Why do people trust fiat money?

[Mike Christ]

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.

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.

[marcovaldo]

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.

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.

If fiat disappears, and we need a currency to continue our way of life, then exactly this will happen:
(...)

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.

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?

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.

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.

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.

[marcovaldo]

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.

[imrer]

They think that governments save their asses.

[johnyj]

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

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

[johnyj]

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.

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...

[crumbs]

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

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

[johnyj]

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

[crumbs]

...
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

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

[Mike Christ]

snip

Backed by govs: I already explained why this doesn't matter; if people don't accept a currency, it doesn't matter who prints it and who backs it.  Saying "It's backed by governments" is synonymous with "We're forcing you and sometimes other nations to use our currency by subsidizing ours against theirs.  We will shut down any currency used in our borders that isn't ours."  A monopoly over currencies is not a worthy quality to me.

It will remain: Provide evidence of this happening.  I have evidence of this not happening; we can clearly see how many currencies have gone extinct over the course of time.  Neither the USD or Bitcoin-the-currency (but not the protocol) is safe from extinction.

Its value is almost constant over time: You're comparing something old to something new; of course BTC is unstable right now, it has a very small userbase, compared to most nations.  The only thing constant about most fiat is that it's worth less now than ever, and thus hopeless as a store of wealth.

It is accepted everywhere: Define "it".  If you went to a grocer in Norway and pulled out this stuff, how far would you get?  Chances are, the grocer will ask you to put your monopoly money away.

It is convenient to use: No more or less convenient than Bitcoin, except when you, as a businessman, have to put up with unjust chargebacks.  Then it gets a little inconvenient.

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.

It takes (AFAIK) 180 days for a CC to confirm, fees included, period.  It takes Bitcoin about an hour, fees included.  Without the fee, you're right; 1-3 days.  Now, you can accept a CC charge instantly, and you can accept Bitcoin instantly (if you don't believe me, actually try using Bitcoin, instead of knocking it), but considering it only takes Bitcoin roughly an hour to finalize, there is far less to worry about when it comes to BTC; by the time you get 6 confirms, you know, beyond a reasonable doubt, you are in possession of that bitcoin.

180 days for a CC to confirm.  That may seem awesome if you're only a consumer, but from a business point of view, along with all the fees which come with accepting CCs (hooray for convenience), it is, at best, a chore to put up with.

Though there is a tiny, optional fee to using Bitcoin, it's nowhere near as big as the fee businesses pay to use CCs.

You might think that currency x will succeed, but if you're alone to think that, currency x is pointless, useless and worthless.

I'm glad to see you're catching on.

I have most of my wealth in BTC, since you're asking, because I work as a freelance artist and that's what my clients pay me with.  I convert some to fiat whenever I need to pay the bills, but would pay directly with BTC if they accepted it.  And the question becomes, "Well if Bitcoin is so great, why aren't businesses accepting it?"  Which requires a long, drawn out answer, which can be summed up as: 1. Bitcoin is young, and 2. The whole government-backed anti-other-currencies thing the USD unfairly has.

[Dabs]

Some South African government collapsed, but their fiat paper money was still worth something many years later, as it was still being used and traded.

[GigaDice]

This is because fiat is easily exchanged and globally accepted, which is exactly what you would want in a currency. Bitcoin still alludes most people as they see it as an abstract idea that would never work on a large scale.

[marcovaldo]

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.

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...

But your reasons are totally wrong.

1) Bitcoin is backed by nothing, or thin air. The concept might be cracked in the future, or under 51% attack, and noone will do anything to save it.

2) Bitcoin is still in beta. Its value can be worth nothing tomorrow. The chance that fiat disappears within 20 years is 0%. The chance that bitcoin will disappear within 20 years, is between 10 and 50% depending how confident you are about it.

3) Why would btc value will always rise over time? I don't think so. Let's talk about that in 20 years
And don't tell me that btc is a deflationary currency, it's bullshit.

People are only using bitcoin to invest money, and make some fiat profit. If bitcoins does not find some use in the future, its value will decrease.

4) Bitcoin is accepted where? I have only seen one Australian shop that accepted bitcoins and the fees were twice as much as CC fees. It's pointless, if the fees are higher.

