Bitcoin and fiat

By lugass | Cryptolugass | 28 Jan 2021


Cryptocurrency are reshaping our Financial System( especially with the newest DeFi projects), but one of the main argument for their adaptation is not their usability - it's their limited supply.

Since 1913 (when it was issued) the US dollar has lost 92% of its value with its ever increasing monetary , while bitcoin became one of the most performing "asset" -[ being mostly used as a digital gold rather than as a currency.]

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We can see from this chart that the money printer really goes brrr - especially in the last decade the Fed went full nuts and , with a prospected 4.2% rate for 2021, more and more people buy bitcoin as an hedge against inflation - but there are many more perks for bitcoin as a currency.

 

SCARCITY

Because as we all already know , Bitcoin has a supply limit coded in its consensus protocol , there can't be no more than 21 million bitcoins with an ever decreasing inflation rate -making it a disinflationary currency (and not deflationary as many wrongly say) 

Sound money must have a strict control over its supply; historically the first long lasting currency wew the solidus issued by Constantine the Great used for more than a thousand years because unlike previous roman coins it has never been devalued (with a literal cut that reduced the value)

 

DECENTRALIZATION

Bitcoin has the ability to carry out transactions without the need for a trusted third party and the intermediary costs associated with them.This is crucial, because we know from 2007 financial crisis that banks can't be trusted in managing our money as they function with high leverage ratios.

Being "too big to fail" when banks inevitably lose our money on high-risk assets , the cost of their failure is covered by taxpayers money.

 

COUNTERFEITABILITY

You can't "print" yourself some bitcoin because any transtaction that will ever exist is recorded on the blockchain and it has to be accepted by that .

At the same time we don't have the double spending problem that we had with previous digital currencies - as it would need a 51% attack to occur and it would make the bitcoin price plummet  (with the current size of the blockchain it will be a huge cost with a great loss when BTC value will drop to 0)

 

DURABILITY

An effective currency must be durable while traditional coins or banknotes can be damaged, destroyed and degrades over time so they need to be replaced ; this doesn't occur with Bitcoin.

Also with Bitcoin you don't owe traditional storage cost paid to banks.

 

TRANSPORTABILITY and GLOBALITY

Bitcoin is transfereable between 2 parties in a few minutes with low costs (that's not totally true now and for 2017 bullrun)

Fiat currencies are limited to the borders of the respective issuers while Bitcoin allows to transfer value with no restrictions because being a decentralized currency it can't be controlled by any centralized authority

 

DIVISIBILITY

A currency ,in order to work as a medium of exchange ,must be divisible so it can reflect the value of every goods in the economy.

Bitcoin is currently divisible up to 8 decimal point ,but as block rewards decrease over time we will see even units smaller than the satoshi

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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lugass
lugass

crypto-enthusiast


Cryptolugass
Cryptolugass

Crypto ecosystem is now becoming really large,and as old projects get rejected new ones are created every day. I will pick what are the best ones and will post about upcoming airdrops. Let's explore this new world together!

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