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Bitcoin: Bronze-Age Bank of England calls Bitcoin the “next internet”..whatever !!

LessThunk comment: There are essentially only three (ordinary) ways to use a modern international currency, namely “Tranasaction”, “Store of value” and “Record of account”. Note that it isn’t necessary to satisfy all of them in order for a currency to be used. Bitcoin certainly doesn’t yet compete with the likes of USD or YEN, which are used globally to ‘transact’ at every level throughout society and clearly satisfy all three ordinary uses. However, perceptions are changing and here’s why..

 

Transaction‘ is the first of the the three (ordinary) roles of a currency. Ever since replacing the Stone-Age need to offer ‘5 chickens for a piglet’, currency has been what most people just refer to as ‘money”. It must have been quite difficult for the market-makers of ancient times to really grasp the virtualization of ‘actual things’..  and hard to find trust in the new, more efficient way of transacting with these metal-tokens of reality (we call them coins in modern times).

 

Goat Herder:   “you want to give me ‘metal’ instead of chickens..you call metal ’10 virtual chickens’ and I give you 1 goat”

Chickeneer:    “Yes, but hey, get this.. when you give the same ‘metal’ to BoozeBoy  here..he will give you 3 full moons worth of wine”

BoozeBoy:      “hey! only 2 full moons for ‘1 metal’ gentlemen, please”

 

Money was initially only worth what you could buy with it that day, most people were happier dropping the risk of keeping a lump of ‘metal’ at home and preferred instead to hold a real pig overnight, as ‘Store of value‘, the second (ordinary) usage of currency.  After all, you can eat a pig, if you buy two pigs you might also make more pigs.. and metal can obviously ‘do’ nothing. Money did not make more money back then. eventually all that changed..enter the Bronze-Age of currencies..

 

Today, just like a Bronze-Age coin, Bitcoin is simply a token. In the 21st Century we have yet to universally grasp that a token can just be a public entry in a tamper-proof register (no metal required). Bitcoin is a ‘Record of account‘, which is the third (ordinary) usage of an international currency.

Just like the leap-of-faith taken in allowing metal-tokens to equate to ‘real things’, we need to leap once more, this time allowing data-tokens to equate to ‘metal-tokens’ and for each of the three ordinary uses..perhaps the time has come for us all to move out of the Bronze-age..

http://www.telegraph.co.uk/finance/currency/11434904/Bitcoin-revolution-could-be-the-next-internet-says-Bank-of-England.html


Categorised as: interesting

Posted by: Phaedrus



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