To discuss a very controversial topic: bitcoin, or digital encryption currency, it is money? The answer to this question, think for a lot of money to invest in the circle of people, may have very strong practical effect. So how to answer this question? In fact, to analyze from two aspects.
First, digital encryption currency is like these coins ring have claimed, it can well solve the problem of the currency? Secondly, digital currency can complete the function of money?
To answer the first question.
A bitcoin really “credit subject”?
You may not know is that for a lot of technology geeks, bitcoin represents not a currency, but a special longing for their fair and transparent, the pursuit of individual freedom, there is no inflation of the credit system. In this system, is not a subject of credit, everyone is equal equal credit node, checks and balances, so that inflation does not occur. And these are the central subject of credit problems, they criticized the current system of inequality, and inflation. They believe that these problems can be solved by modern technology.
This sounds like a very good publicity. Is it really so? A analysis.
First, bitcoin is not true to the subject of credit?
Recently, there are a lot of human archaeology found that during the formation of human society in a strong currency, the main power is always go hand in hand, regardless of the subject of power is a sovereign state, or a chief or a region of the family. Moreover, the more widely used is large, the need for a strong credit subject. Why? We say that money is a kind of value consensus, but consensus on the cooperation between people is actually to be far greater than the technology geeks imagine. The main credit, this is actually the multilateral consensus into a collaborative coordination point across, this process will be greatly simplified and standardized. The bitcoin is what? The credit mechanism of bitcoin is how to produce? Depend on the distributed accounting. All nodes have formed a consensus of complete synchronization transparently.
This design, but in reality there are many limitations, such as bitcoin now probably tens of thousands of nodes, has begun to produce the internal differentiation. You can imagine, when the number of nodes up to a certain extent, this differentiation is almost inevitable. In addition, you will hear later in the course, after the node reaches a certain number of collaboration, in the technology itself is faced with many restrictions. Whether it is from the history of human society, or from the technical constraints now bitcoin to achieve to the subject of credit, to a large extent, it seems, is not an accomplished fact.
Two, bitcoin really achieve “go to the center, equal”?
Again, it is not true to the center, equal?
This problem is particularly interesting, I feel a lot of people first is that each node of bitcoins are “equal rights”, but if you think you know, this is not realistic. For you to change the scene, for example, is now a source of the same size, a miner with a hoe, shovel, another open excavator to mine. These two individuals are the same? In fact, the same thing happened in bitcoin mining. In bitcoin mining, stress is the deciding factor. So, those who have great energy consumption, large server “miners”, began to dominate more and more.
A few years ago, because China IT staff wages cheap, like Inner Mongolia Erdos, Sichuan Panzhihua hydropower, coal, these sufficient place, around the “bitcoin mine”. There is a bit, enterprises have occupied half of the global work force. What’s more, bitcoin core of the rules of the game is held in a number of core geek hand game player.
In other words, the bitcoin world is not really no node center node and monopoly, it is just a technology center and the center of the computing power of monopoly, to replace the original sovereign center and monopoly. Deep thought, until today in education under the 99% people are not clear bitcoin principle or mechanism, let alone to their own mining.
Again, there are billions of people around the world about computer, may even have not seen, how can they be as an equal node, to participate in such a game to have the technical threshold? So, the bitcoin world did not go to the center, not eliminate inequality, it is just a technology center to replace the National Center to replace the national machine technology geeks collective credit credit entity with stress inequality replaced inequality. So, bitcoin is not able to really achieve to the center of peace.
Three, bitcoin really can solve the problem of inflation?
Then, bitcoin is not really able to solve the problem of inflation? This is the most interesting place.
We are against the modern credit currency system, support bitcoin who they believe that this kind of system relies on an unreliable sovereign government, its power is not controlled, so naturally with inflation impulse. So, bitcoin makers of imitation gold standard system, the provisions of the bitcoin limit is 21 million. It’s like the world’s gold reserves are limited, they think the total control of inflation will not happen.
This is actually a technology geeks on “modern credit economy” misunderstandings.
Recall will understand, in a sense, bitcoin design principles, and gold and silver as currency is quite similar, but bitcoin generation and mining, is to rely on modern information technology, so the bitcoin system is often referred to as “the gold standard technique”.
But they forgot the gold standard, there is a long time in history, and finally fell apart.
How is it collapse? The direct reason is the collapse of the gold standard, the gold currency growth rate was far greater than the speed of economic growth, will not stop occurrence of monetary tightening, resulting in the price of gold soared, resulting in economic fluctuations. In other words, it is the gold mining was not enough to support economic growth.
In 2000 the agricultural society, the human economic growth is very slow. Less than 2000, a total increase of 3 times. So, the money supply is very slow, because the flow of money is not much.
However, from the industrial revolution to the beginning of the 20 century 200 years, the whole world economic growth 10 times, especially during the second half of the 19 century after the first industrial revolution, economic growth is faster. Gold mining did not keep up with the pace of economic growth, it began to deflation, depression, economic fluctuation. We all know when the money supply exceeds the rate of economic growth, will be prone to inflation, on the other hand, is prone to deflation and economic recession.
Whether it is “gold” bitcoin, or physical world real gold reserves are limited. So, the supply depends on the ability and willingness of mining, in other words, it is a relatively stable natural growth process.
We all know when the money supply is greater than the rate of economic growth, prone to inflation, on the other hand, is prone to deflation. So, money supply and economic growth must be dynamic adaptation. Whether it is gold or gold standard technology, stable monetary system relies on the entire economy in a relatively stable state of equilibrium.
If economic growth have undergone major structural changes, the currency will naturally have no stability. The industrial revolution period, the collapse of the gold standard, after the change of information technology, the collapse of the Bretton Woods system, and even the collapse of the late Qing Dynasty China silver standard, are actually caused by the fundamental contradiction between economic growth and monetary system.
Well, here, and then go back to see bitcoin. The storage capacity of 2100 million, 1500 million gold has been dug up now. So, if it’s as legal tender, we will inevitably face two problems.
The first question, we all know that the intelligent technology revolution led to economic growth accelerated, bitcoin supply shortage, then may be deflation. This time, bitcoin is facing the choice of expansion. And as long as an expansion, will be faced with the increase of money supply, inflation pressure.
The other way is not expansion, unless the global economy is no longer growth, otherwise, will inevitably face the dilemma of the gold standard.
That is to say, in fact, bitcoin does not solve the problem of inflation, because inflation is never a monetary problem, but a dynamic monetary and economic growth problem.
And what is called dynamic? Dynamic means that you can not design a balanced position. So, when the founder of bitcoin are in the default currency rules, in fact already did what, contrary to the rule of dynamic evolution of human society.
Or that sentence, the human society is a process of evolution, any idea when God, I think that is a kind of utopia.
So you see, in fact, the current bitcoin monetary system, also faces numerous difficulties and challenges. Then we step back, do not say it than the current monetary system is superior, so it can be considered a new currency? This problem is another day to discuss.