Bitcoin VS Fiat Currencies and Bitcoin VS Blockchain - Eaglesinvestors

Bitcoin vs fiat currencies, where bitcoin and all cryptocurrencies will be the future of financial transactions.

Someone said that the internet It is going to be one of the major forces for reducing the role of government. The one thing that’s missing but that will soon be devolved is a reliable E Cash A method whereby on the internet you can transfer funds from A to B without A knowing B or B knowing A.

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What is the Bitcoin, what backs Bitcoin?

You put some of your money, real money online and it turns into Bitcoin. Bitcoin turned into a massively multiplayer online game where speculators are trying to help each other. Is it a mean of exchange or an asset class? The subject Bitcoin is known even by our elders. Jason Seibert grandmother asked what is Bitcoin stuff anyway. Jason asked his grandmother if she remembers when VISA Cards first came out. Before VISA Cards you were used to paying with cash or CECs, so it was a new and weird system that you didn’t understand. So Bitcoin is the new evolution of payment systems. But what do you think? Bitcoin vs fiat currencies, who do you think will eventually become even stronger?

Bitcoin, by now you probably heard of it.

The wild fluctuation in his price has gain attention from main financial media. Also, attracting controversy and hate from the current banking and monetary system.

However, Bitcoin is much more than just your average investment, and beneath of hype, hysteria lies what could be the most important technology of our lifetimes. So, to fully appreciate the characteristics that make Bitcoin a potentially world-changing technology we first need to understand what money is.

What is a Fiat Currency and how is it different from Bitcoin?

Currency started developing 6000 to 9000 years ago some sort of medium of exchange and people used something of value. Societies around the world started to select gold and silver as their primary currency about 3000 years ago. In the year of 680 BC, they became money when they were melted into coins of equal weights. The government’s started creating representative currencies where you deposit gold and silver, or they have gold and silver in the treasury, and they come out with notes. So, creating a claim jack on the gold supposedly as good as gold because you can always convert it back. Throughout history, precious metals were chosen as money not thru government decree but because of their unique features.

bitcoin blockchain currencyGold is rare, easily recognizable, portable, durable and divisible. Above all, because gold is difficult to find and labor intensive to mine, refine and mint.

Precious metals were always perceived as a store of value, but what about Bitcoin?

In modern history, as World War Two was coming to an end in 1944, the allay nations meet in the small town of Bretton Woods New Hampshire. It was here where they drafted a new financial system which would stabilize the world financial system once the war ended. With the United States poised to enter a golden age of prosperity, the US dollar was chosen to be the world’s reserve currency.

The Bretton Woods system was created after the Second World War of the Bretton Woods conference in New Hampshire. So rather than using gold as a means of exchange between countries as was the case of the old gold standard the dollar is going to be used and the dollar was chosen because back then it was as good as gold.

Under this new system, the countries of the world would tie their currencies at a fixed rate to the US dollar and because most of the Worlds gold was held in US volts.

bitcoin blockchain currencyThe US dollar would be backed by gold at a fixed price of $35 per ounce. Therefore, creating a system where the currencies of the world were effectively backed by gold for the US dollar. The Bretton Woods system lasted for about 25 years. In August of 1971, President Richard Nixon called for an emergency press conference where he announced foreign countries would no longer be able to convert US dollar holdings into gold.

His Surprise Move is Known as the Nixon Shock

With this one announcement, President Nixon effectively created our current monetary system. A system where no fiat currency is backed by gold or anything of value. Our current monetary system is known today as a Fiat currency.

Fiat currency is a currency that is backed by nothing except government promises. The word FIAT comes from the Latin word, and it means currency that is circulating by force. If people have confidence in a fiat currency and if there’s enough government force that will enable the fiat currency to circulate for some time. However, that’s until people lose confidence in the fiat currency.

Gold vs fiat currencies or bitcoin vs fiat currencies? We know that everytime something else proved to be of more value thru out the history the governments decided to take them down. Much like gold, bitcoin vs fiat currencies are experiencing the same problem.

