Bitcoin, Behind The Facade
Why bitcoin is not a currency/money (and probably never will be)
Keep in mind: Money’s only value in its use and acceptance as a medium of exchange and unit of account, and money’s only worth is in what it can buy. This holds true for all money, regardless of its material construct. Money has no price external to its utility use as such.
While bitcoin has been marketed as a monetary medium, it has yet to go through a market ‘worth’ discovery, that is the process of discovering its ‘worth’ in standard market exchanges.
Nor does it serve as a standardized unit of account, which is one of the most important features of money. As such, I’m able to calculate my per-unit costs, formulate a price structure that informs my customers, and measure my profits and losses. Bitcoin is not a monetary medium precisely because it does not serve in economic calculation, which makes bitcoin little more than a barter-able item with a fluctuating value based on speculation.
In case that wasn’t a convincing enough argument that bitcoin is not a currency/money, yet, let’s move on to another aspect of money, divisibility. As we know a dollar is divisible by 100 and the monetary unit used to express this division is called a cent. So, it takes 100 cents to total one dollar. These cents are also grouped into monetary units with a nickel coin equaling 0.05 cents, a dime 0.10 cents, a quarter 0.25 cents, and a half dollar 0.50 cents. These monetary units can be grouped to equal one dollar, expressed as $1.00
Bitcoin is divisible as well, by 100,000,000. And the monetary unit used to express this division is called a satoshi. So, it takes 100,000,000 satoshis to equal one bitcoin, expressed as 1BTC. That’s it.
As we know, bitcoin has been promoted as having a hard limit of 21 million BTC, which has been hailed as the ‘value’ behind the imaginary coin, no inflation. But with such a hard limit this would mean that the satoshi will become the primary unit used in almost every exchange, with the hard limit on those being 2,100 Trillion. That’s 2,100,000,000,000,000,000 satoshi. Impressive for a hard limit imaginary coin, isn’t it? Every time a bitcoin is mined, 100,000,000 satoshis is added to the bitcoin ‘money supply’. Talk about inflation….
Let’s go back to that drawing. Are you beginning to understand why the guy is expressing his price as 0.00044 bitcoin instead of 44000 satoshi? Are you beginning to understand why he is depicted counting backward, subtracting from, to arrive at a market price instead of forward, adding up to a total?
But that’s just my 0.02 dollar.
