What those who are promoting the notion that Bitcoin is some real, if virtual, money fail to comprehend is that all market transactions involving production and sales in any developed nation are organized through the use of that nation’s money denominated legal contracts.When Bitcoins first made a splash in the media (I think it was nearly a year ago), I immediately thought that it could not be considered legal money. Yet, so much of Wall Street and mainstream media took it seriously. I was extremely puzzled because the control of money is vital to the power of any ruling class and their governments. Any contracts involving such fabricated money would not be enforceable in their courts of law. I wanted to issue a statement explaining why Bitcoins were not legal money, but I thought that others, with far more credentials than I have, would do so. I have had to wait until now with this piece. But, this puzzling phenomenon begs an obvious question: why has Bitcoin been taken so seriously so long by the One Percent ruling class?
Money (or currency), whether fiat or backed by gold or silver, is therefore defined as that thing that by delivery discharges all legal contractual obligations. Only the government, as the enforcer of contractual obligations, can determine that thing that is legally MONEY, i.e., what thing(s) will discharge contracts under that nation’s civil law of contracts.
I am convinced that it is making it easier for them to move money around any legal regulations that restrict their commerce (for example, illicit drug transactions) and to avoid taxes. But, this is for someone else with far more credentials than I have to write about at any length. If you have followed my thoughts about governments, you will recognize immediately the logic of my following summary statement.
Because existing governments are controlled by capitalist ruling classes and Bitcoins are very useful to this class, they will exhibit a lot of ambivalence about using the weight of their governments' enforcement authorities to interfere with their use. Of course, this liberal economist cannot, or avoids, making such an explanation.