Money is a Medium of Exchange

bitcoin blockchain currencyThe way it has evolved is that it’s always something of intrinsic value. Until modern age when politicians decided we don’t need anything of intrinsic value anymore all we need is political decree. We can say this is money, this piece of paper is money, now money has a new characteristic. However, underneath it all there’s the same concept in place that nobody ever seems to challenge. The Government has the right to declare something of no value to be money, and you must accept it.

That’s the real problem today and without anything tangible backing the fiat currency as we use today. Government’s around the world have been able to issue an unlimited amount of new currency without restraint.

Similarly, with the advent of the digital age currencies around the world are now digits in a global banking database.

So what is Bitcoin?

Well, simply put it’s a digital currency much like the electronic currency we use today. However, it’s also the payment network which facilitates the transfer of this new digital currency.

Bitcoins it’s a new internet protocol that enables the transmission of value over a communications channel. Think of it like being able to send a gold coin as easy as an email. Allows users to send any amount of money, anyone in the world, anytime, can’t be seen, confiscated or frozen.

A very useful technology in my opinion. The bottom line is that this digital currency and a payment system works the same way as banks system or PayPal. But it’s also a currency, so PayPal and banks use the dollar as their fiat currency.

The Bitcoin payment system uses Bitcoins as its currency, so they both have the same name.

Others are calling Bitcoin vs fiat currencies a disruptive Digital Currency

If you’re looking for the idea that currency doesn’t have to be something physical but something virtual that’s the system, we already have. However, what is this Bitcoin supposed to do differently from what we already have?

Bitcoin is different from other fiat currencies in a couple of ways but not the way people think. Most people think it’s different because it’s a digital currency, but fiat currencies are also digital. So the dollar is a digital currency the Euro is a digital currency they’re all just ones and zeros in the banks of the world.

The real answer of why Bitcoin is unique is that it cannot be created out of thin air. So dollars, euros, yen can be created out of thin air by people who have permission to do so which is generally a Central Bank.

Bitcoin cannot be Created out of thin air, so it is a Scarce Digital Asset.

Unlike the banking system, we currently use where bureaucrat meets behind closed doors and determine or regulate the supply of new fiat currency.

bitcoin blockchain currencyInstead, mathematics and cryptography are used to regulate the creation of new bitcoins. The Bitcoin network is decentralized, which means that transactions and account balances are not stored on a central computer or database. Bitcoin ledger of accounts more commonly known as the blockchain is distributed across tens of thousands of computers around the world. Taking bitcoin vs fiat currencies, it is easy to identify which is superior.

Napster, some of us will remember the application

So with that app, we can download music and movies. But after a while, it got so big and popular the government came in and shut it down because of copyright infringement.

Then somebody created something called the BitTorrent network. A software people run on their computers that allows file share. Similarly, if you run the software, you can go to websites like Piratebay or BTjunkie to download music or movies.

Why is it different from Napster?

Well, governments can’t stop it because it’s not a centralized location. Now, Bitcoin is the currency that runs on the BitTorrent network.

Fast recap of why Gold and Silver was considered money for the last 4000 years

Because it took work and effort to make that nice, beautiful coin. They had to dig it out of the ground, refine it the crucibles and furnace. So you don’t have to trust anybody that they were going to work for you because the work was already done.

Bitcoin proof of work is the same thing.

You have to hash away and solve all these math problems, add the chips, electricity to create the Bitcoin. Today it will cost you around $600 to mine a Bitcoin.

Bitcoin has Multiple Levels of Intrinsic Value

Firstly, one of Bitcoin’s property is that I cannot be confiscated.

Secondly, censorship-resistant value transfer that no one can stop you from sending. More importantly, what gives it an intrinsic value is the productive capacity and the brainpower of some of the brightest developers in the world.

Developers that have chosen to work on this open-source protocol and this productive capacity of the brightest minds that are building it that is what truly gives it value.

Bitcoin Transactions Are Cryptographically Verified by Thousands of Computers on Bitcoin network

The use of such powerful computers known as miners spends a massive amount of energy and processing power to verify the integrity of every transaction. So the miners validate transactions.

