Topic: Is bitcoin actually protecting fiat money? - page 6. (Read 9032 times)

Bitcoin creation is not the way that it could wipe out fiat currency or just protecting it, instead it could just an option for the community which currency we have to used in a certain transactions. May we think that due to the fast growth of bitcoin may the reason of killing fiat but it won't happen since some of us still in used of fiat currency.

I am with you, man. The question seemed to me very odd. HOW can Bitcoin become a protector of traditional money? It is a digital currency - BTC cannot do it.

This is to be understood that cryptocurrencies can neither replace fiat currency nor they can affect the performance of fiat nor they can protect them. The thing is, these two things are different and they have got different pros and cons. We have been seeing these two working with one another for 9 years and they are doing amazing. They both can do fantastic while separately they are nothing.

I don't think he is talking about any kind of conspiracy but talking about how the economic system works, and the "system" he meant was what I said, the economical system. He is basically questioning how the creation of wealth out of nothing (which is cryptocurrencies) can affect their economy particularly the inflation late. To my basic understanding with economics if cryptocurrencies' value is based from fiat and a lot of crypto millionaires liquidate their crypto to fiat then the creation of millionaires will in itself create inflation, it will just basically depreciate the value of fiat. But I might be wrong their are other factors that will be involve like the participation of companies into the market.

I personally don't support those conspiracy theories implying that the whole world is controlled by an evil (capitalist?) government and that whatever is happening it's happening with their consent. What do you mean by "to keep the system afloat"? Which system? And what can you counterpose? Communism? Anarchy?

I tend to think that people either in the banks or in governments are people like me and you. They try to do what they think is better for the country and for them of course. If they think crypto is dangerous, they ban it. If they see that it is not that bad and that it's definitely here to stay, they go along with it. And if crypto can help to patch the economy, so be it, I don't see anything wrong with that.

this is actually a good notion. if you think about it, to buy coins you still need fiats and you actually convert crypto currencies to fiat so there is a direct correlation to the two. but then again, our goal is to have crypto currency used around the globe in exchange for goods and services. cutting off the middleman (fiat) with projects and business that accept crypto currencies will be the downfall of fiat in the future.

Bitcoin is no doubt one of the best thing and that there are so many people whose lives have been significantly changed because of bitcoin and that there are continuously investing their money into these crypto coins and are changing their lives. After this evolution of the crypto currencies, there will be no such need of the paper money and that people will avoid using it in near future.

Bitcoin has a good chance to protect its users from fiat currency inflation but one should not hedge against inflation with bitcoin and hope to become rich in the overnight process. It's plausible that Bitcoin price would appreciate over time but it will take many years to happen. Right now buying Bitcoins as a hedge against inflation could be risky but that risk isn't greater than risk of buying any other asset or making investments.

I think your links and the entire process you mention is quite complex and cause and effect relationships are highly indirect. To me all of this appears quite forceful. One thing is very clear that crypto transactions are limiting or reducing the number of fiat transactions. But the crypt market has no intention of going against or replacing fiat because government will never let that happen.

The main reason the mass printing isn't severely effecting economies is that the US dollar is a base currency, just like what Bitcoin is in the crypto market. That significance is giving the US dollar a great deal of value.

It's enough to somewhat undo the damage of mass printing, and that's all because of how governments around the world consider the US dollar to be worthy of being a base currency.

Basically everything in the world is tied to that currency. If the US dollar didn't had that global backing, things would be completely different and the US economy would likely have imploded already. We gave the US dollar that value.

I can not actual see the part where fiat is protected by cryptocurrencies. In fact fiat keeps cryptocurrencies alive and valued until today. Due to investments and other projects Bitcoins and othe coins aree being valued.
In my opinion, fiat is fiat and it can not be harmed because there will never be a time that traditional money will disappear. Cryptocurrencies are like credit cards, it is convenient way of payment and could probably more acknowledged in the future but as I said fiat will never be neglected.

I personally don't see the connection between the  two. The fiat currency and cryptocurrency;  bitcoin particularly. Though, in some way, you may feel that the present of the cryptocurrency is prevents inflation just because the adopted the use of cryptocurrency. But you should bear in mind that the two are totally different because speaking of the usage of cryptocurrency, most people hold for a while while people just spends fait currency.

First, the whole marketcap of all cryptocurrencies is too insignificant when compared to fiat economy, so it has no effect on it. This alone is enough to counter the argument that cryptocurrencies are somehow helping the fiat economy. Also, you can't just create wealth out of thin air, Bitcoin is valuable because of it's technology, but altcoins are not, they are copycats and vaporware, so this theoretical scheme of boosting fiat economy with crypto's won't work. And overall it sounds like some conspiracy theoiry, while the explanation is simple - people are making money on bullish, volatile market, prices are increasing because people expect them to increase further, but it can reverse, because the market is very speculative and only few coins have strong fundamentals.

