The below excerpt is from my new 2016 research primer, "Bitcoin, Ethereum, And Modern Gold Systems." (If you wish to instantly download & read the whole primer, I've temporarily reactivated the discount pricing I tweeted back in June for the benefit of my readers. Go to the tweet right here and follow either of those links for the discount!)
If modern fiat currency is simply a notionally rare token issued by central banks, and then utilized by citizens to convey and store value over time, it follows logically that the introduction of even a marginally better rare token system might be adopted by a large number of citizens, consumers, and so forth.
The maximum number of Bitcoin that will ever exist is 21 million coins, whereas the maximum number of dollars or euros or pesos that will exist in any given economy is unknown--and over enough time, effectively "unlimited."
￼As Satoshi Nakamoto posted back in August 2010, his last year of communication with the public, currency can be looked at as follows:
"As a thought experiment, imagine there was a base metal as scarce as gold but with the following properties:
- boring grey in colour
- not a good conductor of electricity
- not particularly strong, but not ductile or easily malleable either
- not useful for any practical or ornamental purpose
and one special, magical property:
- can be transported over a communications channel
If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.
Maybe it could get an initial value circularly as you've suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it."
Many of Satoshi's public comments and explanations have a strange prescience to them. Six years after his post, Bitcoin has indeed "somehow" acquired a market value -- so it's being used as currency; a rare item that can be shuttled around the Internet as intermediate commodity money.
Digital gold, as much as that phrase perturbs the committed gold bugs, appears to describe the Bitcoin valuation phenomenon better than high flying academic theories.
There's a clear need for rare, easily transportable digital gold.
And someone invented it.
So it follows, sooner or later, someone will use it. Maybe a lot of someones, one day.
Hope you enjoyed the excerpt! Happy the new e-booklet has been so popular among my YouTube viewers. If you're code savvy and angling to earn some Bitcoin or another cryptocurrency, check out hack.ether.camp - their competition page opened up this morning, as I reported earlier. First prize is $50,000 of Bitcoin or Ether - that's about 75 Bitcoins at the current market exchange rate!