All these transactions of flying around and they have not yet been formally vetted by the network. If the miner believes the transactions are valid, he will put them in the block in the block then becomes part of the blockchain. Over time that becomes the record of truth. So what that means is if you receive Bitcoin and a few blocks happen after you receive it no one can ever take that money away from you. Because of that the blocks are stuck into the blockchain, can’t be reversed, and you know that the money is this truly yours.

The Decentralized Nature of the Bitcoin Network Eliminates a single point of failure and makes it impossible to be hacked or shut down

Bitcoin transactions are transmitted peer to peer without the need for a third-party meaning that the user is in complete control of their money.

The beautiful thing about it is that it is impossible to shut down. That’s a beautiful thing about it; there is no bitcoin place you can’t shoot Bitcoin. It has no center of gravity; no headquarters you can’t shut it down.

However, there is a way, the only way you could destroy Bitcoin is shutting down the internet.

The average person has absolutely no idea how their email works. But it works, and that’s all that matters and Bitcoin is very similar to that.

Let’s try and describe Bitcoin to people. Simply put it’s a form of money that you can use on your phone or computer in today’s digital age where everyone is on the internet. This digital currency is much faster than most of the banks, and it has risen in value since its inception in 2009.

For new users, the inner workings of Bitcoin can be quite complex and daunting. However, what’s important is how this revolutionary technology changes how money is transferred globally.

Right now every single payment that you make to another person goes through an intermediary. PayPal, Banks, Visa or MasterCard and more importantly the government or jurisdiction who decides if you’re allowed to make that payment.

Payments could be stopped halfway through and then you have to try and get the money back.

bitcoin blockchain currencyNo one can stop Bitcoin transactions from the moment you decide to send another person digital value. So you can just send Bitcoins, and there is nobody who can stop it. Similarly, there is no one that has to permit you to pay another person money, and all they need is an internet connection.

Bitcoin has the potential to displace the need for banks as a trust institution. If people exchange currency or Bitcoin and it goes on the blockchain Ledger, we don’t need a bank to confirm that it is a valid transaction.

The main differences between Bitcoin and the banking system are that it doesn’t require a third party to perform. When people deposit into a checking or savings, account, they are loaning the bank their currency.

The Reason Why Central Banks and Governess are Afraid of Bitcoin VS Fiat Currencies 

So the people are depositing money into their savings or bank accounts, therefore, loaning the bank. The bank is now entitling to your money, and they have a liability on their books to pay you back one day.

bitcoin blockchain currencyUltimately banks get to do anything they want with that money where you depend on intermediaries. So third-party or counterparty have to perform for you to get the currency back.

Cryptocurrencies invert the power structure.

It isn’t a few people at the top controlling a whole bunch of people at the bottom, and the power goes to the individual.

The same with the internet flattens access to information and allows anyone with an internet connection to learn anything. Similarly, to communicate and engage in activities with anyone else on earth.

Bitcoin does that with money.

So now anyone on the planet no matters their age, arbitrary geographic location or the arbitrary rules that are governed over them can now engage economically with anyone else directly.

Also as profoundly influential as it seems you do not need a bank account to interact with Bitcoin. You don’t need a bank account now to receive an honest payment from someone else in the world and know that the money is legitimate.

So money now can’t be censored any two people can send it between each other thru Bitcoin.

The Cryptocurrency Bitcoin Has Defied and Surpassed all Other Asset Class

Headlines such as: “Bitcoin is spiking above $18000”, “Bitcoin’s incredible run going into the holidays” or “Bitcoin has seen a pretty big pullback 30% in a week and 50% loss in the year”.

bitcoin blockchain currencyThe past year we witnessed the price of Bitcoin rise and fall in dramatic fashion. Also, getting the attention of Wall Street and the Investment community.

Bitcoin is now seen by the public as a speculative asset class that can be traded, but the core fundamentals of this important technology cannot be overlooked

Bitcoins Importance for third tier Economies

The use of Bitcoin is particularly vital in the developing world where billions of people are without basic banking services.

People see the price of Bitcoin all the time, especially in advanced societies and focus more on the price. Such people think that Bitcoin is an investment solely and that it goes up and down like a stock based on news and expectations.

