Since Bitcoin is now a $400 million market, with its pricehitting new all-time highs, now might be good time to ask, is bitcoin money?
According to Aristotle, for something to be considered money, is has to fulfill four characteristics:
1) It must be durable. It can’t fade, corrode.
2) It must be portable. It has to be ‘dense’ so that you can take it with you when you travel to the market.
3) It must be divisible or, ‘fungible.’ This means that if you break it up into smaller pieces each smaller piece when you add them up will equal the value of the original piece.
4) It must have intrinsic value. This means it must have value whether or not it’s used as money per se.
Let’s look at these four characteristics and see if they apply to Bitcoin.
Bitcoin is a peer-to-peer, decentralized form of money; as durable as the Internet itself. Remember, the Internet or DARPA as it was originally called, was created as a fail-safe, global network with no ‘single point of failure.’ If one part goes down, data takes another route and nothing is lost. So on this point the answer is “Yes,” Bitcoin is durable.
Bitcoin is probably the most portable money in the history of the world. I can download any amount onto a thumb drive and walk across any border without any problems. Or, I could commit to memory a line of code that I can then input into the network and save or spend Bitcoins. So on the point of portability, Bitcoin gets an Aristotelian “Yes.”
Bitcoin is probably the most fungible currency ever created. You can break it down by 10,000 decimal places and trade it just as easily without it changing in value so on this point the answer is also “Yes.”
4) Intrinsic Value.
This is probably the characteristic that most people find difficult to comprehend. The intrinsic value of Bitcoin is very 21st century. If you think about it, what’s the one thing that has become extremely scarce over the past thirty years that has grown in desirability? Privacy.
Privacy is an age of universal email collection and spying, with millions of CCTV camera’s, and warrantless spying pervasive; privacy has become virtually non existent and therefore extremely scarce and desirable. Bitcoin can be a completely anonymous transaction that maintains the user’s privacy beyond the reach of any authority. So on this point too, the answer is “Yes,” Bitcoin fulfills Aristotle’s need for having intrinsic value. Privacy is a desirable human right and people would want it even if it wasn’t encoded as Bitcoins.
In conclusion, using Aristotle’s four characteristics of money, Bitcoin fulfills all four. So then according to an Aristotelian definition, the answer is ‘Yes.’ Bitcoin is money.
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