Topic: Why do people trust fiat money? - page 3. (Read 7467 times)

And that's why people in charge of printing moneyz are typically smarter than Pedro (that fool cuts his blow with sheetrock instead of  baby laxatives, which, as every college graduate knows, doesn't even cook up!)

The smart people are in charge to avoid above-mentioned goofiness from happening.  That's why they & Economy are fuqbuddies, while u get to bag her groseries

Historically, people lose their trust for fiat money during two occasions:

1. Government change
Either war or political storm destroyed the old government thus their fiat money become worthless

2. Super inflation
Some kind of super inflation that double the money supply every week, mostly happened during war time where government need to print more money to support the exploding military spending

However, it is possible that an unprecedented incident cause fiat money lose its value, here is one possible scenario:

Due to automation and economy of scale, production more and more concentrated to a few multinational enterprises, more and more people become jobless, lower spending cause those companies to cut employee, which in turn cause even lower spending for the whole society. In order to counter this spiral, government spending accelerated, which cause an exponential increase in national debt

The debt repayment + interest rely on an exponentially expanding money supply. Higher money supply together with large government spending cause lots of money stashed at those multinational enterprises, and they moved those money to tax heaven countries

Government could not collect enough tax on those money they spent, they decided to confiscate those enterprises' USD cash saving in tax heaven accounts

Huge amount of USD savings flooded the market for every possible things that can avoid confiscation, including real estate/oil/PM/bitcoin ... Cause a sharp rise in everything's price, thus hyper inflation in a very short time

People start to use bitcoin instead of fiat money

That's why i cash muh paychecks into pennies, load up my M3 half-track, and dump the whole treasure trove into mah Bunker of Doom.  
The register chick hates my financial sophistication when i buy $100 worth of groceries with muh pennies, guess haters gonna hate

Well, almost the same reason apply to bitcoin  

People trust bitcoin because it is backed by mathematics
People trust bitcoin because it will remain (Government might disappear, bitcoin won't)
People trust bitcoin because its value will always rise over time (unlike fiat money)
People trust bitcoin because it is accepted somewhere (Just like euro, a currency doesn't need to be accepted everywhere to be useful)
People trust bitcoin because it is convenient to use (not as good as cash, but better than any other online payment method)

So these reasons are irrelevant, there should be some other reasons. Tradition, habbit, ignorance, fear, need protection from a powerful entity...

And FDIC won't cover your loss with pennies, only paper money

They think that governments save their asses.

Don't get me wrong, I don't think that bitcoin is going to disappear soon. But it's not going to replace fiat.
You might dislike banks, governments and whatever, but it's providing safety, stability and back up which is the only way to be trusted by most of people.

It does not mean that you can't use bitcoins for sending money worldwide, or for anonymity.

You can't build a service, a company, or anything with a price that can double within a month.
In 2010, you could buy a pizza for 10k btc. Now, with the same amount of btc you can buy a house, a car and a swimming pool.
In the meantime, you can buy almost the same kind of stuff with 10 k usd.

That's one reason why people trust more USD than BTC.


And if I die tomorrow in a car crash, I would not see the next Olympics Game.
Which is unlikely to happen.
Why would you think about things that will never happen?

Fiat is not gonna to disappear anytime soon.



No, bitcoin does not confirm much faster than credit card. It took me 1 - 3 days to confirm every time I make a transaction without fee. Double spent are unlikely though, but still, you can't say that the transaction is done before the first confirmation...
It took me 10 - 20 seconds to confirm by CC.



I don't think that bitcoin will fail, but it is obvious that I trust more fiat than euros, and will keep it this way in the upcoming days.
You might think that bitcoin will succeed, but if you're alone to think that, bitcoin is pointless, useless and worthless.



I don't deny that bitcoin has some advantage. But tell me, honesty: how much money do you have in BTC? And in fiat?
I bet that you have much more fiat than btc, because it is much safer... That's the answer to this thread (title: Why do people trust fiat money?).


People trust fiat money because it is backed by govs.
People trust fiat money because it will remain.
People trust fiat money because its value is almost constant over time (unlike btc).
People trust fiat money because it is accepted everywhere.
People trust fiat money because it is convenient to use.

