Tuesday, December 19, Economics Bitcoin Cryptocurrency The classic criticism against the gold standard is that it was too costly. Why are these guys wasting resources to suit up, dig into mountains, desperately seeking a finite resource, and slogging the results all the way to Treasury Department?
There is a reason that Bitcoin is being called Digital Gold. This is all just silly. We know how to make money: A paper standard will save a tremendous amount of resources that can go to other purposes. There is a plausibility to the claim. We do know how to make money substitutes that appear to work just as well as what we used to call money.
The costs of mining operations are huge and discovering new deposits has to be funded. It involves speculation and drains financial and time resources, all to find the thing we already know how to make more or less with paper and ink. Keynes Contra Gold J. He said that the gold standard is too inflexible for modern times.
It has to go. Gold belongs to the past, not to an age of scientific central planning, or so went the refrain. The old-fashioned gold standard, with its limits and discipline and self-managing logic, just has to be destroyed. And so it was, for many decades, until when all that was left of it was demolished. It was structured to operate the same way as the classical gold standard minus the sponsorship of government. It requires no centralized management. You have to expend resources to become the first owner of the initial resource.
There is a finite supply of the specie payment. Payments are finally settled when made. Bitcoin is the gold standard ported over to the digital age. In gold mining, as the price of the metal rises, the inspiration for finding and mining more deposits rises, along with the profits of the mining industry itself.