Alternative Currencies: Bitcoin – is it just a fad?

Posted: June 28, 2013 in Monetary System, Paper money
Tags: , , ,

In an effort to present alternatives to the fiat paper money system currently in operation, it is interesting to note the attention the virtual currency of Bitcoin is gaining

Here is a link to the official site;

http://bitcoin.org/en/about

Also note a number a articles recently published giving a view on the merits or otherwise of this currency;

Note this passage of the above article;

“THERE is much to like about what Bitcoin stands for: free-market money, safe from the grabbing hands of a state that cannot wait to debase, devalue and decimate whatever currency it gets its hands on..

… But it is encouraging that governments no longer monopolise money. If the reach and influence of currencies such as Bitcoin continue to grow, the internet may yet eventually achieve what F.A. Hayek, the Nobel prize winning economist, called for many decades ago: competing currencies that finally force monetary authorities to get their act together.”

The rise of Bitcoin comes at a time when a major world currency is believed to be on its last legs; the Euro. The troubles of Cyprus (and those of Greece/Spain to name a few) are rightly pushing populations to understand the major fallacy behind fiat money, thus driving this spotlight on such digital currencies.

As mentioned in the article, the value of Bitcoin has risen sharply, so much so that it is already being dismissed as a bubble. It is important to note that the market mechanisms that are driving this appreciation in value are still one of the components of the global ribanomic system, therefore exposing a key misunderstanding that if one false system is to be replaced, it will not necessarily mean the end of the troubles associated with ‘The Market’

I would also add that digital currencies still allow users to determine the changing value of this currency, albeit with some controls, since it has no intrinsic value – this is a key reason why some observers prefer commodity based currency

The important point behind this is that when we bring forward alternatives, the mechanisms must be holistically free from the workings of the current system; otherwise we are simply dealing with the same problem in a different guise

Those wanting to learn more about paper money system and the thoughts of the renowned economist, Fredick Hayek, can view this site mentioned in earlier blog posts;

http://detlevschlichter.com/

Readers can also Google about the history of other such alternative currencies that have been attempted throughout history for more context on this issue

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Comments
  1. Muslims really need to look at how bitcoin can help us avoid the usage of government fiat currencies and bank controlled payment systems. Gold and Silver are the best, but consider the situations where money has to be sent over long distances. Gold and silver do not work well in this scenario – you would have to trust a CORRUPTIBLE third party to move the money for you. But if you use bitcoin, NO TRUST IS REQUIRED. Money is sent directly from sender to receiver, no middleman at all! Please read what I wrote in this link:

    http://www.reddit.com/r/islam/comments/1tjgsp/bitcoin_fiat_and_islam/

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