One of the most asked questions I get when people discover I work in the Bitcoin industry is ”Evander, why should I start using Bitcoins when I have Dollars (Or any other fiat currency)?” Instead of explaining it to each person for ten minutes, I figured I’d just make an article about it that I can send out with a simple hyperlink. Hell, I might put the link in my email signature!
FYI, “fiat currency” is any national currency decreed legal by the national government, but is intrinsically valueless money. Fiat currencies no longer represent gold deposits or other things of known market value. They are just the accepted pieces of national paper, printed by a private central bank and loaned to the national government, with interest. All fiat currencies are debt instruments.
The U.S. Dollar and other fiat currencies certainly have their own inherent advantages, which mostly revolve around their acceptance by the banking systems that create them. These will prove fleeting in the coming years, whereas Bitcoin’s advantages are built into the technology, can be amended or updated through the protocol, and are built to stand the test of time.
Here are five reasons (out of many) why bitcoins beat dollars, both now, and in the future. I will use the global reserve currency, the U.S. Dollar, for all relevant fiat currency examples, but any centralized bank note will still have the same principles apply. Please feel free to reference this in the future, and share it with your friends. So let us begin…..
1. Bitcoin Gives Financial Power to The People; Takes it From Banks
In “Fractional Reserve Banking,” banks can, legally, only be held responsible for having a fraction, usually 10% or less, of the funds they have on loan. So if they lend out $100 USD, they are only responsible for having $10 or less on hand to cover that loan. This explains when the “Grexit” was going on in the Summer of 2015, and people starting hitting the bank to take money out en masse, known as “a run on the banks,” the banks simply closed, and limited withdrawals to $60 a day. Banks are only one miscalculation away from being totally bankrupt, as the emperor really has no clothes. Or cash.
Now if you want to beholden to this system this is a choice, not the only game in town. I have lived for three years without a bank, and many others in the Bitcoin industry are doing it every day, so it can be done. An independent Bitcoin economy, with businesses like BitPay, OpenBazaar, and Purse.io give you the a real option of having your own economic system, without being tied to a bank.
Yes, you can have economic power on a peer-to-peer basis, but you have to want it. You have to be strong enough not to live in fear of separation from the establishment. Most people are so dependent upon banks they can’t imagine life not tied to one. The problem is not need for an option, its courage to accept one. You have to want to be free from the banking system, and then have the maracas to make it so. With Bitcoin, you have that option, for the first time in modern history.
2. Fiat System supports Kleptocracy; Bitcoin Will Rebuild Free-Market Capitalism
Andreas Antonopoulos explains this point far better than I ever could……
3. Bitcoin’s Appreciation Beats Dollar’s Inflation
First, many people actually do not know what inflation means. Having been in banking for years myself, I discovered that most people believe inflation to be the price of goods and services rising over any period of time. This is the effect of inflation, not inflation itself, an important distinction. Inflation means that the amount of U.S. dollars, the “global reserve currency,” or any currency, in circulation continues to increase. It is the number of currency units in circulation and is not tied directly to market prices.
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. Economic policies like “Quantitative Easing” lead to as many as $1 Trillion U.S. Dollars being made by the U.S. Federal Reserve, annually. This leads to real-world inflation levels of 5% or more, per annum, even though the government will tell you 2% or less.
Prices in the government’s CPI index base this on 25 items that they change conveniently to fit the numbers the want to show. If meat prices are rising 10% a year, it is simply removed and replaced with something that doesn’t reflect the actual higher rate of inflation. A good way to game the system, and keep you ignorant.
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). This forces the Bitcoin value to increase based on standard supply and demand economics, or “sound money” principles. As more people enter the Bitcoin ecosystem, Bitcoin’s value per unit increases over time, a very foreign concept to anyone brought up to use a paper currency, as they NEVER rise in value.
To illustrate this important point, Bitcoin’s market value has increased over 50% so far in 2016 after rising over 35% last year, when it was the world’s best performing currency of 2015. For those who use dollars exclusively and are not familiar with this economic concept, this is called “appreciation.” When is the last time a U.S. Dollar’s value “appreciated” that much in a year? That would be sometime around never. Paper currencies are designed to be debased by banks and government, whenever it serves their needs. This is great for them. For you not so much…..
4. Bitcoin’s Speed Beats Dollar’s Speed
Try to move $1 million dollars, physically, or otherwise, from your bank to….. anywhere! Try to walk up to a teller at your bank, imagining you had over $1 million laying around in your account, and just remove it from the bank. Forget about matching Bitcoin’s speed in transferring that money to the destination of choice, you’ll probably be put on any number of terrorism watch lists throughout the nation, for openers.
Not only would your interrogation by multiple layers of bank personnel by arduous, but you’ll probably be tailed, and mugged. Try to take $1 million in cash on a plane or through any TSA Checkpoint/Customs Area. You will make plenty of enemies along your journey, and join more Most Wanted lists. It’s just a pretty bad idea, overall.
