Real Money? Looking Inside Your Bitcoin Profit Calculator May 15  nike air max 1 ultra tokyo kopen , 2014 | Author: Wallace Eddington | Posted in Business

This article follows the conventional practice of using the upper case Bitcoin to refer to the program or network and the lower case bitcoin to refer to the currency.

As you crunch the numbers on your Bitcoin Profit Calculator , estimating the worth of your bitcoin in, say, dollars, you might well ask yourself: is this stuff I'm calculating really money? It's a fair question.

We have, after all, been inundated in recent months and years by the condemnations and criticism from both sides of the chamber in the long running debate between fiat currency's defenders and their precious metal rivals. Both have often enough dismissed bitcoin as fools-gold. Their reasons of course are different.

Fiat currency defenders simply give no respect to any alleged money which isn't backed by a government. Without such backing, they consider it just a joke. More sophisticated versions of the case likely cite the relevance of network-effect – not without some validity.

Practical merit aside though, such arguments are only the death rattle of their beloved money supply. The experience of history reveals having a government (and a government alone) as the guarantor of the money is a recipe for systemic, impoverishing theft through systematic inflation.

In this debate, bitcoin enthusiasts would side with the precious metal crowd. Fiat valuation is the down-slope of a currency. As I explained in an article at the Fiat Currency Review site, money begins as and always remains strong when it is adopted via market processes from an already widely demanded commodity. That alone prevents its corruption by government.

Going back to the dawn of our species, right up to the recent agricultural revolution, sea shells, cattle, tobacco, salt and gold  nike Air Max 1 ultra milan dames , among others, have arisen as money initially because it was a commodity demanded by enough people that it could be relied upon as a general medium of exchange or store of value. However, if we concede this point against the fiat currency crowd, is bitcoin thereby self-condemned by the same argument, as many precious metal promoters allege?

When the gold bugs insist that money must be backed by something, by a real commodity, that has real value, they are exactly right. What they are wrong about is their presumption that bitcoin lacks such a backing.

Bitcoin is no less a commodity-money then is gold or silver today, and cattle or cowry shells once were, in the past. Misconceiving bitcoin as merely abstract numbers, rendered in pixels, fundamentally misconceives what is happening, here.

It has to be understood that bitcoin as a currency is a product of Bitcoin technology – software and hardware – which is constituted through the networked work of what are, somewhat misleadingly, called the miners. It is these miners who audit and secure the Bitcoin system, by means of solving advanced mathematical equations. Thereby, Bitcoin (and thereby bitcoin) is literally the miners' math calculations.

Anyone who has kept tabs on the evolving circumstances of Bitcoin mining is acutely aware of one distinctly pertinent fact: mining uses extraordinary amounts of electricity. As the great economist Julian Simon revealed  nike air max 1 ultra paris kopen , in his classic book, The Ultimate Resource, high prices of a resource generates incentives to innovate less expressive alternatives.

No doubt, in the long run, the costs of Bitcoin mining will reduce, but it seems hard to imagine how bitcoin could exist without electricity. It is the existence of an electrical system that makes Bitcoin possible. Without it, there would be no bitcoin.

Indeed, as we look off into the future, it seems likely that electricity will be, if it isn't already, our single most important commodity. The only real rival today is oil. Unlike electricity, though, there surely is a finite amount of oil on the planet. Hundreds of years from now, when oil is too expensive for its current uses – whether generated by windmills, nuclear or hydro power plants, or means not yet invented or conceived – electricity will still be buzzing along.

The excavating, smelting and molding of aurous compounds into the coins and bars that constitute the commodity-backed money called gold is no more the production of money than is the generating  nike air max 1 ultra city kopen , conducting and programming of electricity into the mathematical calculations that produce Bbitcoin. Each is equally backed by the mining of a real resource from the natural world. And that is