 

The fact is that probably more people in this kind of third economies that might not know a lot but they own it. The reason that they own Bitcoins is only that they need it and not because they expect to get rich or hope to get rich. Also because they need to protect themselves against both destroyed fiat currencies and capital controls.

People who think of Bitcoin as investment needs to realize that Bitcoin is exciting because it’s the future money.

Cryptocurrencies are something else, something unique that became a significant investment.

With cryptocurrencies and Bitcoin, it so happens that both scenarios can be accomplished at the same time.

One of the great powers of whether it’s Bitcoin or any other cryptocurrencies is the technology itself. If we can figure out how to scale the technology, we can solve a lot of problems in the financial system.

It will allow us to transact with each other globally at very low cost and very effective. Also, there’s tremendous market power in that, has nothing to do with anyone in the financial system. People want to be able to communicate and transact with each other simply and quickly. The hunger to do just that is enormous and too late to stop.

Today Bitcoin is seen as a Financial Asset Whose Bubble Popped

As the technology develops the blockchain that powers Bitcoin may be used to verify transactions other than the transfer of money.

bitcoin blockchain currencyEach Bitcoin is divisible into 100 million of a bitcoin called a satoshi. These tiny fractions of a bitcoin can be programmed to represent assets other than money. Therefore, the Bitcoin blockchain can be used to verify transactions of all kinds of items without needing a central authority.

The Bitcoin blockchain is a tremendous technological innovation that enables distributed consensus. People can agree on what the state of the ledgers should be and what it is. Enables people to have trust without trusting any other third party, person or institution. So anywhere we need to have trust. Also, we need to be able to verify what is the true and correct state of something. That is an application which will be put on the Bitcoin blockchain.

The Same Problem for 6000 Years of Recorded History

Humans always had this problem by not engaging in this consensual exchange because we are strangers. Questions and doubts about trust are what happens. So what’s happening with Bitcoin and the blockchain technology is that we don’t have to worry about that.

Now it is possible for us to have a trustworthy exchange without those third-party. Read more about consensual exchange or the financial Law HERE.

The trust is built into the cryptography that guarantees the exchange of value. So it means that this technology is as disruptive as the internet was. Also is disruptive to these hundreds of different institutions that glued society together.

Everything from notary public’s, voting or governments all those rigid things can be recreated in the blockchain. We can recreate them in a way that will finally be able would trust. What that means is that we’ve seen technology do to lots of private Industries will now start doing the government functions.

Understand the Implications of Bitcoin

So 100 million bits of a bitcoin is a Satoshi, and you can program that to be anything of value. It can represent titles for cars, real estate, diamonds, Gold or votes in elections, etc. Anything of value can nowadays be digitized and tokenized on the blockchain and also transacted. It can be sent across the internet without having to go through a trusted third party.

Bitcoins will Revolutionize Latin America, Africa, Southeast Asia

The blockchain and bitcoin will change the world and everything else regarding protecting people’s identities. It will allow people to own property and also help the 2 billion people that don’t have a bank account. Similarly, help the 5 billion people that can’t prove they exist or don’t have title to real Estates.

This is how bitcoin is going to help those people, and this is how they will jump from the third world to the first world.

People will now own real estate or have transparent elections, and it can’t be hacked. Just imagine how just a couple of factors will improve the lifestyle of many people.

Ultimately this technology will be able to transform our world into a Utopia, and it will probably need another 100 years to develop fully.

Corrupt Governments Tries to Seize Power Yet Again

Since anyone can start using bitcoin by can installing an app on their phone, have pushed governments to take drastic measures. Bitcoin can be used by the developing world to protect their wealth from unstable currency and government control. We are all seeing manifesting as a currency crisis in Venezuela, Nigeria or Zimbabwe where countries can’t get a grasp on her monetary policy.

bitcoin blockchain currencyThe underbanked or unbanked population no longer lies in the hands of the corrupt government, centrally planned economies or central banks. Anyone who lives in the United States or Europe can get a bank account very easily. Also having a credit or debit cards, they don’t find any friction or pain points. However, in a country like India, there are 233 million individuals who are unbanked. Such people don’t even have access to traditional financial infrastructure, and so they are operating cash payment to cash payment.

