Bernstein report examining whether Bitcoin is money by looking at the history of money.
On the “myth of barter”
The notion of barter evolving to money was a convenient
assumption for thinkers and economists. People did not really try
to exchange chickens for wheat because there were no matching
engines back then to solve the double coincidence of needs.
Instead, people starting storing goods of common use (e.g. salt)
which everyone else finds useful and hence, commodities such
as salt, sugar became convenient alternates to currency. History
is filled with cases of salt, dried cod, sugar, hides, even nails
being used as currency. Thus, currency in simple terms is
something the society believes in to be acceptable universally.
Currency evolved to metals for long distance trading as metals
are durable, portable and divisible.
On what gives Bitcoin value:
Some of Bitcoin’s value does indeed come from its usefulness for
payments or monetary transfer.
Bitcoin is valuable in this regard only for “censorship resistance.
In fact, Bitcoin could be seen as virtual ‘bearer cash’ economy
supported by a decentralized ‘trustless’ network – a new crypto
economy with its own protocol or policy. The faith of its citizens–
software developers, miners, investors, early individual and
sovereign state adopters would drive the value of that network
…for now Bitcoin has only emerged as a ‘censorship resistant’ asset class.
We will delve deeper into Bitcoin and its cryptographic cousins in
the coming editions.