He lived in the early twentieth century Austrian Jew born in Lvov, concurrently, as Wikipedia claims, “the economist, philosopher, historian, advocate of classical liberalism that have made a significant contribution to the development of the Austrian school of Economics” — Ludwig von Mises. This wise man was released in 1912 his fundamental work “Theory of money and credit”, stating that all economic crises are just derivatives of the waste of the governments of modern countries of “gold standard”. These crises gives rise to unrestrained printing of paper money and the world economy, if you move away from the gold standard, is “unpredictable to fly and to dive into the depths of chaos.” Even the exact timing of the onset of a new crisis in connection with the arrival of new masses unsecured money into the world economy. Time has shown the accuracy of these calculations, which today are futurists.
Advantages of Fiat money: they can produce is unlimited, the cost will continue to decrease, as the level of trust in them,
Refer to the Wikipedia:
“Bitcoin, Bitcoin, Bitcoin often (from the English. bit — unit of information “bit”, eng. coin — “coin”) — is a peer electronic payment system using the same unit of account. Bitcoin is often called a “cryptocurrency”. The Ministry of Finance of Germany considers bitcoin option private money that can be used for “multilateral clearing operations.”
The network is fully decentralized, has no Central administrator or any analogue thereof.
Bitcoins can be used for electronic payment of goods/services from sellers willing to accept them. There is a possibility of exchange for real money through specialized platforms for trading or exchangers.
One of the features — decentralized issuance of new bitcoins, which can be used by anyone, but in strictly limited quantities and only through the use of computing technology used to protect the payment system from re-spending.
The basic element of this payment system is the client program open source. Using a network application layer Protocol running on many computers clients connected to each other in peer-to-peer network.
To ensure the functioning and protection system use cryptographic methods”.
And this is not a complete listing of all properties of the digital phenomenon. Let’s translate tricky terms from Wikipedia for human language.
Consider now onlythe properties that allow us to call bitcoin “digital gold”
1. A finite number of “digital coins”. Bitcoins can not produce more than 21 million “pieces”. Currently issued into circulation over 11 million bitcoins.
2. The complexity of finding new coins, “mining” becomes more difficult, and the price found new codes (BTC) falls. Simplified system looks like. The probability of finding a new coin in a private lane is proportional to its computing power in relation to the capacity of the whole system that produces bitcoins. The computing power of this system in 2013 grew twice every month.
3. Decentralization. Bottom bitcoin in the world millions of ordinary users of personal computers. A single “emission center” is not. Therefore, it is impossible to “print” from the huge number of coins.
4. The almost infinite divisibility. Each “coin” can be divided into one hundred million “cents”. The name of this one hundred millionth part of a bitcoin “Satoshi”, named after the founder of the cryptocurrency Satoshi Nakamoto.
5. Like gold, bitcoins can be purchased, for traditional currency at exchange rate.
6. It’s impossible to fake. No, the theoretical possibility of counterfeiting and to put two of the same input to the Network is. However, it needs to capture more than 51% of the computing power of the system, which is distributed to the Earth mainly in the computers of private users. And to trace the history of each cryptomonad from the moment of its birth until the last operation can each participant of the system. No intelligence service and the Central banks in this system do not need.
7. But if we take into account the complete anonymity of computer code… it is not the one who has signed someone documents, and the one who owns the starting and the receiving password this combinations of numbers.
What does this “killer combination” of properties
1. A finite number of coins contributes to a high attractiveness of investment in bitcoins.
2. The anonymity of the currency plays the role of “network cash”, allowing to buy any, even illegal to sell products. The speed with which these money, in contrast to this, paper and metal cash, at any distance almost instantly.
3. The lack of a single emission center protects the currency from “economic crisis”, when the network is thrown a large number of unsecured money.
4. Bitcoin cannot be taken away or declare “outside the law”. Actually, you can, and, for example, the governments of Thailand and China have done so. So what? How to trace perform the citizens decree or not? I can’t yet.
Well, the result? And here it is. Absolutely fantastic! Boundless confidence. “Bitcoin volume of daily transactions has already surpassed Western Union and Paypal. Anyone still believes that Bitcoin is the future of money?” Twitter from on 6.12.2013.