What anchor's a currency? I know that is an denotatively unclear question with a connotative suggestiveness. What makes a currency valuable is the ability to buy and save, and the ability to save is the confidence in the future ability to buy, which depends on others' expectations of their future ability to buy. So what is the source of confidence. Convertabilty to a useful or valued commodity such as gold was common. Now confidence is based either or the need to get fiat money to pay taxes or wishful thinking that the next seller will accept the money. Bitcoin is not collecting taxes any time soon, and they don't have a track record of wide acceptance, so convertibility might be their answer. Maybe become the technical basis for a gold, basket of commodity, or basket or currency system. I think the developers are long on technology and short on economics.
Tuesday, April 19, 2011
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