So, bitcoin is the next generation of money technology. Money is very old human invention and it went through its own evolution since it’s inception.
Current form of traditional money is called fiat money. Fiat money is a currency without intrinsic value that has been established as money, often by government regulation. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.
So fiat currencies are essentially valuable because governments impose them as the only valid exchange device.
Bitcoin is conceived on a completely difference set of rules and ideas. Moving on, we will compare these two types of money on the basis of widely accepted criteria sound money should have.
What is sound money?
The criteria for “money”:
- transportability and
This has less to do with it’s physical durability as it does on one’s trust that the institute it relies on will exist in the future.
On this one…who knows, another debt limit discussion could kill the USD on this regard, as far as bitcoin goes it’s expected that bitcoin will continue for as long as there are people with clients and computers and miners.
The chance of the USD tanking though is pretty low but you almost can’t KILL bitcoin…so i’m calling this for bitcoin.
Do i need to say it? There is no currency on earth that goes down to 0.00000001 and a protocol change could bring this even further.
If more divisibility is good then bitcoin wins…if not…
This is where bitcoin shines, transportability is ridiculously good. you can take a brain wallet anywhere, with a single letter DPR could spend his confiscated money from his jail cell. that is transportability.
To date no one has counterfeited a bitcoin…though if you could manage a 51% attack you could THEORETICALLY, counterfeit bitcoins. While fiat plays a constant cat and mouse game with counterfeiters going back as far as fiat money.
It is not YET better to use Bitcoin than cold hard cash or even most online transactions.
Did you use the internet in the early 90s? It was clumsy, expensive, slow, and out of reach for most people. Bitcoin is in that stage right now.
It IS in essence better in every way, but the technology needs to evolve some more. Wait for the new tech and apps that are coming out. It won’t take more than a couple of years.
- Bitcoins cannot be counterfeited. Not that that matters much to consumers, but it should. Every time your fait is counterfeited, the money you have goes down in value artificially.
- Accepting bitcoins is a benefit to businesses because it eliminates fraudulent credit card problems. There are no chargebacks! Not to mention the relatively low fees.
- Users can access bitcoin without any bank account. That means that the billions of “unbankable” people around the world could still access bitcoin. That’s especially beneficial in developing nations. Developing nations often have incredibly high inflation rates, against which bitcoin also protects.
- Don’t forget that Bitcoin is a ‘push’ protocol versus credit cards being a ‘pull’. This means that a merchant needs all of your identifying information in order to charge your credit card. This same information can be used repeatedly or stolen from the merchant (110 million Target customers).Bitcoin is a ‘push’, where the consumer has to initiate the transfer of funds, by unlocking their private key. The vendor only ever sees the customer’s public address, which is not enough to do any good if stolen or misused. Much safer for the consumer.
- Bitcoin’s Appreciation Beats Dollar’s Inflation
Consistently, since WWII, the U.S. Dollar has lost value every single year due to inflation. This is a bad thing since the more actual dollars there are in circulation, the less each dollar is worth in circulation.
Bitcoin, on the other hand, is a deflationary currency. It has a set amount of bitcoins in circulation (12.5 new Bitcoins are added into circulation every 10 minutes), and a capped maximum amount overall (just a hair under 21 million).
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