Let’s examine if Bitcoin meets the criteria of a currency through the lens of classical monetary theory. We’ll start by applying Aristotle’s principles of economic theory to evaluate Bitcoin’s fundamental characteristics as a financial instrument.
Aristotle’s Framework For Monetary Analysis
In the legendary work “Politics,” Aristotle delineated four essential properties that define adequate money. This framework provides a systematic basis for evaluating any monetary system, including modern digital currencies.
So – let’s evaluate what Aristotle looked for in an ideal currency. Then, we’ll find out for sure if Bitcoin meets this criteria.
1. Durability
Currencies must be durable. That’s why turnips and apples cannot be a currency. But what about Bitcoin?
Bitcoin’s durability manifests through its immutable ledger. Bitcoin’s distributed ledger ensures that the monetary data persists across a global network of nodes.
I propose that Bitcoin’s durability transcends the physical vulnerabilities that plague traditional financial instruments. This architectural resilience has endured over a decade of continuous operation despite numerous technical and regulatory challenges.
Therefore, I propose that Bitcoin is very durable.
2. Portability
Currencies must be portable. That’s why heavy machinery or real estate cannot be a currency. But what about Bitcoin?
Bitcoin achieves unprecedented portability. Cryptographic keys representing diverse values can transmit across the globe at speeds never thought possible.
Therefore, I propose that Bitcoin is very portable.
3. Divisibility
Currencies must be divisible. That’s why artwork and antique furniture cannot be currencies. But what about Bitcoin?
Bitcoin’s divisibility into 100 million satoshis per unit provides granular precision that exceeds practical requirements for modern economic activity.
In other words, Bitcoin features superb divisibility combined with negligible transaction costs. The result is the potential for micro-economic activity that the world has never seen.
4. Intrinsic Value
Currencies must have intrinsic value. That’s why seashells or comic books cannot be a currency. But what about Bitcoin?
Here, we arrive at the crux of Bitcoin’s criticism. Critics argue that Bitcoin lacks intrinsic value. But their perspective fails to recognize Bitcoin’s revolutionary capability!
Here’s what I mean. The real intrinsic value of Bitcoin is the power to transfer value anywhere on Earth without intermediaries. (Even if you don’t have a bank account!)
In other words, Bitcoin has real-world intrinsic value because it allows anyone on Earth with an internet connection to transfer money to anywhere in the world. I propose that this represents tremendous inherent value.
Conclusion
Bitcoin doesn’t simply satisfy Aristotle’s requirements for sound money. It dramatically exceeds them! While Aristotle sought to define the fundamental properties of adequate currency for the ancient world, Bitcoin established an entirely new paradigm of monetary excellence.
Bitcoin’s ability to enable unrestricted value transfer represents an evolution of money. It also means a revolution in human economic capability.
Based on these ideas, I posit that Aristotle would concur with my view that Bitcoin has remarkable attributes that make it a sound currency.