Bitcoin is only "weighed" in other currencies, as an indicator of how much a Bitcoin is worth against another currency; this does not mean that, if other currencies disappeared, Bitcoin would become worthless.  If fiat disappears, and we need a currency to continue our way of life, then exactly this will happen:

Businesses which can no longer use fiat, for it is no longer trusted by anyone, will resort to the next best thing.  They'll trade in PMs, privately issued currencies (like e-gold or something similar), digital currencies; as long as several parties agree that currency X is worth something, then it'll be fine.

Your fallacy is in assuming that no one would fight to keep Bitcoin alive, because there's no reason to; Bitcoin is private, does not require a middle man, confirms much faster than credit cards (and at the same time, does not come with the cost of those CC companies), it's locked by distributed computing to never increase its supply, making it perfectly controlled by consensus, does not require an issuer, does not require a government, can be used anywhere on the globe with an Internet connection and a business which accepts it; exactly what is it about the USD that's so attractive?

Simply because you have doubts, does not mean--in fact, it is completely false to believe--that your PoV is as God's word.  It's very unlikely that Bitcoin, if not as a currency, but as a protocol--a technology--isn't going away.  It's because of people like me that Bitcoin won't fail, and as I've said in my last post, a currency works only when it's trusted by people; it does not matter if a currency is backed by government, if it's not backed by its people, which has happened more than once in the past, and the USD is no exception.

US government backs dollar. The whole world thinks that it is a good currency, I still wonder why when I compare it with euro but whatever.

I never that said that if fiat disappears, bitcoin will disappear too.
I said that: if it is not possible to freely exchange fiat <-> bitcoin, bitcoin will disappear. Fiat can live without bitcoin, bitcoin can't live without fiat.



You can dislike the fact that banks are running economic. The fact is that bank's profit is rougly a couple of billion $ per year, less than 1% of the American national debt. USA and FED are regulating things, and putting efforts to keep things running. When I will die, hopefully not before 2050, USD will still exists. USD will still be trusted. USD will still be used for million of transactions every day. I am not sure that bitcoin will. I doubt it will actually.


What would you trust bitcoin as least as much as usd? There is no reason. Noone will fight to keep bitcoin alive, and it can disappear any time.




Why do people uses BTC? Because they want to make some fiat profit. Because they want to buy illegal drugs. Because they want to scam. Because they want to pay a cheaper price (for international wire). Not because they dislike fiat.

On the contrary, if there is ever a time when fiat goes "poof", Bitcoin would be flooded with new waves of new users; after all, we like money, and don't want to resort to bartering our goods and time.  Or perhaps we'd all go communist.  Anyway, Bitcoin is backed by people, and so long as people trust Bitcoin, Bitcoin will succeed.  This is true for any currency; if tomorrow, we all agreed that gold was just some useless yellow hard thing not worth a dime, then so it is.  If tomorrow, we all agreed that the dollar was just nasty cocaine-tainted cloth, then tomorrow, the dollar would be worthless.  To say Bitcoin is backed by nothing is to misunderstand exactly how money works; if you don't accept Bitcoin, it's worth nothing, since you don't back it, but between two people who do back Bitcoin, it is worth something.

The increases in production cost not to be confused with inflation which is consistently around 3% 

If you have nothing to say, don't feel the need to embarass yourself and GTFO

Good day.

Fiat is more trustful than bitcoin. Fiat can succeed without bitcoin. Bitcoin can't suceed without fiat.

If tomorrow, USA and Europe forbid bitcoins, and close every banks / transfer to buy bitcoins, the bitcoin beta will be finished. It might be used from time to time to buy drugs on internet or do some transactions, but nothing more.

Government, states back fiat. You will always be able to spend euros in the Eurozone, and even if the prices might increase a little bit, you won't have +50% on prices in 48 hours like it can happen in the bitcoin world.  


Bitcoin is backed by nothing, vulnerable to 51% attacks, still in beta, and highly volatile. That's only a mean to make some fiat profits.

Headline:
Guy on Internet Hoards Pennies -- World's Banks Fall Like Dominos!

If everyone is doing that, banks go bankrupt, they can't afford to pay those mint factories

You do know that penny sorting (old ones made of copper alloy) is an actual hobby in Internet Libertarian circles?

Thank you for explaining things so clearly.  You will be happy to know that:



Which means that i'm currently enroute to my bank to convert all of my fiat into pennies.  I'll be at least 2.4 times richer.

BRB, PROFIT!1!!

Again, this is not backing. If anything, excessive wars take down economies rather than make them stronger. To fight a war, a government must take from the countrys capital, loan from it's subjects and debase the money.