Thursday, December 25, 2014

What is a good currency?

A good currency? None has been invented yet. Currencies become accepted when they are tied to something tangible. Then they are corrupted and inflated out of existence, to be replaced by a new currency with finite amount.

The finite tangible currency becomes adopted rapidly, but then becomes a constraint on economic growth. The 'cross of gold' is an example. Then, the currency becomes inflated and the cycle repeats. 

Fractional reserve has the potential to solve many of these issues, but would require rock solid central banking accounting to something tangible. And probably finite, or at least easily quantifiable. 

Bitcoin is finite, so pricing things in Bitcoin, creates a 'cross of Bitcoin'. Also, due to its electronic nature, and for the above reasons, Bitcoin requires alternative currencies.