Horizon Kinetics LLC is a NY-based investment firm and author of numerous research reports with increasing experience in the cryptocurrency space. We have been authoring research on cryptocurrencies, and bitcoin in particular, since late-2015. Since our founding over 20 years ago, we have continuously received invaluable feedback on our research from our subscribers. We now share some of our work on cryptocurrencies with the Steem community. Here is our first piece. Additional information on Horizon Kinetics LLC is available at www.horizonkinetics.com. We can be reached via email at info@horizonkinetics.com.
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When the colony of Virginia made tobacco legal tender, the first problem was that the incentive was created to increase production. The second problem was the creation of very low-grade tobacco that some people refused to accept as payment. The policy ultimately created low tobacco prices for farmers. In 1682, there were riots and the tobacco crops of various farms were destroyed.
The non-uniformity of a currency (apart from paper) is a not a trivial problem. Throughout history, it has been a significant issue. In colonial Plymouth, Massachusetts, the Wampanoag Tribe’s wampum was made legal tender at the rate of six white beads or three purple beads per penny. Unfortunately, supply of beads was limited. It was hard for prices to rise in the sense that the bead, as an instrumentality, was not divisible.(1)
Historically, therefore, the government really needed to take over responsibility for coinage. That created another problem. How does one prevent the government from abusing the privilege by basically destroying the value of the currency by issuance?
Enter Bitcoin. It is very hard to counterfeit since all Bitcoin in existence are always visible in the Blockchain ledger. Supply of Bitcoin is fixed; it is hardwired in the code. This is a possible revolution in currency design. If nothing else, it is a new asset class.
(1)Barry Eichengreen, Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System (New York: Oxford University Press, 2011), 9-10
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Horizon Kinetics LLC (“Horizon Kinetics”) is the parent holding company to several SEC-registered investment advisors including Horizon Asset Management LLC, Kinetics Asset Management LLC, and Kinetics Advisers, LLC. Horizon Kinetics authors research reports based on information available to the public. No representation is made with regard to the reports’ accuracy or completeness and all expressions of opinion reflect judgment as of the date set forth and are subject to change. This document is neither an offer, recommendation nor solicitation to buy or sell securities. Horizon Kinetics and each of its respective employees and affiliates may have positions in securities of companies mentioned herein. You may visit our website at www.horizonkinetics.com to find additional information on Horizon Kinetics. All views expressed in these research reports accurately reflect the research analysts’ personal views about any and all of the subject matter, securities or issuers. No part of the research analysts’ compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analysts in the research reports. Reproduction and dissemination of these reports outside the constraints of this social media space is strictly prohibited. ©Horizon Kinetics LLC® 2016.