In contrast, hundreds of millions of dollars in Bitcoin are moved at a time on the blockchain from one address to another. In a matter of seconds, millions of USD worth of Bitcoins can be sent. This is not possible in dollars without a major identity shakedown from multiple fronts.
So if you wanted to walk out of a bank with “your money” in cash, and take it to Tokyo, besides the time of traveling itself, you will have to jump through so many hoops of regulation and invasions of your privacy, the time it would take you to get there may double. With Bitcoin, if you have a smartphone wallet, the same amount of money can be transferred and confirmed in the same time it would’ve taken you to leave the bank branch. Bitcoin is a faster way of doing business.
5. Bitcoin Costs Significantly Less to Send Than Dollars Do
Let’s say you just wanted to wire the money. Go down to your bank, and see a teller or banker, which has it’s own cost in time and travel fees. Fill out the form, and pay a bank fee, which will be a flat fee of around $30 or a percentage, depending on the bank and how much you are sending.
Privacy is a nice utopian idea, but it’s not for the real world of finance. Now the bank knows what you did, how much you did it with, where it's going and who is picking it up. If you are sending $100,000 USD or more, you may expect a rubber glove treatment by bank personnel.
Let’s say you send it to a person in China doing business with you. They have to travel to their bank, which is a cost. They can pick up the transfer, after exposing their identity, the fact that they are receiving money, and they may have to pay a fee as well. And this can take anywhere from 1 to 5 days, depending on the amount, and where the transfer is going. So it’s inconvenient, costly, and timeconsuming. A triple threat!
With Bitcoin, you can send any amount to someone’s QR code or address and pay about 0.004 BTC.
Forget using something like Western Union, where fees can go from 5–20% of the amount transferred! That’s why the remittances market is so fertile for Bitcoin. The Third World is waiting, pleading, to reach out and grab a better option than Western Union transfers. Anything is better than that!
6. Bitcoin Security beats Dollar Security
How many times have you lost $20 here or $20 there? Or lost your entire wallet, in your lifetime? Five times? Ten times?
Ok, now how many times have you lost your computer? Or digital wallet? Stupid people can do a lot of things, but let’s agree it is much harder to do and will happen less often over time. Some things are a lot less likely than others.
Losing paper money is relatively easy to do, forget actual theft of it. Identity theft is now somewhat commonplace (about 7% of Americans in 2014, starting at age 16), and counterfeit bills are still an issue, as countries around the world continue to change their bills in hopes of stopping it.
Bitcoins are digital in nature, so they can be backed up and saved to other servers, computers, protected by multi-sig, passcodes, paper wallets, offline vaults, cold storage, brain wallets, etc. The security options are only limited by your imagination.
There are really only three ways to “lose” your Bitcoins, which are trapped in a public blockchain anyway, so they are never truly “lost.” You give your Bitcoins to someone for a good or service and they do not provide said service. You give your Bitcoins to an exchange, which then gets hacked and loses them for you. Or you forget your password or credentials to your wallet, locking away your Bitcoins into a vault-like abyss forever.
All of these are very preventable with a little forethought, and wouldn’t happen by accident, like putting your wallet down at a bar or at a gas station. Bitcoin security options far exceed those of common dollars, especially those held in your hands (Stick ‘em up!)
7. Bitcoin’s future is brighter than the Dollar’s future
In case you haven’t been told by your mainstream media outlet (That wouldn’t be the first time,) Russia, China, Brazil, India, and South Africa have created a world bank called the BRICS Development Bank for the sole purpose of hating the U.S. and the Dollar they rode in on. These countries represent 40% of the world population and 40% of the global currency reserves, so it’s a HUGE deal when they all form an international hate group.
Interest rates are already at near zero, or less than zero, and dozens of countries have been performing bilateral trade agreements to avoid the dollar for the past few years. The US is already approaching $19 trillion in national debt, the U.S. Dollar can collapse at any time.
China and Russia are buying up gold faster than it can be mined over the last several years. They are expecting something, are building a leveraged position, and the U.S. Dollar is not going to be on the inside of the economic plan coming its way. The Dollar won’t be around as the world’s dominant currency for too much longer, the way things are going.
Meanwhile, Bitcoin is not going anywhere. Bitcoins are pieces of digital code, decentralized information. They are not being debased now or in the future. They can be sent by any form of information transfer, from morse code to text messages to a napkin passed along a table at a diner. They can be divided into millionths of units, and the skill set of a Bitcoin makes them the most versatile currency the world has ever known. Bitcoin’s value rises with every new person who discovers its abilities.
Bitcoin cannot be killed, no matter how many obituaries the mainstream tries to write for it. Like killing Jason Voorhies, who carries a keyboard instead of a machete. Bitcoin is the future of money. Dollars are money’s past. Like still playing a CD in 2010, you’ll catch up.
China, the U.S., Tunisia and other countries are either discussing marking their own digital currency or have done it already. They’re admitting their paper tiger is just that, and its time to enter the 21st century. I already have. Have you?
Don’t settle for a bad copy of a classic movie. Watch and enjoy the original today. You’ll be glad you did.