. Behind bars? Your currency might be cigarettes or ramen packets.
Think about it: Why do certain items emerge as money in different times and places? Technology, as always, plays a pivotal role. But let’s be honest, some things simply make better money than others. The paper money and its digital echo you use daily? They’re just the newest iterations, not necessarily the best and certainly not ideal. Prepare to question everything you thought you knew about money.
What qualities transform an object into coveted currency, a reliable medium of exchange? A truly effective form of money, one that nails its core purpose, usually boasts a blend of these inherent traits:
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Durability (It has to last, not spoil or deteriorate);
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Portability (You have to be able to move it around);
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Divisibility and Aggregability (You need to be able to buy little things and big things too);
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Fungibility (The units need to be uniform);
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Scarcity (If there’s a lot of something, it won’t maintain value);
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Acceptability (People have to want it for you to use it); and
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Verifiability (You don’t want a lot of counterfeit money).
Think your definition of “good money” trumps the experts? Maybe you believe fairness in creation is key. Economists, however, have a time-tested list. Even the Federal Reserve Bank of St. Louis uses it to demonstrate why dollars beat cows as currency. A cow? It seems the Fed prefers easy wins.
Forget bananas as currency. Picture trying to pay rent with a bunch of bruised Cavendish. Clearly, not ideal. Gold coins, on the other hand? They practically scream “money.” But where does that leave the crumpled twenty in your pocket? Or the mysterious bitcoin buzzing on the internet? The qualities that make something “good money” aren’t simple yes-or-no answers; it’s a sliding scale. The more boxes an object ticks, the better it functions as a medium of exchange. So, let’s dive deeper than gold doubloons and banana republics to explore the surprising economic properties that truly define money.
Forget bitcoin versus gold. The real showdown is between the $20 bill and bitcoin. Round six, Acceptability, goes to the twenty,for now. But don’t count crypto out. History is littered with currencies that rose and fell, and bitcoin’s acceptability is climbing faster than Jack’s beanstalk. Every new business that flashes “Bitcoin Accepted Here” chips away at the dollar’s lead.
Round four, Fungibility, is a squeaker. Technically, dollars are identical. Bitcoin? Not quite. But this is a microscopic difference, a wrinkle only blockchain nerds notice, and clever tech is already smoothing it out.
Forget dollars, Bitcoin dominates. In every crucial category durability, portability, divisibility, scarcity, and verifiability it’s not just a win, it’s a knockout. These aren’t Bitcoin-boosting buzzwords; they’re the bedrock qualities economists have always sought in sound money. And Bitcoin, born digital and programmable, leapfrogs the past to become the money of tomorrow. It doesn’t just outperform the dollar; gold crumbles in comparison. Bitcoin is quite simply humanity’s monetary masterpiece.
Let’s pump the brakes for a second. Before diving into why Bitcoinispotentially money, let’s dismantle some common misconceptions about what itisn’t. Forget the notion that money needs to be tangible, possess inherent worth, or be stamped by a government mint. Those are just echoes of our past experiences with currency. Bitcoin challenges these ingrained beliefs, and rightly so. What qualifies as money has always been a moving target, constantly evolving alongside our own relationship with it.
Think about it: Have youactuallyheld most of the money you’ve earned in the last two decades? Probably not. It exists as fleeting digits on a bank statement, a silent promise shimmering on a screen. So, when someone balks at Bitcoin’s intangibility, remember this: money, even the dollars in your account, is often just an idea, a shared belief given form in the digital realm. Bitcoin’s lack of physical presence shouldn’t disqualify it any more than your unseen savings balance does. It’s real because webelieveit’s real.
Money doesn’t need inherent value to work; in fact, it’s better if it doesn’t. Think of money as a pure signal, broadcasting price information across the economic landscape. Intrinsic value would muddy that signal, creating static in the communication.
Imagine every transaction becoming a debate: “Should I buy this coffee, or melt this coin for its metal?” Economic activity would freeze in place, paralyzed by endless cost-benefit analyses beyond the price tag.
Those digits on your screen representing your bank balance? They’re not backed by anything tangible either. The common criticism against Bitcoin – its lack of inherent worth – is actually a strength. Free from competing uses, Bitcoin offers a clear, unadulterated pricing signal, untainted by external value or manipulation. It’s pure information in a digital age.
For centuries, money flowed freely, untethered to any government. Forget kings and queens – individuals shaped the marketplace, bartering and trading with diverse mediums of exchange. Governmental control is a relatively recent invention, born from the need to standardize coinage and ensure trust in an era before sophisticated verification. The king’s stamp was a guarantee, a symbol of weight and purity. Now, the state’s grip on currency feels absolute, a deeply ingrained misconception that fuels manipulation and serves only the interests of those in power. But history proves a vital truth: valid money doesn’t require a sovereign’s blessing. Bitcoin offers a revolutionary path – humanity’s best chance to finally liberate money from the clutches of the state.
At minimum, this provides a crucial reality check on whether governments are responsibly managing the nation’s purse strings.
Forget dusty textbooks. You alreadyknowgood money when you see it. Humanity has an instinct for it, a primal pull towards the reliable. For millennia, that instinct led us to gold. Then came paper, propped up by legal muscle, a mere 50-year experiment. But coercion can only hold back progress for so long.
Bitcoin doesn’t need explaining; it needs experiencing. As Jörg Guido Hülsmann predicted, free markets naturally gravitate towards superior money. Gold, silver whatever innovation arises to serve as honest currency will spread like wildfire. Bitcoinisbetter. And that’s why its future is bright, powered by the same age-old human drive towards sound money.
Get your hands on the updated “A Progressive’s Case for Bitcoin” – freshly revised and ready to challenge your perceptions! Pre-order now for just $21 and dive into a compelling argument you won’t want to miss. But hurry, this discounted offer vanishes after November 15, 2025.
13 Jörg Guido Hülsmann, The Ethics of Money Production (Auburn, Ala.: Ludwig von Mises Institute, 2008), 197.
This post What Is Money? first appeared on Bitcoin Magazine and is written by Jason Maier.
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