Why Bitcoin is the Future, Whether it Survives or Not
Writing in The Wall Street Journal, Bob Gelfond of MQS Management (and a donor to Reason Foundation, the nonprofit that publishes this website) talks up how Bitcoin ("an electronic version of gold") represents the future:
The attraction of the Bitcoin is not just the anonymity it provides to users (an anonymity that the U.S. government has alleged some users have employed for money laundering). Bitcoin is also secure against traditional forms of counterfeiting. More important, the Bitcoin is designed to be scarce and thus immune to inflation. There is a limit to the number of Bitcoins—21 million—that is determined by a transparent rule and not by the whim of a central banker….
It is likely that other digital alternatives to currency will emerge, each one competing in the market to satisfy the needs of users. The possibilities are limited only by the imagination. Here is one:
Cloud-computing companies could issue certificates convertible into an hour of premium computing. Prices for other services could be quoted in terms of these certificates. The analogy is to traditional gold-backed currency, which was redeemable into physical gold at the option of the owner….
It is impossible to predict what kinds of money a truly free market will create in an increasingly digitized world. But we can be confident in predicting that just as markets improve the quality of all products, they will do the same for money.
Mercatus Center scholar Jerry Brito talks about Bitcoin, including the recent speculative bubble that jacked up its price despite the steady, pre-determined increase in its supply mentioned above:
