Why fiat will still be here when Bitcoin will be worth 1 million dollars
When I first heard about Bitcoin in a dusty bar back in 2013, I was feeling as if I was met Jesus himself. I was sure that in 2 years or so we will have 1 global currency used by all.
Now 5 years later bitcoin price went up 30 times but we don’t see the revolution that was promised, Bitcoin is not used 30 times more and looks like it is not built for that reason.
Here are some of the reasons that you will here from the experts.
- Bitcoin’s blockchain is built for micropayments — the 10 minutes 1–4 MB size blocks are not fit. There for solutions like LN will help to bring the revolution. I think that it will not help at all. If that was the case we would still have seen the blocks full and many companies accepting large payments with bitcoin. LN is a cool project but I am not sure it is addressing the real issue of why bitcoin is not yet giving a fight to fiat.
- Bitcoin is volatile — the mass adoption is still not here and once the price will reach the true value of bitcoin (something like 1 million dollars) people will start to use it and it will replace fiat. So even so this is a true issue, it shouldn’t make true bitcoiners not using bitcoin as a friend of mine once told me “you can buy bitcoins with your salary and use bitcoin whenever you can”. Sounds hard but if you truly believe in bitcoin as a new better money that’s what you should do. But we don’t see that happening as well, we will soon get to why Bitcoin is not yet and probably never will replace fiat. BTW stable coins might do that trick but most of them are not Decentralized, or they are backed by fiat (which make them good as a coin issued by the government)
- There are the countries regulations thing — fighting crime and ce’. But I truly think that it will be the people that will decide on which currency they will use eventually. We live in a democratic countries (most of us I hope).
- This is the one I wish to talk about — “the Nobel Prize–winning economist Paul Krugman says that this feverish enthusiasm is ill-informed and that a full-scale collapse of bitcoin is a real possibility, arguing that cryptocurrencies aren’t solving any problems in the current monetary system, which already boasts seamless and low-cost transactions” (from :https://www.marketwatch.com/story/a-total-collapse-in-bitcoin-is-a-real-possibility-says-nobel-prize-economist-krugman-2018-07-31)
So does Bitcoin really better than fiat money. Let’s understand the difference between them. The 2 main things they are different are:
A: centralized vs decentralized — So there is a huge argue about what is better. I am on the decentralized side. There is no need for a third side to gain power and profit from transactions. The chance for corrupted bankers is smaller and the people will have more privacy. If someone is buying stuff he is not allowed to buy by the low let the police do its roll and find the offender. But this argument is one of the things that keeps people from using bitcoin.
B: This one is the best — This reason is the reason I believe to be the true reason Bitcoin and the current crypto out there is not yet able to replace fiat. The crypto monetary systems are simple and not “smart” enough to encourage consumerism. Fiat has evolved for many years to become a perfect consumerism currency. The Fed make USD just as inflectional as needed for people to want to use it in order to buy stuff or to invest it (maybe in Bitcoin) but they know that if they will hold it it will lose its value. Bitcoin is built as super strong “store of value” but not as a good “medium of exchange”.
So in order for crypto to replace fiat we need a new currency built for that purpose. A new project named RYA has got my attention. They built the currency exactly for that purpose. The amount of RYA in the system is always fit to the demand for it. It is the same as the Fed plays with the interest rate. They have a White paper explaining all about it.
This project is still new but they have a live test net, a growing community and an impressive road map. It is an open source code. With an anonymous founder like in bitcoin. When I asked about it they said “A true decentralized coin cant have a leader, look at what happened with ethereum ”.
Although I didn’t like the fact they plan to airdrop most of the RYA’s to nxt holders. I will follow on their progress. The just might be helping in getting the unbelievable goal of making “p2p electronic cash system” that is used in day to day life.
P.S I am holding NXT, and there for I will receive RYA’s in the airdrops.