The US Federal Reserve is an august institution. It is respected the world over as the ultimate guardian of the global economy, if only because of its role as the custodian of the US dollar, the world’s de facto reserve currency. As a medium of exchange, the dollar is so completely liquid and viewed as a genuine store of value that it is the currency of choice among the political elites in North Korea, a country outside of the world economy.
There are many things available at Coin Mining Direct review that you need to know. The registering at the exchange is possible with the correct and real information. You can pay preference to the needs and requirements while dealing at the reputed and licensed platform.
Notwithstanding the views of the American right-wing, the Fed brings cachet to anything it does or opines on. To have worked there is to have a gold-plated name on one’s CV, a door-opener to further career progression. Its Chairman is often credited with saving the world’s economy single-handed. It is, unarguably, the world’s most influential and respected institution in the world of economics, finance and banking.
So what on earth it is doing going anywhere near Bitcoin? Irrespective that it announced only a review of the phenomenon, and let’s ignore whether this is some Machiavellian way of getting around to control and regulate Bitcoin or simply an academic assessment, it would be better for everyone if it simply came out and said what it was: an asset whose value is at the vagaries of supply and demand like any other asset. It is as far from being an alternative currency as gold or a brand-new Ferrari are.
Apparently, one of the real advantages of Bitcoin is that its value can’t be manipulated in the way a fiat currency’s value is by a central bank. It can’t be devalued by persistent “cheap money” policies like quantitative easing.
No – rather, Bitcoin proponents would prefer to cede control to “the market”. If its value is going to yo-yo with the kind of volatility often associated with a tech-stock circa 1999, give me central bank control any day.
There are so many reasons why Bitcoin isn’t a currency, it’s difficult to know where to start. If I dig some oil out of the ground, or (more realistically) design a module for use in a university MSc course on Finance, someone will pay me dollars for it. I’ve generated value. The only way to generate more Bitcoins is to solve arcane complex mathematical algorithms. Ah, but that is how it maintains its value you see, there is only a finite amount of it. Do what? That’s the same as gold or palladium, and no-one is saying they should be currencies.
What about the fact that more and more people are accepting payment in it? Yes, in the way they would accept a Krugerrand or a Van Gogh painting – they can’t do anything with it until they exchange it into real money. The reason people accept it is for its speculative properties, they are taking a punt on it rising in value. Just see how its value fares the next time there is a global crash like in 2008-2009. If it is a genuine store of value, its exchange rate to the dollar should act like the gold price.
But that’s the whole point. Gold has not been a store of value over time. Its value in real terms has dropped considerably over the past 100 years. It’s simply the “flight to quality” characteristics of gold that saw its price rise after the 2008 crash. A long-term investor would have been better off holding a US dollar bank account. This goes back to my first point – when one generates real value, then overall economic output is increased and one is rewarded with fiat money. We aren’t limited to the amount left un-mined in the ground, which is why currencies came off the gold standard a long time ago – if they hadn’t, the size of the economy would be much smaller than it is today.
Virtual currencies have all kinds of sought-after qualities, beginning with the anonymity that they afford their users. But a future “currency”? Pull the other one. We should treat them in the same way we do other commodities. It’s time for a central bank to just come out and say that. Central banks are vilified for inflating away the value of the money they print. But when one of them says something that implies a virtual currency might be a real currency, people stand back and think, “Well, it must be – the Fed has spoken!”