5) Credit Card confirms instantly.
I'm still waiting (3 days now) for my last btc transaction ....

Credit Card can be charged back if you got hacked, or an unauthorized transaction happens.
Bitcoin offers no protection to customers. If you got hacked, you can only cry and make a thread here:
Mt Gox account hacked!
Mtgox Account Hacked
bitstamp and mtgox accounts hacked at same time
Bitcoin wallet hacked!
Mt. Gox account hacked, 21.88 BTC stolen Have IP and BTC address..
...
[HACKED] while i was on holiday.
My account has been hacked.

Not to mention that bitcoin is really hard to use. When I download the client, I could not download the whole blockchain, even after 1 month of downloading. I had to use an online wallet ... Normal people want something easy, convenient, and simple to use.

[marcovaldo]

Backed by govs: I already explained why this doesn't matter; if people don't accept a currency, it doesn't matter who prints it and who backs it.  Saying "It's backed by governments" is synonymous with "We're forcing you and sometimes other nations to use our currency by subsidizing ours against theirs.  We will shut down any currency used in our borders that isn't ours."  A monopoly over currencies is not a worthy quality to me.

But you are not representative of the people. The US government, elected by US citizens, is representing the people, and they rule the country on behalf on the people, for them, with their agreement. That's exactly the same. It's the same people who prints and accepts USD in America, and the same people that accepts and prints EURO in Europe.

It will remain: Provide evidence of this happening.  I have evidence of this not happening; we can clearly see how many currencies have gone extinct over the course of time.  Neither the USD or Bitcoin-the-currency (but not the protocol) is safe from extinction.

Fiat money exists in my country since 1795. And it will exist when I'm passing away.
I don't see any only-accepted-fiat currency disappearing in a developped European or American country.
I only see crap coins disappearing, like bitcoin. Which is actually a point:

- if you have USD, it won't disappear, or it will be replaced by a new currency, and you will be allowed to exchange freely the old currency by the new one.
- if you have some coins (like bitcoins) which are unofficial, and only used by some people and not everyone, it is likely/possible to disappear.

I can't believe that you think that bitcoins has any chance to disappear after fiat money.
Just wondering: how many fiat do you have? How many btc?

Its value is almost constant over time: You're comparing something old to something new; of course BTC is unstable right now, it has a very small userbase, compared to most nations.  The only thing constant about most fiat is that it's worth less now than ever, and thus hopeless as a store of wealth.

The problem with bitcoin is that it will never grow higher, because:
1) it is unsafe for customers.
2) it is highly volatile for merchants.
3) it is not convenient to use.
4) ...

It is a great innovation. It made some people millionnaires (in usd ), maybe the founder billionnaire.
But it will remain what it is now:
- some tool to buy stuff anonymously on internet, and uncommon.
- some tool to buy drugs.
- some tool to invest online.
(- eventually a safe haven like gold for some people)

But nothing more. It is not gonna replace fiat, or even compete with it. It is clearly not designed for it, and not trustworthy enough.
Still, it does not mean that it will disappear, but people will always go to the shop buying with USD.

It is accepted everywhere: Define "it".  If you went to a grocer in Norway and pulled out this stuff, how far would you get?  Chances are, the grocer will ask you to put your monopoly money away.

If you offer to send him a btc transaction, he will tell you to GTFO as well.
But if you show him some kroners (fiat), you will be fine

Guess what, it = fiat.

It is convenient to use: No more or less convenient than Bitcoin, except when you, as a businessman, have to put up with unjust chargebacks.  Then it gets a little inconvenient.

From a customer point of view, I want a guarantee that if some douchedags chinese cracks the system and stole my lifetime savings, I want it back. And quickly. It is insured by fiat, not by btc. And I can show you dozens of people crying the fuck out of them because of that.

From a customer point of view, I want to pay it cheap. I don't mind of VISA takes a 2% fee. But if I see that bitcoins price are 10% higher than fiat prices, which is currently the case, and most likely will stay that way, I don't give a shit that the merchant has no fee with bicoin and I will pay it cheaper with my CC.