Bitcoin Will Become a Game changer for Individuals

Currently, Bitcoin transaction can sometimes carry a significant fee making it unsuitable for small transactions. However, Bitcoin is programmable money, meaning that new layers of technology can be integrated into it.

What if that technology is already developed? RapidX and Lighting network can help to reduce the cost and they already been successfully tested.

At the moment Bitcoin is becoming more popular even in current market conditions. The biggest challenge for cryptocurrencies and Bitcoin is the computational power need for each transaction. For now, Bitcoin can carry out four to seven transactions every second, and with lightning, technology can become one million transactions every second. It will make it so much more efficient and so much cheaper for the average person.

The Integration of the Lightning network into the Bitcoin Protocol

bitcoin blockchain currencyWhat will happen with this integration is that bitcoin will be a fast, cheap and efficient payment system. Once implemented this will have enormous implications for the developing world.

The biggest stumbling block to do international business is the payment system. If your applying for credit cards from some particular countries, they are associated with fraud and the rates of those credit cards are astronomical.

So something like 33% of the credit card transactions coming from Africa is fragile. Therefore, nobody wants to take business from Africa because it’s just too risky. With bitcoin, you know the funds are good so as a merchant pay with bitcoin.

The Bitcoin technology has a tremendous impact on such businesses. You can get access to these types of products and services and then they can start having property rights. Such property rights are really what’s going to help to get out of poverty.

In today’s digital world governments have started to phase out cash replacing it with the digital currency.

In this environment of concerns over personal privacy are very real, bitcoin provide monetary sovereignty outside the control of government policy. If the government is trying to control, they do not want people to have the means of hiding anything from them. Not just from a cyber attacks standpoint but also the government wants to know what everyone is doing in a very “Big Brother” fashion.

So the way we have to look at bitcoin is as the ultimate monetary weapon that the people have never had in history.

Every government in the world wants to go cashless

bitcoin blockchain currencyOne of the reasons is that in a cashless society you are not able to exit the banking system. When people panic they run to the ATMs or the bank and they withdraw money. The other thing is that governments are starting to run out of money and they don’t build anything. Governments are just using other people’s money, so they are treating everyone as a tax evader.

The main reason why bitcoin is so popular and important is not that of its finite supply or being gold. It’s because of anti-money laundering laws preventing people from doing what they want with their money.

One of government main functions is to create currency and bitcoin is successful because of its potential for circumvention. As to whether that bitcoin is illegal or should be seen legal remains at our discretion to decide.

But What About Fiat Money?

Fiat money has been used for a lot more illegal things that Bitcoin has thru the years and still is today. Also, fiat money is untraceable, easily transportable; nobody knows where that money has been moved from hand to hand.

So, in reality, it is a matter of making that connection that a cryptocurrency is not a new thing. It’s just a different version in a digital form of something that existed in our society and legal structures for millennia.

Bitcoin is shifting the paradigm and challenging the Legacy financial system

Jamie Dimon, chairman, and CEO of JPMorgan Chase America’s largest bank was quoted calling “bitcoin a fraud.”

bitcoin blockchain currencyHe said:

“The reason is that government’s the first thing they do is form a currency. Also, they like to control the currency with a Central Bank and knowing who has it, where it is and where it is going. Then we will only wait to see if someone gets hurt or we will only monitor if it is used for this purpose. We should have somewhere used currency for this purposes, but governments can guaranty to close it down.”

Well, good job Jamie for clearing that up for us. So in essence Bitcoin is a fraud because is not controlled by the government or Central Banks. If Jamie D. did some more research before making that statement he will probably understand the Bitcoin was designed not to be controlled by governments.

Developers and Crypto Enthusiasts replied back to Jamie Dimon

Quote:

“Asking banks if they like Bitcoin is similar to asking a King if he likes Democracy.

People who know very little about the upcoming technology and have the audacity to call developers criminals. They are not criminals, and the whole reason this ecosystem exist is that governments are the real criminals.

