Currency Competition

Competition is typically thought of as what business do to be better than each other.   If a BK whopper is cheaper and tastes better than a Big Mac, then the whopper will be more successful.   Competition is good for consumers.    When there is no competition its called a monopoly, which is bad for consumers.   So bad in fact that the US made monopolies illegal.   What doesn't make sense is their monopoly on money, which is bad for the consumer.

What people dont typically think of is what competes for the value(storage) of your work.    We store work in dollars, stocks, bonds, mutual funds, gold, and silver.   You can also store your work in houses, cars, and other tangible goods.   You can consume your work with food and drinks!

So how do you decide where to store you work(dollars).   Of course, we diversify.   We build up a savings account of dollars, and once we feel comfortable enough, we buy some stocks.    These things are competing for your storage of work, and when you have excess work to store, you put it in a safe place that might give you a return(or really just keep up with inflation).

So as Americans, why dont we store our work in Euros or Yen.   Whats wrong with storing work in the Peso?

I think the answer is that they dont compete for American storage because we can't use them.   They offer us no benefit.

Here are some benefits of Bitcoin, and how it competes on the world market for 'storage of work'

-Deflationary.   The supply is fixed at 21 million, of which 12 million are accessible today
-Transportable.   I can store the wealth of a nation in a 33 digit code.    I can email that code across the world in seconds.
-Low friction.  I can send a $1.00 donation to a disaster relief area.
-Government free (for now) - I can spend or send money wherever I want
-Its cloud based money
-Infinitely dividable.   (unlike gold or silver, which typically come in ounces)
-Un-printable
-Un-forge-able
-de-centralized (both a good and bad thing)
-Irreversible transactions (both a good and bad thing)
-Designed for the internet age
-Pseudonymous
-You can keep infinite value in a 33 digit code.

How about some downsides
-Irreversible transactions (both a good and bad thing)
-The market cap is small enough right now that its easy to manipulate
-de-centralized (both a good and bad thing)

If your curious, think about the other ways you store your money and compare!   All methods of storage of value/work that you participate in compete for your extra dollars.

 What makes you decide to put leave money in the bank?
 What makes you decide to buy stocks
 What makes you decide to buy gold/silver

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