It takes (AFAIK) 180 days for a CC to confirm, fees included, period.  It takes Bitcoin about an hour, fees included.  Without the fee, you're right; 1-3 days.  Now, you can accept a CC charge instantly, and you can accept Bitcoin instantly (if you don't believe me, actually try using Bitcoin, instead of knocking it), but considering it only takes Bitcoin roughly an hour to finalize, there is far less to worry about when it comes to BTC; by the time you get 6 confirms, you know, beyond a reasonable doubt, you are in possession of that bitcoin.

180 days for a CC to confirm.  That may seem awesome if you're only a consumer, but from a business point of view, along with all the fees which come with accepting CCs (hooray for convenience), it is, at best, a chore to put up with.

You are confusing 2 things:
- confirm
- proceed

CC takes 180 days to proceed, but only a couple of seconds to confirms. Bitcoins need at least one confirmation to confirms because of double spend. Depending on the point of view, we can considered it as proceeded after 1 - 2 - 6 confirmations. Bitcoins is much faster to proceed. But much longer to confirm. And the only things that matter is confirming. When you buy something, after it is confirmed, you can have it. In a shop, you can leave within 1 min, you don't have to wait with your bag for 180 days. In an hypotetical bitcoin shop, if you don't include a fee, you would have to wait 3 days before leaving the shop with what you bought.

Though there is a tiny, optional fee to using Bitcoin, it's nowhere near as big as the fee businesses pay to use CCs.

I never complained about CC fees. Actually, my CC is free of charge (for me, not for people who accepts it).
But I am fucking annoyed by BTC fees, and also BTC websites fees.

I am only using btc for trading though, so my profits are way higher than fees, but if I used bitcoins for something else, I would be pissed out quickly.

I have most of my wealth in BTC, since you're asking, because I work as a freelance artist and that's what my clients pay me with.  I convert some to fiat whenever I need to pay the bills, but would pay directly with BTC if they accepted it.  And the question becomes, "Well if Bitcoin is so great, why aren't businesses accepting it?"  Which requires a long, drawn out answer, which can be summed up as: 1. Bitcoin is young, and 2. The whole government-backed anti-other-currencies thing the USD unfairly has.

Yes, bitcoin can be used rarely for private transactions, as an unofficial currency. I don't deny it.
But as you said in your last sentence, it will never be used widely.

[xxjs]

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.

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...

But your reasons are totally wrong.

1) Bitcoin is backed by nothing, or thin air. The concept might be cracked in the future, or under 51% attack, and noone will do anything to save it.

2) Bitcoin is still in beta. Its value can be worth nothing tomorrow. The chance that fiat disappears within 20 years is 0%. The chance that bitcoin will disappear within 20 years, is between 10 and 50% depending how confident you are about it.

3) Why would btc value will always rise over time? I don't think so. Let's talk about that in 20 years
And don't tell me that btc is a deflationary currency, it's bullshit.

People are only using bitcoin to invest money, and make some fiat profit. If bitcoins does not find some use in the future, its value will decrease.

4) Bitcoin is accepted where? I have only seen one Australian shop that accepted bitcoins and the fees were twice as much as CC fees. It's pointless, if the fees are higher.

5) Credit Card confirms instantly.
I'm still waiting (3 days now) for my last btc transaction ....

Credit Card can be charged back if you got hacked, or an unauthorized transaction happens.
Bitcoin offers no protection to customers. If you got hacked, you can only cry and make a thread here:
Mt Gox account hacked!
Mtgox Account Hacked
bitstamp and mtgox accounts hacked at same time
Bitcoin wallet hacked!
Mt. Gox account hacked, 21.88 BTC stolen Have IP and BTC address..
...
[HACKED] while i was on holiday.
My account has been hacked.

Not to mention that bitcoin is really hard to use. When I download the client, I could not download the whole blockchain, even after 1 month of downloading. I had to use an online wallet ... Normal people want something easy, convenient, and simple to use.

This is mostly as the common people see it now. Put on the entrepreneur spectacles, and try to imagine bitcoin when it is more known, and companies add useful services on top of it. Look forward a couple of years. How can it be in the future. That is the question.

