Bitcoin is basically a money like any other money.
You can spend it on things, you can pay people, except instead of being in physical dollars,
where you can hold dollar bills, these coins exist on computers and you hold the coins
on your computer.
Because it acts very much like gold, you can apply many of the same rules, and so one of
the ideas is that you don't need a complex new system of regulations or a complex new
law to be able to govern Bitcoin.
You can go with the same old property rules and the same old procedure rules, uh, that
govern other forms of property.
So the benefits of competing currencies are the benefits of any kind of competition.
You have more suppliers and so you have lower prices, essentially, so for money, that means
lower transaction costs, for instance, and you have higher quality.
Now, whatever those qualities for money are, are something to be determined by the market.
Maybe, privacy is a quality of money that we want, or maybe, neutrality between creditors
and debtors is a quality we want.
It's essentially allowing the market to satisfy consumer demand.
The Legal Tender Act and legal tender laws generally around the world act as a kind of
monopoly advantage to central bank currency.
The downside of competition is, from the government's perspective, they're no longer able to able
to effect monetary policy in the way that they would like to.
Now, many would say that the legal tender laws are necessary, and allow the government
to conduct monetary policy.
So, in a sense, having a monopoly power is good for the government.
Now, whether you think this is a good thing or a bad thing is gonna depend on your view
of government.
Some would have the view that because the government is all of us, we want to confer
a sort of monopoly privilege on the government.
And some have the view that the federal government, at least, is an entity separate from us, and
is beholden to all sorts of special interests, and it’s subject to all sorts of political
pressures that don’t necessarily narrow down to the good of all of society, and so
giving them this monopoly is really not great for society writ large.
Many think that the real benefit of Bitcoin is going to be in settlement across borders,
and going to be in places in the developing world where they don’t have the kind of
monetary stability that we have in the U.S.
No one has any doubts that something that cost a dollar yesterday is going to cost a
dollar today.
But this is not true in developing countries like Zimbabwe or in, in places like, Argentina,
for instance, where they have major currency problems.
So these countries are using Bitcoin as a store value and they know that it’s gonna
fluctuate less, the price of Bitcoin is gonna fluctuate less, and perhaps it might even
appreciate more than their own currency.
So, in the developed world, many think that Bitcoin plays a tangential role, which is
one reason why some people say if you were to repeal legal tender laws with respect to
digital currencies, it wouldn’t be that big of a deal.
But it’s really in the developing world, and in places that don’t have stable political
regimes and stable monetary situations that something like Bitcoin, which isn’t susceptible
to political pressures is gonna be able to thrive.