From Port Phillip Insider (Australia)-
It’s official, Bitcoin isn’t money.
It’s true, a Florida judge says so.
But just as importantly, the judge said something else: Gold is money.
Actually, it’s not quite that clear cut.
Here’s the report from Bloomberg:
‘Miami-Dade Circuit Judge Teresa Mary Pooler cleared Michell Espinoza in what prosecutors called the first state money-laundering prosecution involving the virtual currency.
‘“Bitcoin may have some attributes in common with what we commonly refer to as money, but differ in many important aspects,” Pooler said in a ruling made public Monday. “They are certainly not tangible wealth and cannot be hidden under a mattress like cash and gold bars.”’
We don’t quite know what to make of the judge’s ruling.
Of course, we wholeheartedly agree with the judge on the issue of gold. Gold is money. And it most certainly is tangible.
We suppose the judge is also right on the question of cash being tangible. And, like gold, you can hide cash under a mattress.
Naturally, we would also say that the similarity between cash and gold ends right about there.
While it’s true that you can’t hide a Bitcoin under your mattress (unless that’s where you keep your computer, tablet, or smart phone), Bitcoin has other attributes that make it more ‘money-like’ than cash.
For instance, like gold, Bitcoins aren’t easily replicable. You have to ‘mine’ for them, and they are in limited supply.
But if Bitcoins aren’t money (in Florida, at least), what would that mean for central bank plans to abolish cash and replace it with purely electronic money?
That’s easy; we’re sure governments would ensure their electronic money was classified as money. Not only that, they would have to go one step further.
In Florida, according to Judge Pooler, Bitcoin is classified as ‘property’ rather than money. Hence, Mr Espinoza couldn’t be guilty of money-laundering since he wasn’t laundering money.
But in order for any government-controlled electronic money to be successful, the government must do to competing electronic money what it did to competing paper and gold money — make government electronic money the only form of legal tender.
That wouldn’t necessarily mean that it would be illegal to possess Bitcoins; it’s just that it would be almost impossible to use Bitcoins as money.
They would become (or remain) an asset or property, valued in dollars, euros, and pounds, rather than being a medium of exchange on their own merit.
The topic of the definition of money is something to watch closely in the months ahead. Not so long ago, the mainstream would have considered the idea of abolishing cash as the domain of the lunatic fringe.
But today, it’s a completely mainstream idea, with central banks seriously looking at viable alternatives to paper money. Not as most would have you believe, in order to put a stop to money laundering, but, rather, in order for the government and central bank to have complete control over the value of money.
And when that happens, it won’t be good news for savers. That’s why we continue to advocate for the ownership of what we believe to be the one and only true money — gold.
Now over to the markets…