Fun and Games with Bitcoin

The ups and downs of the digital currency, Bitcoin, is generating a vast amount of speculation in financial circles. Most people will have been bewildered by this innovation. They have been used to dealing with real money and have a degree of understanding of how inflation and deflation affects their decisions. The volatility of Bitcoin is beyond their comprehension. Many of those who have tried this digital currency have had their fingers burnt while others are hoping that the price of the Bitcoin they have acquired will make them rich by growing exponentially.

Intangible money is a means of buying tangible goods and services. Speculation in dollars, euros and other real currencies by investors, banks, financial managers and governments does not hide the fundamental usage of money to pay for those goods and services that are available. These goods and services are produced by irreversibly using up the limited supply of natural material resources, including those providing the necessary energy to do the work. That is an unsustainable process. So potency of real money will decline as these resources become scarcer. Economic contraction will set in, despite the protestations of economists.

Bitcoin will inevitably share the fate of real money after causing a lot of confusion amongst those who fallaciously believe it can cope with reality.

Fundamental physical principles

I list the points in my hypothesis about fundamental physical principles below. People, in the main only make decisions as their personal impact on the operation of physical (materialistic) systems is small compared to the impact of technological systems and natural forces. People make decisions (good and bad) about realizing some of the potential that fundamental physical principles determine.

These principles are:

1. energy is a property of materials and the form of energy (nuclear, chemical, thermal, mechanical or electrical) able to do positive work depends on the applicable circumstances. The internal (chemical) energy in water is of relevance in electrolysis but it is the gravitational potential energy of water that is relevant in hydro works. There is a vast amount of thermal energy in the oceans but there are very few systems installed to extract some if it. 'exergy' is often used in technical works to identify the circumstances where energy does work in technological systems. 
2. every physical operation (process) entails the passing of time, the dissipative flow of energy and often the immutable transformation of material (as in hydrocarbon fuels to greenhouse gas emissions due to combustion) in the associated transformation of energy in doing positive work
3. technological systems irreversibly use limited natural material resources, including those that supply energy, in an unsustainable process to temporarily provide infrastructure, goods and services for use by civilization
4. this process produces immutable material waste that has a deleterious impact (such as contributing to climate disruption and ocean acidification and warming) on the eco (terrestrial and marine) systems and on the health of organisms (including human beings)
5. the materialistic infrastructure of civilization (cities, roads, skyscrapers, bridges, etc.) is subject to an aging process due to the destructive action of natural forces, including friction during negative work, so these components have a lifetime that depends on circumstances, including what natural material resources remain available for their operation and maintenance 

These principles have applied for eons but human beings have devised (made decisions) about innovative ways of realizing (in an unsustainable manner) on some of the potential provided by the application of these principles.

Denis Frith