Bitcoin is basically a money like any othermoney.
You can spend it on things, you can pay people,except instead of being in physical dollars, where you can hold dollar bills, these coinsexist on computers and you hold the coins on your computer.
Because it acts very much like gold, you canapply many of the same rules, and so one of the ideas is that you don't need a complexnew system of regulations or a complex new law to be able to govern Bitcoin.
You can go with the same old property rulesand the same old procedure rules, uh, that govern other forms of property.
So the benefits of competing currencies arethe benefits of any kind of competition.
You have more suppliers and so you have lowerprices, essentially, so for money, that means lower transaction costs, for instance, andyou have higher quality.
Now, whatever those qualities for money are,are something to be determined by the market.
Maybe, privacy is a quality of money thatwe want, or maybe, neutrality between creditors and debtors is a quality we want.
It's essentially allowing the market to satisfyconsumer demand.
The Legal Tender Act and legal tender lawsgenerally around the world act as a kind of monopoly advantage to central bank currency.
The downside of competition is, from the government'sperspective, they're no longer able to able to effect monetary policy in the way thatthey would like to.
Now, many would say that the legal tenderlaws are necessary, and allow the government to conduct monetary policy.
So, in a sense, having a monopoly power isgood for the government.
Now, whether you think this is a good thingor a bad thing is gonna depend on your view of government.
Some would have the view that because thegovernment is all of us, we want to confer a sort of monopoly privilege on the government.
And some have the view that the federal government,at least, is an entity separate from us, and is beholden to all sorts of special interests,and it’s subject to all sorts of political pressures that don’t necessarily narrowdown to the good of all of society, and so giving them this monopoly is really not greatfor society writ large.
Many think that the real benefit of Bitcoinis going to be in settlement across borders, and going to be in places in the developingworld where they don’t have the kind of monetary stability that we have in the U.
No one has any doubts that something thatcost a dollar yesterday is going to cost a dollar today.
But this is not true in developing countrieslike Zimbabwe or in, in places like, Argentina, for instance, where they have major currencyproblems.
So these countries are using Bitcoin as astore value and they know that it’s gonna fluctuate less, the price of Bitcoin is gonnafluctuate less, and perhaps it might even appreciate more than their own currency.
So, in the developed world, many think thatBitcoin plays a tangential role, which is one reason why some people say if you wereto repeal legal tender laws with respect to digital currencies, it wouldn’t be thatbig of a deal.
But it’s really in the developing world,and in places that don’t have stable political regimes and stable monetary situations thatsomething like Bitcoin, which isn’t susceptible to political pressures is gonna be able tothrive.