It doesn’t really matter at this point what they think the Genie out of the bottle.

Somebody reading this article or somebody around the world will solve the problem with the decentralized landing. Within ten years’ thanks will become less relevant just like landline telephones have become. We will wake up one day we’re going to be in charge of her own money and Jamie Dimon can watch in retirement the world as it is. Not the world that he would like it to be.”

The Bitcoin blockchain is built on decentralized consensus outside the control of a central party

That said, with the hype in the rise of cryptocurrencies such as bitcoin banks are preparing for war.

bitcoin blockchain currencyBoth central and commercial banks have started to develop their digital currencies on what we call blockchain technology.

The biggest fear is that governments and fiat national currencies will adopt blockchain technology. It will run on blockchain technologies in the entire monetary system globally will eventually become cashless.

So if it’s centralized and there’s an entity that runs the blockchain they can lock you out of it if they don’t like what you’re doing.

Also, they can trace everything that you do, every transaction, everywhere you go it will be recorded. Blockchain technology at governments fingertips has the ability to enslave us.

Blockchain or any other open Ledger Will have a Tremendous Impact on our World

Former bankers, traders, brokers fear that if blockchain is used to centralize the digital technology will give banks ultimate power.

Also, give them the ability to put a chip in you and to text you whenever they want. But that’s not all they can interface with the money system with you physically at a perfect the collateral.

So, we all love the innovation. However, the question is how can we innovate and make the financial system more efficient. Also at the same time, we distribute the power lines in the political system.

More from Jamie Demon

Quoting:

“The blockchain technology is a good technology. We use it for different other things GOD Bless Blockchain and bitcoin vs fiat currencies will grow stronger in time.”

Cryptocurrency and digital currency I think are also fine. JP Morgan moves 6 trillion dollars every day and is not done in cash but digitally. If we move to do it on the blockchain digitally so be it, but it will still be a dollar cryptocurrency.

What is Blockchain?

Bitcoin vs blockchain, two different things but cannot exist one without the other.

The majority of people are using the word blockchain, and they don’t care whether it has this decentralized mining. The government is going just to have a digital representation of the dollar that they can call it a blockchain. However, there’s not going to be mining is not going to be decentralized is it going to be a centralized coin. So if they do call it, a blockchain or not is irrelevant.

bitcoin blockchain currencyThe whole purpose of a blockchain is to remove control from a central party. If Central Banks, make a blockchain for dollars then you have dollar coin. So they still have full control over the coin, creating how much they want or where it goes. That being said, there is no point in having a blockchain at all. You might as well have a centralized database like a banking system.

How to use Blockchain and Bitcoin

To really use blockchain in a meaningful way, it means that there is no person in charge. Central Bank by definition is the one in charge of money and they would never I create a blockchain or cryptocurrency that they couldn’t control.

So that’s why they will likely be made redundant because the market can choose which kind of money uses.

The market can choose between:

  1. A digital currency that can and will be controlled by central parties and inflated without limit.
  2. A digital currency that cannot be controlled at all by any central party and that has a fixed amount in computer-based.

Over time, that is going to be an undeniable choice and Bitcoin in the blockchain already proved to be incredibly powerful technologies.

As the future unfolds, these technologies could be used to restructure the financial system into one of fairness and equality for all.

Bitcoin and Blockchain is Meant to be Outside the Control of the Banking Elite

Millions of people are taking an interest in what is money. The question of what is money, what should it be and their learning especially a lot of young people.

Precious metals were once money and then came the era of paper fiat money.  Could we now be entering a golden age of decentralized digital money?

Only Time Will Tell

Bitcoin is first and foremost about changing how the financial system of the planet operates.

However, because bitcoin is also a financial asset itself, it goes to these bubbles.

People have made many millions of dollars after buying bitcoin low and then it goes up in value.

But that’s not really what matters.

All that matters is that it’s actually going to change the entire ecosystem of the planet.

It is a fascinating thing to be part of and withies how humans will interact with each other in the near future.

Bitcoin vs fiat currencies

 

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