People think that inflation is a bad thing because historically that has been the case, a limited level of inflation is good for the economy because it is stimulates the economy and people are forced to not store their money for an indefinite amount of time, but what we see is that governments always abuse the power of printing currency, I really do not think that I need to give too many examples because they are everywhere, in fact the US dollar has been printed massively and the only reason it's not going down dramatically compared to other currencies is because other currencies have been printed in an even more massive way.

I think your links and the entire process you mention is quite complex and cause and effect relationships are highly indirect. To me all of this appears quite forceful. One thing is very clear that crypto transactions are limiting or reducing the number of fiat transactions. But the crypt market has no intention of going against or replacing fiat because government will never let that happen.

Fiat won't be going anywhere. Governments will tokenize the fiat system to step up their game and directly to obtain more control over money flows and whatnot. In reality people won't even be noticing that much of a difference because of how they conduct nearly all their transactions digitally through apps already. I haven't touched any physical fiat in ages, and probably won't have to anymore. Every place here accepts wireless payments.

All merchants accepting wireless payments can also integrate a payment processor that will allow people to pay with Bitcoin. The main infrastructure is present already, it just needs merchants to set up applications and ready they are. Mark my words, Lighning Network + NFC is a killer combination capable of taking over rapidly. Merchants will be able to get rid of around 2% in CC fees and reward customers using Lightning with a 2% discount on their purchase. Future looks bright.

this one I believed so, because in the near future fiat currency could possibly be disappear, because there are some other country practicing the crypto currency to adopt it and use it as payment now electronically. Imagine nowadays we have now using debit card or credit card they can buy crypto, in some other country.

I think bitcoin and Fiat are not antagonistic. From bitcoin development, maybe bitcoin has a protective effect on Fiat. We all know that Fiat often inflation, and bitcoin can control this very well. The continuous development of the encrypted community will promote the Fiat system to be healthier.

This is an interesting idea.
Actually, in order to keep the economy healthy, without changing the system altogether, the inflation should be a 1-3% above the rise of the real value in the economy. Fiat money is not real value, it is just a tool made to enforce the trading (as opposed to the barter system where a lot of trading would simply be impossible or would take forever, hence slowing down the development). The inflation should always have a higher rate, not because it is some safety factor, but because, unfortunately, the complicated mathematical formulas and synergy effects inside the economic ecosystems don't allow the ideal 1:1 situation.

Now, when we've put that behind us - it is the question what cryptocurrencies are. They should be a) assets like stocks (providing the partial ownership of the project/company), b) assets like money - for providing payments. Currently, they are mostly a). This makes them only a financial derivative that the traders can use to speculate and increase their wealth. With the increase of financial derivatives in the economy, we have the increase of a financial balloon which is dangerous if nothing "real" is backing it up. Now the question is- is it. Has the cryptocurrency created enough real goods and services that are covered by all the tokens and coins that are created? Probably not at this moment.

The next step is to determine whether this increases the inflation. Is the new fiat money created when new tokens/coins are created? At the moment - no. Once when cryptocurrencies will be a legal tender and considered money, just like fiat money - then yes. At the moment the money is just being diverted into the cryptocurrency community from some other areas of the economy. Is this good or not? Probably good for cryptocurrencies but not so good for that other area that are losing their investments, being it traditional stocks or simple trading (public or consumer spending).

So, this is currently not the issue of money creation but money distribution and, hence, cryptocurrencies are not creating inflation, at least not directly (what happens inside the economy when the money moves around is another, and much more complicated, thing).

The only new wealth that is being created is only a "shift" of wealth through the shifting of the money, not the actual new wealth. No new money is being "printed" (we don't print the money anymore in the traditional sense that much, as most of the money is digital, but we can still use that term). This also means that some people are getting poorer at the same time....

How does people putting money into bitcoin, either for trading purposes, or for a long term investment in order to store their wealth, help out fiat currency a single bit? If bitcoin actually goes mainstream, then it would actually mean that a lot of the reasons why people use fiat (mostly because it's their only choice) are now non-existent, and that would mean that bitcoin would pose as a legitimate globally accepted form of money.

The money that is invested into crypto now, doesn't come from nowhere. It comes from other investments, or just fiat currency itself.

Plus, your theory doesn't really make sense, since injecting wealth into the economy to cure inflation simply doesn't work, or perhaps I'm misunderstanding. Either way, I don't really get how something that is genuinely potentially going to be an alternative, if not a popular replacement of fiat is going to help it at all in the long term.