Loading ...Bitcoin is Not Money ( and Neither is FIAT)
Here is why we cannot: Bitcoin is a medium of transfer. It is not money yet. It will likely NEVER be money.
While it shares one excellent characteristic with Gold right now, that being it is a borderless currency, it will not sustain that quality as envious governments, banks, and corporations will demand it be reeled in. And as such, it will NEVER be a substitute for Gold. And we are aware that the use of superlatives is ALWAYS a sign that an argument is specious. So be it.
Bitcoin shares with Gold for the moment the ability to unshackle people’s economic freedom, but it is ludicrous to think it could satisfy the other requirements needed to be called money let alone the other qualities that make gold the best example of the definition of “Money” itself.
- Medium of exchange: Bitcoin satisfies this. It is used as a means to transfer your Rubles to Dollars without being “watched”. Not unlike how the USD is used to convert your chicken sales into a purchased cadillac. But different in the sense the Government is watching that trade and will not let you sell your chickens to that guy in Haiti even though he is offering a higher price.
- Unit of account: Bitcoin is too volatile, and not “commonly accepted” as a standard – although that may change as it evolves. just know that volatility undermines confidence in a currency (Zimbabwe, Reichmarks etc)
- Store of value: Bitcoin does not hold its value over time. Yes it is growing in value, but that is precisely what we mean. It is also NOT a convenient way to store wealth. Just ask the guy expatriating Yuan to Australia to convert it to USD and his Bitcoins drop 20% in 5 minutes. Stability is key. And Bitcoin has none of that.
FIAT is a horrible long term store of value. Bitcoin is a horrible short term store of value
Do a Sharpe vs Sortino ratio comparison on both BITCOIN and all FIAT to make our volatility point. We are sure the Sharpe ratio will show up as lower in both Bitcoin and FIAT than their Sortino ratios. And the Sortino ratios will show most volatility in Bitcoin is to the upside, while all FIAT will show volatility to the downside.
The USD: slowly sucking you dry.
Sharpe Ratio says “Low Volatility!!” ; Sortino Ratio Replies: Yea but it is all to the downside Post Bretton WoodsBitcoin: All upside, unless of course you store your wealth in it today and are fine with it being +/- 20 % when you go to buy lunch with it.
http://www.zerohedge.com/news/2017-07-03/dear-bitcoin-wealth-preservers-youre-doing-it-w