More Dirt on the Bitcoin

Thursday, 12 November 2015

Hugo Salinas Price

Suppose someone wished to sell his house, way back in the 1890's when gold was used as money, and somebody came to that person and said, "I'll give you "x" ounces of gold for your house", and suppose the offer was accepted. This was a commercial operation, where goods traded hands - the owner of a house sold a house, and received gold; the other party delivered some gold and purchased a house.

When, in bygone days, a house was sold for gold coins, all that the seller had to regard was the quantity of gold in the coins offered and whether that quantity was satisfactory or not. Gold was recognized as money!

Now suppose you wish to sell your house today, and someone offers to pay for it in "x" number of Bitcoins. The quantity of Bitcoins - unlike a quantity of gold in yesteryear - would mean absolutely nothing to you. You would have to relate the Bitcoins to something else, namely the dollar. You would want to know for how many dollars you could exchange your Bitcoins. The answer would determine whether or not you sold your house.

It is quite clear that the Bitcoin can only aspire to be a derivative of the dollar. It cannot aspire to anything greater: to have an independent, sovereign value, since, unlike gold, it is not something - something that has a physical existence.

The dollar is presently rising in its exchange value against all other currencies. But no one can deny that the dollar is itself a fiat currency, and that in all history, absolutely all fiat currencies have ended in the total collapse of their value in exchange.

What future awaits the Bitcoin when the fiat dollar finally crashes? Without a dollar to refer to, what is a Bitcoin? It is "the shadow of a dream".

What I am getting at is that the Bitcoin is a non-thing. It will never be able to have an independent, sovereign value on its own, because it is a non-thing, just like all currencies in the world today are non-things, including the (temporarily) Almighty Dollar, which became an absolute non-thing precisely on Sunday, August 15, 1971.

The creators and promoters of the Bitcoin are perhaps acting in good faith, but they are individuals enthralled with technology. The Bitcoin may indeed be a technological marvel, but the creators and promoters of the Bitcoin do not understand money, and they do not understand that the creation of money cannot be accomplished by technology, no matter how sophisticated it may be. The ignorant public of today is also bewitched by the marvels of technology and has been thoroughly deceived by false economists about what money is and must be, and this opens the way for such fantasies as the Bitcoin.

I stand by my opinion that the Bitcoin is, in fact if not in intention, a fraud; it is an attempt to muscle-in on the enormous scam of universal fiat money, which is a curse upon mankind. And as a scam, it will go to the dust-bin of History, along with the world's present fiat money system.