As Bitcoin Shoots Past $40,000, It Unequivocally Reminds Us That It’s Not Money

As Bitcoin Shoots Past $40,000, It Unequivocally Reminds Us That It’s Not Money

Imagine selling a house, car, or your skills as a carpenter to someone offering Bitcoin as payment. The obvious question posed to the buyer would be “Which Bitcoin? The one that fetched $15,000 toward the end of 2017, the one that sold for a little above $3,000 one year later, or the one that exchanges for roughly $40,000 at present?”

Please think about the volatility of the speculation that is Bitcoin. Some naively describe the latter as “money.” They clearly misunderstand what money is.

Money is a low-entropy measure that facilitates the exchange of real things. That's it. Money is an agreement about value, meaning an agreed upon measure of value that makes it possible for goods and services with actual market value to be exchanged. Per Adam Smith, the sole use of money is to circulate consumable goods.

Money that bounces around in a value sense is no longer money precisely because its value is changing all the time. Think about it.

No one actual exchanges money, pays in money, lends, or borrows money. In each instance actual market goods are being exchanged. You sell your labor for dollars precisely because the dollars can be exchanged for other market