Bitcoin and fiat money represent two incompatible paradigms in money theory. We dare to compare.
After discussing last week, why Bitcoin is better than gold, we’re going to compare this week Fiat money. Ring free for round two.
In matters Scarcity hat Bitcoin a home game. The Cryptocurrency No. 1 is the hardest form of money in human history – and the trend is rising. Because the inflation rate halves every four years; one speaks of the so-called Halvings.
During the first four years of Bitcoins Exist ever came Block 50 BTC in circulation, now it is just 6.25. So that will Bitcoins Money supply growth is becoming increasingly scarce and makes a diametrical difference Fiat money.
After all, the monetary growth of the global central banks these days is unstoppable. Fired by alarming economic data due to the CoronaPandemic flooded the central banks Financial markets downright with liquidity.
Recently, the US monetary authorities announced that they would continue their bond purchase programs until the end of the year. Originally it was said that quantitative easing would only be carried out until the end of September. If that is still not enough, there would still be the possibility with further liquidity injections for direct loosening on Financial market to care. The Fed has already signaled its willingness to do so.
Anyone who opposes the uncertainties of being more flexible Monetary policy want to protect is with Bitcoin well advised these days.
We’re just making a calculated bet that this trend of waning confidence in our political and monetary systems will continue, and Bitcoin is the best alternative to fall back on when things really go down the drain,
writes about Bitcoin Podcaster Marty Bent in his Newsletter.
One thing is certain: The trend is towards digital money. How it will look like is still completely unclear. Because physical money, well Cash, is declining all over the world Trend. Not for nothing Satoshi Nakamoto Bitcoin as a digital form Cash framed. One defines Cash as a value storage and exchange medium that is transferable without an intermediary, BTC actually falls into this category. On the contrary to digital central bank money. Because already today the majority is global Money supply digital. Without financial intermediation from (banknotes) banks and Co., however, the euro, the US dollar and the yen cannot survive.
This leads to problems at the latest when political capital is made from the power of reserve currencies. This happened, for example, with the exclusion of Iran from the SWIFT system. In terms of privacy Bitcoin meanwhile certainly not an ideal medium. Against possible surveillance tendencies of the Fiat moneySystems is the digital gold Euro and Co. but way ahead.
Where money gets its value from
At the core could Bitcoin and Fiat money could hardly be more different. One gets its value from a non-corruptible construct of math, incentives and cryptography. The other is based on trust not to use the printing press too much and laws such as acceptance requirements.
The latter is a clear advantage for Fiat money. The tax burden to be paid alone makes for enormous demand after central bank money. This as well as economic indicators such as the external balance of the respective states determine the value of Fiat money.
Bitcoin however, negates the relevance of money as a medium of exchange and optimizes its properties as a store of value. Bitcoins Value proposition mainly feeds on his Scarcity – and the narrative takes hold. It was only this week that the Cryptocurrency No. 1 again the $ 11,000 mark.
The contribution Bitcoin versus fiat money: is BTC’s euro, US dollar and Co. falling from the throne? first appeared on BTC-ECHO.