Topic: Bitcoin vs Fiat - the Difference That no One Talks About (Read 348 times)

I understand what you are trying to convey here, what you mean is that if no one in the world would want to buy Bitcoins and give out fiat, Bitcoin holders will have no use for their coins since they cannot use them to buy resources that are important for someone to live or use in their lives. That is true, but you are totally ignoring one thing.

There are a lot of things that are valuable and people pay money to get them, take gold as an example. Based on your argument, if people all over the world suddenly stop buying gold, the asset will simply be useless no matter who holds how much of it, but why would that happen? The world needs gold so they will surely pay money to get it so that they can make jewelry with it or use it however they want. Similarly, Bitcoin has become valuable because of its features and scarcity, now people understand it's value and that is why they pay money to get it. We know that it is different than fiat, for now, but it obviously isn't useless.

I do not think the reply focuses on Bitcoin and you, it is on Bitcoin and your presented argument.  And when you say goods and services, isn't the boundless transaction offered by Bitcoin technology a service/oods?  This simply shows how shallow your understanding of Bitcoin is, if not I can say how you intentionally ignore important features of Bitcoin to suffice your argument.



Again the use of pyramid and Ponzi schemes is thrown on Bitcoins, if that is the case then everything in the open market is a Ponzi or pyramid scheme since what the Bitcoin market is following is the universal law of supply and demand which is also applied to all items and services in the market.

I posted this here because a lot of small people is here and this info can help them to learn the truth and, consequently, to dump worthless units on whales. Namely, in all previous pyramid schemes small people were the one left holding the bag. This pyramid scheme is the first time in history that a lot of big money joined in. Now small people can dump pyramid units on them and left them holding the bag. Because, let's be honest, Bitcoin is a modern day decentralized and self-governing pyramid scheme as only outsiders to the system can make existing members to return their investments.[/b]

Don't get complicated, you only need to draw simple conclusions if you really understand correctly what and why Bitcoin is different from fiat. Don't pretend that you are going to lead Bitcoin opinion to be complicated and other people will get bored with what you have to say. On forums, people are familiar with this and there is nothing new in what you convey. To be honest, they have been around a long time and know Bitcoin has a single decentralized system, no one can catch up with its creator, and no large-scale printing results in inflation.

This image will make it clear that Bitcoin was created for a better and more rewarding world for every individual who believed in it then, now, and in the future.

As simple as that.

“Decentralization”, “security” and “scarcity” cannot help members to get resources back.

“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.”

Why is securing the return of resources the most important thing in payment systems? Well, suppose you gave up your house and in return, you got membership in the fiat system by receiving banknotes or a deposit account with some numbers. Those numbers cannot satisfy your needs. They are not resources. So, you gave up a house that can satisfy a lot of needs, and in return, you got something that cannot satisfy any need. That is why, if the system is legit, it must have a built-in mechanism so that in the future you can return resources that are roughly worth the same as your house. The fiat payment system has such a mechanism. Let’s see how it functions.

Let’s now turn to the Bitcoin system. This system boils down to a network of computing devices linked together to manage a database. How do people become members of this system? Well initially, they give up electricity in the process of the so-called Bitcoin mining. This gets them the membership units, known as electronic coins or bitcoins(₿). As these units are not resources capable of satisfying human needs, members are in the same situation as members of the fiat system – they need resources back.

This was the point where the entire text completely derailed. If you feel that these are pointless features, you shouldn't be interested in bicoin at all, or be on a forum to discuss about it.

is
On the other hand, membership units in the Bitcoin system are worthless because they do not protect members. These units are some kind of system decoration that looks attractive from the outside and gives the appearance of money. But is not money as it provides no benefit to members. The system is designed to benefit that decoration instead of its members. This is at the same time bizarre and hilarious. What is even more bizarre and hilarious is that people are currently giving up 30,000 protective units ($) to get one non-protective unit(₿).

This post is very long for your first post, some members here will get tired reading this post. You can just simplify it like, Bitcoin and Fiat are two different types of payment system. Bitcoin is decentralized system that uses cryptography to secure transactions, while fiat is a centralized system that is backed by the government. Bitcoin is not reliable to store of value. It is more a speculative investment, and we people should only invest in it if they are willing to take on the risk of losing our money.

On the other hand, membership units in the Bitcoin system are worthless because they do not protect members. These units are some kind of system decoration that looks attractive from the outside and gives the appearance of money. But is not money as it provides no benefit to members. The system is designed to benefit that decoration instead of its members.

