This is the Cato Daily Podcast for Monday, May 6, 2013.

I'm Caleb Brown.

Bitcoin has great potential as a medium of exchange,

but being new, that potential must be tempered by some realities likely not yet

conceived. George Selgin is a senior fellow at the Cato Institute and

author of Good Money, Birmingham Buttonmakers, The Royal Mint and the

beginnings of modern coinage.

We spoke last week about the potential and realities of Bitcoin.

Well, I think it's a fascinating system.

It is not a monetary system quite, but it is a small exchange network which is on its way to becoming a bigger exchange network.

The most fascinating thing about Bitcoin is that it has gotten off the ground at all because

it consists of things that have no value except in exchange.

So as I put it on in an online discussion you have what I call an

oyster problem. The oyster problem consists of the problem of getting someone

to be brave enough to be the first to try something. And in this case, of course, that means being the first to trade valuable labor or goods

for bit coins that themselves can't be used for anything except further exchanges, which means someone

else has to take them from you.

Anyway, for various interesting reasons,

Bitcoin was able to overcome this oyster problem,

and its network has been growing very fast.

Now, that's, so that itself is fast. Now, that's, so that itself is fascinating, given the nature of the stuff.

But the other thing that's fascinating is that it resembles a commodity like gold in that only so much of these

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