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Health & Fitness

Bitcoin!

U.S. dollars, coins, euro currency, yen are all well-known currencies and stores of value, but there is one term that is normally not associated with items.

Fiat currency.

What a fiat currency is, is a currency that is issued by fiat, i.e., it is authorized, published, governed, and managed by a governmental body. Without delving too much into the history of fiat currency and its development, there have been several instances in U.S. history when local regions/states/businesses attempted to introduce their own currency. One excellent example of “local currency” are any “bucks” or “money” that is redeemable only within certain venues. While not legal tender and usable for debt settlement, there items do satisfy the requirements of currency in a very local environment. In the face of quantitative easing, Abenomics, the Eurozone’s monetary efforts, and the easing policy that has been implemented by the bank of China, many are concerned about the long-term impact of this.

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This is the simple law of supply and demand. As the supply of a certain asset or item increases, with no corresponding increase in demand, the item loses value. This relates to currency in the following manner — as the supply increases the value of the currency decreases, which can lead to inflation.

Bitcoin has taken the marketplace by storm recently, and might even by serving as a proxy for gold, which is the traditional inflation hedge. As the value of this alternative, all-digital currency, has shifted wildly as headlines impact it, market watchers and currency analysts have begun to take great interest in it. Ironically, the increasing interest of regulators in Bitcoin and its users may actually legitimize the currency and its use. The currency has swung between $400 and $900 per unit as it has traded during the last few months, and this certainly will be worth watching in the future.

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