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I wrote the above comment before I read the article and the bitcoin.org website. I did this deliberately since I wanted to lay down the foundation of how money comes into existence and what money is.
There is no question in my mind that the bitcoin is indeed money and harnesses all the features of gold and silver while wedding them to the Internet in a peer to peer payment system. The creators of bitcoin have used an analogy of gold and gold mining to create their system and this is justifiable I believe.
The Land in this case is the pool of talent within the bitcoin community and the Labour is the application of the efforts of the original source code creators and the "miners" who bring the blocks of bitcoins into existence. It is then easy to see that bitcoins are genuine money.
Now, there are other features that I find interesting and intriguing. There is another analogy that can be used to understand this phenomenon. This is the formation of a corporation with a block of "authorised share capital" and a block of "issued and outstanding share capital" . The authorised capital would be the c.21 million bitcoins that can be created over time. The issued and outstanding capital consists of the bitcoins that have been issued to date. The business of the corporation itself is the payment system that bitcoin facilitates and represents.
When one sees it in this way then it is obvious that by becoming an early adopter (shareholder) of bitcoin there is a very real possiblity that one couild profit as the payment system is used more widely and the value of the "corporation" and therefore the price of the "shares" increase. The fact that the number of "shares" that can be issued is finite leads to an even greater likelihood of appreciation in the price of bitcoins.
The same caveats as investing in a "venture" company apply but since the system is already up and running and there are more and more joining every day (61,500 bitcoins traded on just one exchange today) the risks are less than one might imagine. Of course one must be circumspect but it might be worth a flutter.
The other feature I liked was the potential link with gold and silver. I use a Goldmoney account and since last year they have stopped offering inter-account transfers under pressure from the government. Eric Voorhees advertises a website offering gold and silver coins for bitcoins and it may well be that Goldmoney will do the same at some point. Then one could use gold and silver as stores of value and "earn" bitcoins on various websites offering payment in bitcoins for filling out surveys, reading adverts etc. The bitcoins could be used to trade for goods and services and to purchase gold and silver to spread the risk and create a store of value.
All in all I agree that when Dr. Paul is President and the market is opened up to competing currencies, removing the threat of government interference, the bitcoin system will come into its own. There is no doubt it has been created for such a time as this. I am not too surprised that it is opposed by the von Mises Institute. They can be quite doctrinaire. They also oppose Professor Fekete's ideas on Adam Smith's Real Bills Doctrine. However they are free market advocates also so that will put everything to the test.
BTW Bitcoin also mentions fractional reserve banking being used to increase the money supply. This is not something I would agree with since I believe it to be fraudulent but it may not last long since in the first place a bitcoin/gold/silver system would tend to be deflationary and this makes all borrowing less attractive. Secondly the existence of fractional reserves would have to be declared and people would be unlikely to provide savings to such an enterprise since other safer options would be available. It would take only a couple of bank collapses to put an end to that way of doing business.
