Bitcoins considered as virtual gold

posted by
June 19, 2011
by David Friedman  
Posted in Commentary

"Bitcoins, as I understand them, are, like gold, mined — not with pick and shovel but with computer power. Each consists of a piece of information which requires a considerable input of computing power to generate. In equilibrium the value of one bitcoin tends to the cost of producing it, just as the value of an ounce of gold tends to its production cost. Thus, like a commodity currency, bitcoins consume real resources in their production. And their value has both the advantage and disadvantage of a commodity money — not subject to deliberate manipulation, but vulnerable to changes from external causes ..." (06/18/11)  


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