Differences Between Bitcoin And Fiat Money

by Ricky Brown Content Strategist
There are differences between fiat currencies and cryptocurrencies. The transactions carried out on the Bitcoin system are recorded in an immutable accounting book which cannot be modified, deleted or censored. It does not depend on the authority of banks or governments but on the consensus of a network of public computers to which, in theory, anyone can join.

The supply of bitcoin is limited since only 21 million bitcoins will be issued. Also, the anonymity - some prefer to talk about pseudoanonimato - offered by bitcoin is not as infallible as that of cash.

What does bitcoin represent for the State and the economy?

With the invention of BTC, it was finally possible to separate money from the idea of the nation-state as a sovereign monetary issuer. Now, thanks to cryptocurrencies, economic sovereignty is exercised by each individual that owns them.
We have gone from money based on institutions to money based on computer networks. In other words, bitcoin gave way to the long-awaited and necessary separation between the State and the economy.

Bitcoin is different from fiat currencies issued by the States because it is not based on debt. You owe nothing to anyone and nobody owes you.

It is a system based on the ownership of this digital and abstract token. Each individual is really the owner of their money since no one can censor, confiscate or freeze it. No one can decide what to do or not with your money.

Money is an illusion

Although it is hard to accept, money is an illusion. It is part of one of the many collective hallucinations. The only real thing is its symbolic power.

Money is nothing more than an exchange language that allows us to value things and trust strangers. Our understanding and interpretation of a piece of paper printed and dyed in different colors is all that counts.

In this virtue, the value of all types of money is unstable, fluctuating and often volatile. All this, despite the unsuccessful and misguided efforts of governments to establish fixed exchange rates, with the aim of maintaining their value and setting interest rates to control their flow.

Does money have an intrinsic value?

The answer is no. The money is fragile and provisional. He who believes that it is real, solid or backed by something or someone is believing in cuckoos. And this is precisely the main argument used against bitcoin and the other cryptocurrencies: they state that they are worthless because they "have no support".

However, money acquires its value because of the trust that users place in it. The Venezuelan Bolivar is worth nothing because nobody trusts him or the government that issues it sovereignly.

Bitcoin has no explicit return - as it happens with gold - but it does have a strong implicit return in the form of liquidity. Undoubtedly, bitcoin's liquidity is today much lower than that of the dollar or the euro. However, the liquidity of this cryptocurrency increases as more people accept it as a means of payment and its volatility is reduced - a phenomenon that has occurred almost throughout the year 2018.

It should be noted that bitcoin's liquidity is much greater than that of the dollar or the euro in specific situations such as international money transfers, where its use generates less financial costs and considerable time savings. A BTC transaction is confirmed in approximately 20 minutes, while international banking transactions take a few days. The bitcoin shipments are between people, without the participation of intermediaries. You can hire blockchain developers for your blockchain development.

Is Bitcoin a fraud?

The theory that gave rise to cryptocurrencies, with bitcoin as a pioneer is that the records stored on this technology are tamper-proof. In this network, the owners do not know each other, but can fully trust each other thanks to the compliance of consensus rules.

Its high resistance to attacks guarantees the strength of a coin, at least in a better way than governments. To this day, the Bitcoin blockchain has remained incorruptible and stable.

To imply that "Bitcoin is a fraud" because malicious people have swindled unsuspecting people or because it has been used for money laundering is tantamount to saying that "the financial services industry is a fraud" for the same reasons. In addition, banks act so irresponsibly that through history, they have been saved from bankruptcy with public resources over and over again.

There is an urban legend that says that most hundred-dollar bills have traces of cocaine. Does the fact that the US dollar is used in illegal transactions from drug trafficking and terrorism delegitimize cash? No. The truth is that money is not good or bad by itself, it is just a tool.

When we refer to Bitcoin, we do not just talk about currency, we talk about the refounding of social, political and economic systems that constantly fail us. Among them are, of course, States and banking.

Open, distributed, horizontal and autonomous systems - such as those generated by blockchains - are replacing their closed, centralized, vertical, hierarchical and corrupt pairs based on 18th-century anachronistic models.

It is undeniable that both states and financial institutions, which act thanks to legal privileges, have deep structural flaws and are prone to corruption. This has always been and will be so as long as the centralized paradigm of power persists.

Bitcoin is a politically and ideologically motivated project from its origins to establish itself as a distributed digital currency system tamper-proof. If humanity develops and promotes it, it will become an important alternative to the traditional financial system. You can hire blockchain developers from app development companies for your blockchain development.

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About Ricky Brown Junior     Content Strategist

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Joined APSense since, May 29th, 2019, From New York, United States.

Created on May 29th 2019 04:50. Viewed 255 times.


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