Author Topic: An indisputable proof that bitcoin is fake money  (Read 7 times)

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An indisputable proof that bitcoin is fake money
« on: September 10, 2019, 03:16:10 PM »
The easiest way to detect if something is real money or fake money is to check whether it can perform the primary function of money, which is to act as a means by which parties exchange goods and services in the market. Real money is capable of performing this function, while fake money is not.

In an economy with commodity money, the exchange function is performed directly because a commodity is a type of good and therefore both parties of the exchange simultaneously provide goods or services to one another. For that reason a commodity money is always real money and it cannot be fake by definition. Fake money can exist only in an economy with paper or digital money. This is because the exchange function is performed indirectly. Indirectly means that the exchange has two stages. In stage one only one party provides goods or services while the other party puts money into circulation by providing the opposite party only with intrinsically worthless paper bills or digital entries. In stage two the other party takes money out of circulation and in that way provides goods and services to the opposite party.

Now if money is fake, stage two of the exchange never happens. Meaning the party that brought money into circulation at stage one and thus received goods or services from the opposite party, simply leaves the exchange process and never provides any goods or services to the opposite party. Basically instead of performing the primary function of money and act as a means by which two parties exchange goods or services in the market, fake money acts as fraudulent means by which one party extracts goods or services from the market. To better understand this let's first take a look at how the primary function of money is performed by fiat currencies and gold certificates.

Suppose that Federal Reserve printed new dollar bills and lent them to a commercial bank which further lent them to some borrower. Finally the borrower uses these bills to get some goods and services from the market. In that way the bills are put into circulation. Given that only one party - the borrower, received goods and services we are at the stage one of the exchange. The stage two will take place when the borrower starts to take money out of circulation. This happens when he makes his loan payments. Namely given that borrower must repay his loan he needs dollar bills. The most common way to get them is employment. As an employee he produces goods and services. Those are then traded on the market for dollar bills. These bills are then used for his salary. Finally his salary is used for loan payments. In that way the borrower takes money out of circulation. So, although he contributed to the pool of goods and services with his employment he cannot access this pool because his salary went for loan payments. Instead to borrower, the access to the pool was granted to holders of dollar bills. And this is basically how the borrower provides goods or services to the opposite party in order to perform stage two of the exchange process. This process will continue until he completely pays off his loan.
Now, if the borrower is government than the taxpayers are the party that will perform the stage two of the exchange process. This is because due to taxes they will have limited access to the pool of goods and services to which they contributed with their employment. And this is how the primary function of money is performed with fiat currencies.

In the case of gold certificates things are similar, it is just that those two stages are reversed. Namely in stage one, one party of the exchange deposits some gold at the bank and receives a certificate for it. This certificate is then traded for goods or services and in that way put into circulation. In stage two the opposite party i.e. a current holder of the certificate takes it to the bank to claim the deposited gold. Once the holder receives the gold the exchange process is finished. And this is how goods and services are exchanged with the help of gold certificates.

Now that we know how the primary function of money is performed we can easily detect how the fake money operates. 

Suppose that a guy buys a money counterfeit machine and use it to print fake dollars. Then he puts these dollars into circulation by buying goods services and euro currency on the market. Now what is immediately obvious here is that this guy will never perform the second stage of the exchange. His dollars were created with one purpose and one purpose only. And that is to extract goods services and real money from the market. So he will never provide goods or services to the opposite party of the exchange. Meaning his money will not act as a means by which parties exchange goods and services, but as fraudulent means by which one party extracts goods and services from the market. Given that no intermediary such as bank exists to identfy him as a party responsible for putting money into circulation, there is nobody that can force them to take money out of circulation with the purpose of performing the second stage of the exchange.

And this finally brings us to Bitcoin. Bitcoin miners are the party that puts bitcoin into circulation. Now, is the role of these miners similar to the role of borrowers and gold depositors or is it similar to the role of a guy that printed fake dollars. In other words are miners obligated to take Bitcoin out of circulation and deposit some commodity in order to provide the opposite party i.e. the bitcoin holders with goods and services. Or, are these miners anonymous and free of any such obligation. Well the answer is obvious. Just like the guy that printed fake dollars they are anonymous and free of any obligation. This is indisputable proof that bitcoin is fake money. It doesn't serve as a means by which bitcoin miners and market participants exchange goods and services. Instead it serves as fraudulent means by which miners extract goods services and real money from market participants.