Bitcoin is a fully digital, peer to peer currency, which is growing quickly.
For those who are unfamiliar with Bitcoin, here is a primer.
It is growing so quickly, in fact, that the ECB thought it necessary to address the virtual currency phenomena. It sees Bitcoin as a challenge, and as the traditional currencies which are manipulated by central banks continue to stumble, a truly decentralized currency sends a shudder down the spine of the wizards.
I have watched Bitcoin closely over the last 3 years or so with quiet hope. Anything that challenges the power of the central banks in a real way is good for humanity.
In claiming that “The theoretical roots of Bitcoin can be found in the Austrian school of economics,” the ECB forever linked Bitcoin to the proud economic heritage of Menger, Mises, and Hayek as well as to Austrian business cycle theory. This recognition is also a direct testament to the monetary theory work of Friedrich von Hayek who inspired many with his 1976 landmark publication of Denationalisation of Money.
Bitcoin fully embodies the spirit of denationalized money as it seeks no authority for its continued existence and it recognizes no political borders for its circulation. Indeed according to the report, proponents see Bitcoin as “a good starting point to end the monopoly central banks have in the issuance of money” and “inspired by the former gold standard.”
Economists from the 19th and mid-20th centuries can be forgiven for not anticipating an interconnected digital realm like the Internet with its p2p distributed architecture, but modern economists cannot be. From their own conclusions (on page 48) which inaccurately lump Bitcoin together with Linden Dollars, here is what the modern-day economists at the ECB are still not getting: