x
--d : --h : --m : --s
Get tickets

Jim Rickards on Why Bitcoin Is a Legitimate Money

by

         Jim Rickards on Why Bitcoin Is a Legitimate Money

Jim Rickards, the New York Times best-selling author of Currency Wars and The Death of Money, recently discussed his latest book, The New Case for Gold, during a reinvent.money hangout. Although the majority of the conversation focused on Rickards’ new book, the economic commentator also shared some thoughts on Bitcoin.

Anything Can Be Money

In recent interviews, Rickards has mentioned Bitcoin as a legitimate form of money and said on the reinvent.money hangout that, in fact, anything can be money. 

He stated:

“At various times in history, feathers have been money, shells have been money, dollars and euros are money, Bitcoin is money, gold is money, and silver is money. There are many different kinds of money.”

Rickards also took issue with the idea that some forms of money, such as Bitcoin or U.S. dollars, are not backed by anything.

“But that’s not true,” he said. “They are backed by one thing, which is confidence. If you and I have confidence that something is money and we agree that it’s money, then it can be money.”

Although Rickards believes anything can be money, he went on to describe how some forms of money are better than others (in the eyes of the market.)

The Viability of a Money is Determined by the Market

Rickards explained that the viability of any form of money is determined by the people who use it (or don’t use it). He stated, “The question is: Will anyone have confidence in it? Same thing with Bitcoin; same thing with gold.”

Rickards then added, “I can call something money, but if nobody else in the world wants it, then it’s not very useful as money.”

As Rickards explained, people can decide to use anything as money. Having said that, there are still properties of some assets that make them more useful as money than others. Attributes such as portability, divisibility, fungibility and others are often pointed to as properties of good money.

Governments Have an Advantage with Their Money

One of Rickards’ key points is that governments hold a major advantage over free market alternatives.

“Governments have an edge because they can make you pay taxes in their money,” he said.

Put another way, governments essentially create an artificial use case for their own forms of paper money by threatening people with punishment if they do not pay taxes, which are denominated in the government’s own fiat currency, to the government.

Although governments benefit from this advantage, it hasn’t stopped many forms of government money from facing a loss in confidence over the years. Specifically, Rickards point out the Weimar Republic (Germany), Zimbabwe, Argentina and present-day Venezuela as examples of fiat currency crises.

Rickards Still Prefers Gold

Rickards has had some kind things to say about Bitcoin recently, but he’s still not convinced it’s a better alternative to gold. He pointed out in the interview one of his main issues with digital currencies:

“Bitcoin is digital. If the power grid goes down, your bitcoins are worthless. I’m not anti-Bitcoin ... but physical gold does not have the disabilities of Bitcoin and digital currencies like the [U.S.] dollar.”

Kyle Torpey is a freelance journalist who has been following Bitcoin since 2011. His work has been featured on VICE Motherboard, Business Insider, NASDAQ, RT’s Keiser Report and many other media outlets. You can follow @kyletorpey on Twitter.

Recommended

Cashaa Now Accepts Debit, Credit Cards for Crypto Purchases

Online banking platform Cashaa is set to allow users to purchase bitcoin, ether and Cashaa’s own token, CAS, using major credit and debit cards.

Landon Manning

Moon Enables Lightning Network Payments on Amazon

Crypto payment startup Moon has announced an online web browser extension that allows crypto users to make purchases on e-commerce sites like Amazon.com with Lightning Network payments.

Jimmy Aki

Coinbase Introduces Debit Card Linked to Cryptocurrency Balances for U.K. Customers

"Coinbase Card supports all crypto assets available to buy and sell on the Coinbase platform, meaning they can pay for a meal with bitcoin, or use ethereum to fund their train ticket home," the platform says.

Jimmy Aki

Western Union Partners With Crypto Wallet for Cross-Border Transfers

Crypto wallet provider Coins.ph has partnered with U.S. financial service company Western Union to enhance cross-border transfers to the Philippines.

Jimmy Aki