I’m writing this from 35,000 feet above the Pacific Ocean, and we’re about to begin our descent into San Francisco.
On the obligatory Customs Declaration form, provided by U.S. Customs and Border Protection, I notice I’m required to answer Yes or No to the following:
- I am (We are) carrying currency of monetary instruments over US$10,000 U.S. or foreign equivalent:
(see definition of monetary instruments on reverse)“Monetary instruments include coin, currency, travelers checks and bearer instruments such as personal or cashiers checks and stocks and bonds.”
Here’s a hypothetical question: What if I had US$100mn worth of bitcoin on a USB thumb drive in my pocket… would I need to declare that?
What if I had my bitcoin wallet on my phone?
Or better yet, what if I didn’t have anything at all except my public and private bitcoin keys – which are the “passwords” I need to access, spend and transfer my bitcoin from any internet connected device – simply memorised and tucked away safely in the recesses of my brain?
Would I need to declare that?
I’m pondering this question because, despite bitcoin’s increasing mainstream adoption and price appreciation, there remains huge debate and skepticism about whether or not bitcoin is really money.
Is bitcoin money?
One of the positive side effects of bitcoin’s march towards mainstream acceptance is that it pushes everyone to re-assess their own personal concept of “money”.
Plenty of critics say that bitcoin isn’t money. Why not?
Let’s take a quick look at some of the hallmark characteristics of what we consider money.
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Transferability. Can I move it around, and transfer it from myself to another party and vice versa? Yes.
Bitcoin is far more transferable than traditional fiat currencies (like the dollar, euro and yen). I can open my phone and securely transfer US$100,000 of bitcoin (or more) straight into your digital wallet, in an instant.
Of course, you can hand me US$100,000 in cash in a briefcase. But I’d need to count it, and check that the notes aren’t counterfeit. And then I’d need to secure it. The bitcoin blockchain does all the above for me. Once I’ve made the bitcoin transfer and you’ve seen the balance in your wallet, it’s done. That’s it. You own those bitcoin.
Usability. Money isn’t much good if I can’t use it. Can bitcoin be used to buy goods and services? Yes, and increasingly more merchants are accepting bitcoin as a means of payment.
Incidentally, I’m scheduled to shortly meet with the CEO of a company which is launching a service that allows you to spend your bitcoin the same way you would a simple debit card. And it’s acceptable in over 30 million locations globally.
Mainstream acceptance is growing every day. Bitcoin is already legal tender in Japan.
Scarcity. Central banks can, have, and continue to create tens of billions of dollars in fiat currency out of thin air. And as a result, currencies the world over collapse, time and again.
Try talking to folks in Venezuela about how much faith they have in the bolivar (the national currency), now essentially worthless. Or Zimbabweans, whose currency collapsed after hyper-printing by their central bank. Or the billion-plus people in India who had their cash lifesavings declared no longer legal tender in an instant last year, when Prime Minister Narendra Modi made a surprise televised announcement informing them they had until the end of the year to exchange their notes for new ones before they would become worthless.
The west is truly spoiled when it comes to relative currency stability versus the rest of the world.
As for bitcoin, only 21 million will ever be minted according to the Bitcoin protocol, and only around 16 million are in circulation today. No central bank or government can “print” more bitcoin.
And as for the concern that bitcoin is purely “digital”, it’s worth remembering that more than 90 percent of all money that exists today around the world is not physical (i.e., not notes or coins).
When you’re buying bitcoin, you’re taking a view that more people around the world will accept bitcoin as a form of money. And with a total market cap of a little over US$60 billion, I think it’s a worthwhile view to take.