The Bitcoin Flaw
To understand the prospects for bitcoin and the other cryptocurrencies and tokens, it is necessary to grasp the ce3ntrality of gold.
Gold resolved both the horizontal and vertical enigmas of money. As a universal index of value, it muted the volatile shifts and shuffles of exchange rates. As an unchanging standard, it made interest rates a reliable guide for entrepreneurs making commitments in the darkness of time. fs
The gold standard thus provided maps and metrics that enabled entrepreneurs to act confidently across time and space. they were assured that in an ever-changing and insecure world the monetary measuring sticks would not change when they brought their products in for a landing in the marketplace.
As King Midas discovered, gold (and all candidates to be real money) is not wealth itself but a metric of wealth. While some gold advocated==including me in years past–have insisted that its slow but steady 2 percent rate of growth assure3s an expanding supply of money. But under a gold standard, the money supply has virtually nothing to do with the gold supply. In 1775, the total mount of currency in circulat5ion(primarily gold and silver coins) was an estimated $12 million. In 1900, it was $1,954 million –an increase of 163X. During this time, the amount of gold in the world increased by about 3.4 times, due to mining production.
Since gold does not deteriorate, all the 189,000 tones of gold mined over the centuries remains available for use as money. Maintaining neutrality in time and space, gold is neither inflationary nor deflationary. It penalized neither creditors nor debtors. It is a measuring stick and unit of account for the world’s goods and services.
Satoshi, the “founder” of Bitcoin believed that his mining algorithm was mimicking gold. Bitcoin did laboriously cancel out the advance of technology through its ten-minute mining cycles and lottery process.