There are conflicting stories among Bitcoins’ supporters about why a Japanese programmer or team of Japanese programmers, who are known by a pseudonym Satoshi Nakamoto, developed the original idea for the Bitcoins software.
The primary justification for Bitcoins among libertarians is the prediction that Bitcoins will become an alternative currency to all existing central bank currencies. Bitcoins are seen as a first-stage revolt against central bank money.
In this essay, I’m going to make a series of arguments. I’m going to tell you in advance what my arguments are. You can then judge whether or not I have been successful in presenting my case. Here are my arguments.
First, the primary benefit that libertarian promoters of Bitcoins offer in justification of their theory that Bitcoins will become an alternative currency is this one: Bitcoins offer privacy. Paper money today offers a much greater degree of privacy than Bitcoins do, plus a whole series of other major advantages that Bitcoins do not offer. Second, money is the most marketable asset. Paper money is vastly more marketable than Bitcoins.
Third, gold-based and silver-based digital currencies are more likely to become future world digital currency than Bitcoins.
Fourth, most Americans do not want privacy in their exchanges. This is manifested by the fact that they do not use the form of currency in which privacy is easily available and totally legal: greenbacks.
I will compare the advantages of Bitcoins with the advantages of greenbacks. I will then compare the disadvantages of Bitcoins with the disadvantages of greenbacks. Then I will compare Bitcoins to digital currencies that are backed by either gold or silver.
Here, I discuss the price of buying privacy.
Greenbacks. There are three ways that anyone with a bank account in the United States can obtain greenbacks. First, he can walk into his bank, fill out a request for greenbacks, hand it to the teller, and the teller will hand over a specific quantity of paper money. Second, he can drive up to a booth in the bank’s parking lot, put a check into a tube, put the tube back into a reception box, and within a couple of minutes, the tube will come back with a specified amount of paper money in it. Third, an individual can walk over to an ATM machine, specify how many dollars he wants, run his bankcard through the machine, and will immediately receive his paper money.
All three approaches raise no eyebrows. All three approaches are quite conventional. The banks promote the use of ATMs, because they eliminate tellers’ labor time. ATMs are available in many locations. There is nothing controversial about them. They are easy to use, and most people who have a bank account know exactly how to use them. There is almost no learning curve involved.
As soon as an individual has paper money, he has total privacy. He also has total control over his money. He knows where the money is. He decides where the money will go. He decides how long he will keep the money. He can of course be robbed, but this is relatively rare.
(For the rest of my article, click the link.)