Why money has value and spending Bitcoin is senseless

The title of this article is not clickbait. Well, kind of. Perhaps a more precise title is “Why using Bitcoin as a medium of exchange now is senseless, but if we manage to make it a good SoV, then it will naturally be used as a medium of exchange in the future.”

“My precious…”

Economic theory and money

Mainstream economists tend to either define money very broadly or refrain from defining it at all. Greg Mankiw, whose economics textbook is the standard at universities across the globe, describes money as “the stock of assets that can be readily used to make transactions.” In no order or degree of importance, as is the usual practice among economists, the authos lists the functions of money as MoE (“medium of exchange”), SoV (“store of value”), and UoA (“unit of account”).

Store of Value takes precedence

Various assets that can be used to store value over time would be considered mediocre media of exchange (i.e., real estate). For goods aspiring to be money, though, the ability to transfer the respective good in an exchange increases its usefulness as a SoV. In this sense, SoV and MoE are interwoven in more ways than economists like to admit.

Swiss National Bank gold reserves.
Beads made from shells of the pea-sized snail Nassarius kraussianus, that lived in a nearby estuary. Blombos Cave, South Africa, 75,000 B.P.

What gives money value

Another angle through which proponents of BCH attempt to make their case is that money must be used in exchange to have value and must be spent. Utility, according to BCHers, is evidenced in the act of spending.



Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store