Fiat is Debt — Crypto is Belief

Fiat money has value that is…

Kinda bad, in my honest opinion.

It’s backed in debt.

Value exchange wasn’t always that way — except in the very beginning.

Our ancestors came up with bartering first — give me that stone axe, I’ll give you some mammoth.

Somewhat-related video to put you in that prehistoric mood.

It all works nice and dandy until the mammoth hunting season is over.

That’s when we have to come up with a system. We’ll just say that I owe you a chunk of mammoth for that stone axe. Congrats — we just came up with non-monetary, debt-based economy.

After a while, it’s a bit tricky to keep a record, so I might just give you a sea shell every time you give me an axe. The shells do have some intrinsic value of their own — they are easy to carry around, pretty, and can be made into necklaces and stuff.

And then, one day, you realize you can use the shells to get some fish — and that’s how commodity money is born. It’s not based on debt —commodity money has an intrinsic value of its own.

Humanity has used (and is still using, at least some of these) a bunch of stuff as commodity cash over the aeons — gold, silver, copper, salt, peppercorns, tea, large stones (such as Rai stones), decorated belts, shells, alcohol, cigarettes, cannabis, candy, nails, cocoa beans, cowries and barley.

Yeah. Large stones. I know.

Wonder who came up with that brilliant idea — and I’m not being sarcastic. The Rai stones are so big and difficult to move that the transaction is recorded in the oral history . They are still used to this day.

In modern times, we use government-issued, debt-based fiat money. It’s not like commodity-based cash — fiat currency has no intrinsic value. The only reason it has any value at all is because the government uses its power to enforce it — sometimes even outside its borders.

Your country doesn’t wanna use my nice, shiny dollars to buy and sell stuff?

Fine — I’ll just bomb you to prehistoric times.

Wait, what!? You are a citizen of my nation and you want to print your own cash?

Jail time, buddy — that’s domestic terrorism.

When it comes to cryptocurrencies…

Can’t really kill a decentralized system, can y’a?

No country to bomb or an individual to throw in jail.

Governments are mostly “fighting” cryptocurrency with regulation — which kinda-sorta doesn’t work as there’s always VPNs and proxies.

In order for cryptocurrency to die, the governments of Earth would have to agree on a move that would obliterate the world's economy — killing the Internet.

I’m not saying it’s not possible (considering the Internet’s semi-decentralized nature, it’s certainly an epic challenge)— but imagine the hordes of angry teenagers that suddenly can’t Instagram their food. No army in the world could stop them.

Crappy jokes and scary thoughts aside, it’s safe to say that the odds of Internet meeting it’s demise are essentially zero.

Which means that crypto is immortal.

The Death of Fiat

Hear me out here.

I might be wrong, the analogy might be crappy, but I think I can make a decent argument.

Technologically advanced civilizations obliterate less advanced ones.

Less advanced tech gets replaced by more advanced tech — horse carriages were replaced by cars, fire was replaced by electricity, swords by machine guns.

The Internet is killing traditional media — services like Netflix and YouTube are putting the last nails in the coffin of cable television. Uber is eradicating taxis. Airbnb annihilating hotels. Amazon is wiping out retail.

So, in essence, better tech always wins — and that’s why I think that crypto will exterminate— and replace fiat.

I don’t know when — I just know that history shows that when two sides with different levels of technology meet, the more advanced one always wins.

Cryptocurrency is a technological tsunami that reaches far beyond the simple exchange of value. It will fundamentally disrupt…

Well.

Every. Single. Industry.

The Rise of Altcoins: Is there a bubble?

If you are reading this article, you’re likely closely witnessing the birth of the blockchain wave that will change the world.

Crypto exploded last year, leaving everyone wondering — will it crash?

My honest answer is — I’ve got no freaking idea. I sure hope not. I’d like everything to moon, governments to die or adapt, and we can all live happily-ever-after in a perfect, blockchain-powered paradise.

I’ll probably be long gone before such a world occurs, or anything resembling it — if it ever happens. I could imagine a Star Trek-type civilization utilizing an advanced Bitcoin version for value exchange (which, in a post-scarcity economy, could be something like “reputation”). I can imagine a future version of ENJ powering colossal, virtual gaming worlds run on Matrioshka Brains.

I do think that cryptocurrency is in sort of a “Schrödinger” bubble — it’s both a bubble and not a bubble.

The overall crypto market cap is based on belief. Not on blind faith — for the most part — but on a number of individuals making informed decisions.

Putting trust in 1s and 0s.

Believing that the fog has value.

So the only way I can see it crashing is everyone losing faith, for some reason or another. Feel free to correct me or add another plausible scenario in the comment section, in case you think I’m wrong.