LOL! This is Wild Ridicule tryout: Bitcoin Combines Ph.D-Level Computer Science With Sub-Kindergarten-Level Monetary Understanding

Bitcoin Combines Ph.D-Level Computer Science With Sub-Kindergarten-Level Monetary Understanding

A “currency” is like “art”: it is anything that we use as “currency.” At times, cigarettes and small candies have served as currency. Tobacco was a currency in colonial Virginia. In Ancient Greece, iron pots and tripods once served as a sort of currency. Ancient Chinese used gardening tools as currency.

Some people use bitcoin as a means for transactions in goods and services, so it is, for them, a currency.

But is it a good currency?

The Bitcoin project is an odd combination of very advanced, Ph.D-level computer science, regarding encryption and record-keeping, and very primitive, sub-kindergarten-level monetary understanding.

What do we want from a currency? What are the characteristics of an ideal currency, and how do we manifest those in a practical, real-life system?

I think it is easy to see, today, that cigarettes, candies, iron pots and gardening tools are not ideal for use as currency.

Today, there are two basic ideals: one is a currency that is as stable, reliable, predictable, and inert as possible — a universal constant of commerce. The other ideal is a currency that you can actively manage to produce certain economic effects, or other government policy goals.

Bitcoin does not serve either of these functions. It is certainly not stable, reliable, predictable and inert. Nor is it a suitable platform for active economic management.

In practice, the first ideal, or the “Classical” ideal — of a stable and inert currency — was most often realized through a gold standard system. The second ideal, or “Mercantilist” ideal — of an actively-managed currency — is realized as today’s floating fiat currencies.

In both of these cases, the base money supply is adjusted, on a daily basis, to attain the policy goal. In the case of a gold standard system, the base money supply is adjusted via an automatic mechanism similar to a currency board, such that the currency’s value maintains its defined parity relationship with gold bullion.

In the case of the floating fiat currency, the base money supply is adjusted on a daily basis to achieve whatever economy-fiddling monetary distortion goals the currency managers have. - Read more here: http://www.forbes.com/sites/nathanlewis/2013/04/18/bitcoin-combines-ph-d-level-computer-science-with-sub-kindergarten-level-monetary-understanding/

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