Bitcoin is the world’s fastest growing currency. It holds several key advantages over traditional currencies that libertarians find attractive. These advantages are bitcoin’s keys to success, both as a currency and as an investment.
21 Million Bitcoins
Bitcoin is capped. There will never be more than 21 million BTC in existence. As of today, there is about 1.5 Trillion US dollars in circulation, and that number is growing. This makes BTC attractive to libertarians, who advocate for the United States to return to the gold standard (more on that later).
US Federal Reserve
The US Federal Reserve can create more dollars at any time. And the Fed does this all the time.
Each new dollar dilutes the value of dollars that are already in circulation. In an extreme case, the Fed can mint a trillion dollar coin tomorrow. This one coin would add an additional $1T to our money supply out of thin air.
This is possible because the US Dollar is a fiat currency.
Fiat Currency
Fiat currency is money that is intrinsically valueless. This money is established by government decree, meaning the government tells you that you must use it. Most of the currencies in the world are fiat.
USD is Fiat
Before 1971, the US dollar was on the gold standard. This meant each dollar was backed by a certain amount of gold held by the US government. Every dollar printed could be exchanged for gold, and its value was tied to the price of gold.
On August 15, 1971, US President Richard Nixon moved the US off of the gold standard. This is where it stands today. The dollar is not tied to gold, and the government is free to print as much of it as it wants.
In 1971, a US dollar was worth 1/35 an ounce of gold (1 ounce of gold cost $35). Now the 1 ounce of gold costs $1,235.
Is Bitcoin a Fiat Currency?
No. While it is not backed by gold or other assets, no government regulates this currency. Instead BTC’s users give this currency value. People choose to use bitcoin. They are forced to use USD.
It’s not surprising that people use BTC. Bitcoin is fast, easy and secure. It’s also relativity anonymous which appeals to anyone with a libertarian mindset.
Libertarianism
For those not familiar, “Libertarians seek to maximize autonomy and freedom of choice, emphasizing political freedom, voluntary association and the primacy of individual judgment.” – Wikipedia
BTC offers freedom that USD does not. With Bitcoin, it’s relatively easy to send any amount of money anonymously around the world within a matter seconds at a very small cost. It’s amazing that everyone isn’t using Bitcoin yet.
Additionally, Ron Paul, the Libertarian Party’s presidential candidate in 1988, call for the United States to return to the gold standard. Paul would prefer that we abandon fiat currencies altogether, and many of his followers feel the same way. With this mindset, libertarians often purchase physical gold, silver and other materials in favor of holding precious metals instead of the dollar. They also purchase Bitcoin.
Bitcoin has value
Bitcoin is valuable. As of this blog post, 1 BTC is worth:
987 USD
925 Euro
111,661 Yen
Currencies trade at relative value
Like all currencies, Bitcoin trades at relative value.
Relative value is a term used for fiat currencies, because they don’t have any tangible value.
Market analysts try to explain exchange rates using a number of different metrics, such as economic performance, political stability, interest yields, liquidity, and a host of other factors. The things analysts talk to impact demand, but that’s only one side of the equation.
In a free market, as demand for a country’s currency increases, so does its value. When a country prints more currency, it’s supply increases, and its value decreases.
Bitcoin is still being mined
This is true. But in less than a year, 80% of all BTC will be mined. It will also take about another 120 years to mine the remaining 20%. So while bitcoin is still being mined, the amount of new BTC hitting the market is a lot smaller than the current amount of BTC that exists today.
Conclusion
Not only is bitcoin the world’s fastest growing currency, it’s also an investment. Libertarians find bitcoin attractive for its ease of use and store of value.
They are not wrong. As more people begin to use BTC, expect its value to rise. After all, there are only 21 million of them.
Hi! Make sure you provide a link to material you borrow from others, from wherever. We want to this keep this place clean and innovative. :)
I did in the body of the post. I also wrote this, so I felt like it was okay to share. Thanks!
In the future, just put a link of your sources at the end of the of your blog posts. This will clear out any confusion. :)
Welcome aboard! :)
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