Why bitcoins are important
No, not because they are a good investment, or even a speculative one. It raises the important question: what exactly is money?
When I was wee lad, I read about the giant stone coins used by the Islanders of Yap. That really puzzled me. You can't put it into your pocket or the bank. Couldn't someone with a lot of time take hammer and chisel, and just make a whole bunch of them (turns out the artisans along with stone quarry disappeared long ago)? I understand that they are too big to steal, and last literally forever, but money?
Everyone on the island agreed that they were so beautiful and sufficiently scarce, to function as money (beginning to sound like gold, eh?). If a Yapian (yes, now I am making up words) went to the next island over that uses amber beads or striped seashells for money, he would be out of luck.
U$ currency likewise should have no intrinsic value. OK, it is special paper printed with special ink, and its creation is controlled by the Fed. Some say it is worthless because it is not backed by gold. True, gold is valued more highly by our society, but does that make it have intrinsic value where specially printed bits of paper do not?
The story behind the Bitcoin reminds me of the stone coins: hard to fabricate, and only a limited amount will ever exist. Yes, both have intrinsic value, since at least some people will accept it as a medium of exchange. The same applies to bits of special paper printed with special inks and precious metals.