Please don’t change Bitcoin, you’ll break it!
The entire digital currency industry is in an uproar over the civil war in Bitcoin. They are apparently going to break it into competing chains: “BTC” and “BCC”. No matter who wins, this will end badly… and it is soooo unnecessary.
Bitcoin has a lock on its monetary role as a store of value for the same reason that physical gold is seen that way…by global consensus. But neither Bitcoin nor gold fill the other role of money as a medium of exchange. Both are just too hard to move around.
As Dominic Frisby, an astute UK commentator, put it: “Broadly speaking, money has two main uses. One is as a medium of exchange. The other is as a store of wealth. You might find other characteristics in an economics textbook, but these are the crucial ones. Our modern fiat system of money is a quite brilliant medium of exchange”.
Thanks to the Internet, you can buy almost anything anywhere in the world and pay the seller instantly. Short of a single global currency that eliminates the need for foreign exchange, it's hard to see how you can improve on modern money as a medium of exchange. But it's a rotten store of wealth. Every year it buys you less and less.
Gold has, of course, proved to be a wonderful store of wealth. It lasts pretty much forever. And it buys you as much as it ever did – as much energy, clothing, bread and meat as it did 50, 500 or even 5,000 years ago. It's why, in this era of negative real in...