We’ve no way of knowing what kind of impact Bitcoin could have on the world if it is globally used although many believe that it could help third-world nations, help the economy and so much more.
New Tech, New Thoughts
An interesting concept was brought up by Bitcoinist in one of their recent articles. In today’s world, most critics will attempt to define Bitcoin using analogies. They compare it to things that they already know such as stocks, commodities and PayPal services.
“Just like the automobile was first described as a horseless carriage, Bitcoin today is presented largely as digital pseudo-money that’s not backed by any government.”
In a similar sense, the act of mining has been slated quite a lot in the media. Headlines such that take digs at how much energy that Bitcoin uses are quite common and are used time and time again.
These kind of findings get proved wrong time and time again. But other worries related to the banking system are deliberately ignored.
But Bitcoin isn’t like the fiat money that keeps the economy going today. It possesses the properties of sound money. Unlike the dollar, it is deflationary, non-double-spendable and un-counterfeitable. This makes it a completely different animal and requires some new thinking in order to understand its potential. This makes it a whole different animal and required fresh thinking in order to get its potential.
As reported by Bitcoinist:
“Dollar hegemony, Keynesian thinking and inflation have now shaped economic policy for generations. Permanent Quantitative Easing (QE) and even negative interest rates are becoming the new normal. So it’s not surprising that something like Bitcoin is incomprehensible to most people today.”
Inflationary monetary policies force companies into high-time preference thinking. This essentially means that chasing quick quarterly profits, borrowing cheap money and you will do whatever it takes to grow at all costs.
The inflationary money phenomenon results in what is known as the Cantillon effect, where those closest to the money printers set the tone of economic activity.
So perhaps, it would be wise not to focus on whether Bitcoin ‘wastes’ more or less electricity than today’s financial system. Instead, maybe we should be asking whether sound money would change how our time is valued.