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Sunday, June 12, 2011

Bitc oins: Why freedom can begin with a currency

Money has come a long way, now currency is not even paper anymore: going digital has turned into numbers.
With the finance collapse of 2008 the competence of central banks that are supposed to manage national currencies has been called into question.
The intrinsic value of a currency depends more on the willingness of pretending that it is worth something, on the official relation with other currency, on the reliability of the bank that issues it.
The financial meltdown has shown how fragile can be a number written on a computer, especially how fragile and worthless ( and criminal) are the banks behind.
Private currencies are coming into the scene, because, while having no more reliability than the official ones, at least they offer new and valuable advantages, first of them being the NON Traceability of transactions.
Though bitcoins are magicked out of nothing (but so is the official currency) as long as many people are happy to accept them as payment for goods and services, they are worth the same.
Instead of pretending that the dollar is worth something, you can pretend that bitcoins are worth the same.
The private currency is protected by inflation by using computational complexity to keep it artificially scarce.
You can evade taxes, you can buy drugs, you can do illegal transactions, because it is digital money, it is numbers and the owner is xy or ab.
Private digital money goes back to what money was created for: it is anything two parties can agree on as a medium for the exchange of goods and services.
Money is nothing else than a promise to give something in exchange of its nominal value.

Private digital money is the proof that we can live without banks and probably much better.
That is why it has so many and so powerful enemies.
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