Bitcoin vs Fiat

[jerry0]

So lot of people on forums here keep talking about how fiat is not much compared to bitcoin.  Can someone explain this?  I know the talk about inflation... but i'm still confused on this bitcoin vs fiat discussion.  I mean if someone say cashed out 5 million dollars worth of btc into their bank account, to me they are rich.  Heck to me, a lot less than that is rich to me. 



Now compare that to someone with say a million dollars of btc.  To me, they are not rich yet but close.  Now if prices drop, that million dollars worth of btc could easily be just 100k worth etc. 



Now with fiat... i hear lot about less buying power.  Can someone explain this to me in detail?  Yes i know 10 dollars would buy you more things now than say 5 years later.  But what is the case with btc here?  Is it because btc will be most likely higher in 5 years than now... thus it has more buying power?  I hear about heavy inflation and people joke about oh now bread will cost 200 dollars or so.  Obviously that is a complete exaggeration right?  But could someone use an example like this with realistic numbers so i could understand this?



I also don't get when people particularly wealthy people or with people with decent amount of money say... I basically don't have any cash... i have just real estate, stocks, investments, bonds and maybe crypto.  It makes it sound like you don't want cash in the bank or something?  Like if i had 3 million dollars cash in my bank account that to me would be rich.  I mean with that kind of money, you can basically live off it with passive income easily right?  I heard 3 million dollars is enough to live off passive income etc.  But 2 million is more than enough for most people right?  I know people say one million isn't these days.



Like if you ask me ... hey would you rather have 500k worth of crypto now... vs say 2 million dollars cash in the bank right now and no crypto or own anything... wouldn't almost everyone choose the second option?  Of course you could take that cash and buy 500k worth of crypto but let say you aren't allowed to do that.  Almost everyone here would choose the second option here right if say hey you can get either 500k worth of crypto or 2 million in the bank?



Like if someone could cashout their crypto and say have 2 million dollars total, couldn't they just not worry about anything and live off passive income? 

[BlackHatCoiner]

Now if prices drop, that million dollars worth of btc could easily be just 100k worth etc.

If the price dropped it couldn't easily lose 90% of its value. Bitcoin is indeed a fluctuating asset, but it doesn't gain/lose 90% of its value within a night. That's an exaggeration, not the one below.

I hear about heavy inflation and people joke about oh now bread will cost 200 dollars or so.  Obviously that is a complete exaggeration right?  But could someone use an example like this with realistic numbers so i could understand this?

No, it isn't and I'll give you an example with “realistic numbers”. Back in 1940, with $1 you could buy what is now worthing $19. I don't know if you've watched old Hollywood movies, but the cents had an important value. People in poor neighborhoods were counting their money cent-by-cent and that's justified. Back then, the $0.10 are todays' $1.90. As long as time goes on, there will be more dollars and thus, the value of $1 will decrease.

I also don't get when people particularly wealthy people or with people with decent amount of money say... I basically don't have any cash... i have just real estate, stocks, investments, bonds and maybe crypto.

This is why they're wealthy. Because they don't keep their fortune on a fiat currency. Rich people aren't rich by accident (except heirs, lol). They know that by putting their value on something valuable, they'll have profits. Why should they keep their fortune on a medium of exchange that is slowly losing its value? They'll then withdraw anything they need for any spends.

Like if you ask me ... hey would you rather have 500k worth of crypto now... vs say 2 million dollars cash in the bank right now and no crypto or own anything... wouldn't almost everyone choose the second option?

I'd rather be financially free. While 2 million dollars will make me 3 times richer than having 500k, they won't provide me the same financial freedom. Besides that, 500k sound a lot of money to me, so no. I'll deny the million dollars and accept the 10.62 bitcoins.  

[o_e_l_e_o]

Now with fiat... i hear lot about less buying power.  Can someone explain this to me in detail?

More USD is constantly being brought in to existence by banks giving out loans without keeping the loaned amount in reserve and by the Federal Reserve printing more money. As time goes on, there are more and more USD in circulation. If there are only 100 of something in existence, then 1 of them is potentially very valuable. If there are 1,000,000 of the same thing in existence, then 1 of them is significantly less valuable. This is inflation. As time goes on, each individual dollar is worth less and buys less.

But what is the case with btc here?

No one can create bitcoin out of thin air at will. There is a very concrete release schedule which is known to everyone and a max limit which will be reached. Bitcoin cannot inflate in the same way that fiat can.

But could someone use an example like this with realistic numbers so i could understand this?

When the Big Mac was launched in 1967 it cost 45 cents. By the 80s, it was over a dollar. Today, it costs around $4. If you simply held $100 in your bank account, then you've gone from being able to buy 222 Big Macs to only being able to buy 25.

It makes it sound like you don't want cash in the bank or something?

For the above reasons. If you hold cash in a bank and it doesn't earn you more interest than inflation, then you are losing money every day.

[Pmalek]

Look at it this way. By using an inflation calculator, you can figure out what the value of your fiat was back in 2009 when bitcoin was introduced for example. If something cost $100 in 2009, you would have to pay $124 for the same item now because of the inflation. What did bitcoin do in this timeframe? Bitcoin's value increased by almost 68000% in the last 8 years alone if the data I am looking at on CMC is correct.

[ropyu1978]

bitcoin vs fiat currency, they are the same but not the same, fiat currencies are common, and can be used by everyone, upper, lower and middle class ''
while bitcoin can only be used by digital savvy and internet savvy people. ''
the same purpose, but a different way of use ...