This is at the same time bizarre and hilarious. What is even more bizarre and hilarious is that people are currently giving up 30,000 protective units ($) to get one non-protective unit(₿).

With Bitcoin becoming known to the public, many began to see it as some kind of alternative to the fiat payment system. Not only an alternative but a superior alternative. This superiority supposedly stems from Bitcoin’s “decentralization”, “security”, and “scarcity”. Here we will show that these two systems are different as night and day. And that in no way can the first be an alternative to the second.

Narratives about Bitcoin are mostly focused on the field of informatics. However, payment systems are economic categories. Here we will therefore focus on the second. Economically speaking, people need goods and services. They need food, clothing, energy, a roof over their heads, clean streets, medical services, etc. In short, they need resources. This is what satisfies human needs. In that sense, the technical implementation of payment systems, through which the resources are exchanged, is irrelevant. Payment systems themselves can neither satisfy human needs nor magically create resources. They are only auxiliary means for exchanging resources and, most importantly, securing their return.

Why is securing the return of resources the most important thing in payment systems? Well, suppose you gave up your house and in return, you got membership in the fiat system by receiving banknotes or a deposit account with some numbers. Those numbers cannot satisfy your needs. They are not resources. So, you gave up a house that can satisfy a lot of needs, and in return, you got something that cannot satisfy any need. That is why, if the system is legit, it must have a built-in mechanism so that in the future you can return resources that are roughly worth the same as your house. The fiat payment system has such a mechanism. Let’s see how it functions.

By holding banknotes or deposit accounts people are members of the fiat payment system. But how did they become its members? Well, first banks granted loans to individuals and organizations or purchased government bonds. That is how banknotes or deposits ended up in the market. By exchanging resources for those banknotes and deposits, people became members of the fiat system. So basically, they gave up resources for numbers.

The fiat system ensures that members get resources back. It does that through the liabilities of debtors and their collaterals, i.e., by forcing them to pay off their debt. Namely, to be able to pay off their debt, debtors need banknotes or deposits. And the only way to get them is if they work for the members of the fiat system, or sell them goods and services. And this is essentially how members get resources back. By being forced to pay off debt represented with banknotes and deposits, debtors must provide resources to holders of those banknotes or deposits. Otherwise, they would not be able to get them, which would result in default and seizure of their property.

Let’s now turn to the Bitcoin system. This system boils down to a network of computing devices linked together to manage a database. How do people become members of this system? Well initially, they give up electricity in the process of the so-called Bitcoin mining. This gets them the membership units, known as electronic coins or bitcoins(₿). As these units are not resources capable of satisfying human needs, members are in the same situation as members of the fiat system – they need resources back.

And now comes the crucial question: does the Bitcoin system have a built-in mechanism that enables members to return resources that are roughly worth the same as the electricity they gave up? Well, it does not.

And this is the key difference between the fiat system and the Bitcoin one. The first one has a whole network of banks, their contracts with debtors, and pledged collaterals to ensure that its members get resources back. The second has nothing. Members just have membership status, and that is it. The system is not there to protect them, to ensure they get resources back. Instead, the system is there to protect those membership units called bitcoins. In short, the system exists to protect its units, instead of protecting its members. It spends electricity for its own sake.

“Decentralization”, “security” and “scarcity” cannot help members to get resources back. These are just pointless features of the system and its units. That is why existing members can get resources back only if people from outside of the system become members by voluntarily giving up resources in favor of existing members. Without that, they cannot get literally anything. The system cannot help them. Outsiders to the system are their only hope.

There is currently an entire army of members of the Bitcoin system. They gave up an enormous amount of resources. And the system has nothing to protect them. They have membership status represented with well “secured” units. These units are stored in a “decentralized” fashion. Also, the units are “scarce”. Yet, none of that can help them to get back things they can live off of. And if outsiders no longer want to become members, that whole army is doomed.

To conclude. Membership units in the fiat system are valuable because they protect members by ensuring the return of resources. The value per specific number of units can be determined by checking the value of collaterals that banks take when issuing that number of units.

On the other hand, membership units in the Bitcoin system are worthless because they do not protect members. These units are some kind of system decoration that looks attractive from the outside and gives the appearance of money. But is not money as it provides no benefit to members. The system is designed to benefit that decoration instead of its members. This is at the same time bizarre and hilarious. What is even more bizarre and hilarious is that people are currently giving up 30,000 protective units ($) to get one non-protective unit(₿).