Business Insider’s Joe Wiesenthal today published an interesting piece on Bitcoin, partially responding to Paul Krugman’s somewhat inscrutable recent blog post that called the cryptocurrency “evil,” and partially answering the question of why Bitcoin has value. It’s been a topic we’ve been discussing for months, making Wiesenthal’s argument worth digging into.
He breaks Bitcoin into three interrelated characteristics that support one another: It’s a currency, equity, and a social network.
Bitcoin acts as a currency because you can use it as a generic exchange medium in lieu of dollars and other traditional currencies in a growing number of places. Bitcoin also at least behaves as an equity, because the more people who use and accept it, the more the value of each coin — at least thus far — generally rises.
Interestingly, Bitcoin’s ability to act as a currency and an equity are both predicated on its network effects. Wiesenthal puts…
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