[johnyj]

1) Bitcoin is backed by nothing, or thin air. The concept might be cracked in the future, or under 51% attack, and noone will do anything to save it.

2) Bitcoin is still in beta. Its value can be worth nothing tomorrow. The chance that fiat disappears within 20 years is 0%. The chance that bitcoin will disappear within 20 years, is between 10 and 50% depending how confident you are about it.

3) Why would btc value will always rise over time? I don't think so. Let's talk about that in 20 years
And don't tell me that btc is a deflationary currency, it's bullshit.

People are only using bitcoin to invest money, and make some fiat profit. If bitcoins does not find some use in the future, its value will decrease.

4) Bitcoin is accepted where? I have only seen one Australian shop that accepted bitcoins and the fees were twice as much as CC fees. It's pointless, if the fees are higher.

5) Credit Card confirms instantly.
I'm still waiting (3 days now) for my last btc transaction ....

Not to mention that bitcoin is really hard to use. When I download the client, I could not download the whole blockchain, even after 1 month of downloading. I had to use an online wallet ... Normal people want something easy, convenient, and simple to use.

I agree that from an end user perspective, bitcoin is still not so easy to use, even after 2 years in bitcoin world, I'm still having problem to trust the safety of a private key (until yesterday some one invented a method to generate a private key by casting dice ) Without some good knowledge in IT, you will always be struggling with the technical details

But if you look from higher level...

Due to its deflative nature, bitcoin will seldom be used as a medium of payment, more likely to become a store of value which you can transfer to anywhere in the world. These properties might not be so important for a domestic user, but when you dealing with another country, it is highly valuable. We all know that most of today's countries are trying to debase their currency through inflation so that they can export more, none of the currency are enough trustworthy world wide if they are issued by a single government. Even a currency portfolio like SDR does not hold its value over time, since all the underlying components are inflating

So from an international perspective, bitcoin is no difference than any other foreign currency that are traded on exchanges, you don't need to know how a japanese yen works in Japan, as long as you can exchange it to dollar, it has value. And due to bitcoin's deflative nature and not backed by any single government, it has the highest credit rating

[crumbs]

...And due to bitcoin's deflative nature and not backed by any single government, it has the highest credit rating

Lul wut
P.S:  Bitcoin is currently inflationary, that's how miners get their coins.  As far as credit rating, well... There's none.

[marcovaldo]

I agree that from an end user perspective, bitcoin is still not so easy to use, even after 2 years in bitcoin world, I'm still having problem to trust the safety of a private key (until yesterday some one invented a method to generate a private key by casting dice ) Without some good knowledge in IT, you will always be struggling with the technical details

But if you look from higher level...

Due to its deflative nature, bitcoin will seldom be used as a medium of payment, more likely to become a store of value which you can transfer to anywhere in the world. These properties might not be so important for a domestic user, but when you dealing with another country, it is highly valuable. We all know that most of today's countries are trying to debase their currency through inflation so that they can export more, none of the currency are enough trustworthy world wide if they are issued by a single government. Even a currency portfolio like SDR does not hold its value over time, since all the underlying components are inflating

So from an international perspective, bitcoin is no difference than any other foreign currency that are traded on exchanges, you don't need to know how a japanese yen works in Japan, as long as you can exchange it to dollar, it has value. And due to bitcoin's deflative nature and not backed by any single government, it has the highest credit rating

I explained here: https://bitcointalk.org/index.php?topic=288335.0
Why I think that bitcoin will never extend more.


Yes, bitcoin might be used as a store of value.
Yes, bitcoin might be used by some people to get paid for their service.
Yes, bitcoin might be used for buying drugs.
Yes, bitcoin might be used for other kind of things.

But no, bitcoin is never gonna replace fiat. It's just like gold.
People trust fiat, people trust gold. But they trust fiat more than gold, because they know that they can go to walmart and buy some fish with fiat, and not with gold.

[johnyj]

I agree that from an end user perspective, bitcoin is still not so easy to use, even after 2 years in bitcoin world, I'm still having problem to trust the safety of a private key (until yesterday some one invented a method to generate a private key by casting dice ) Without some good knowledge in IT, you will always be struggling with the technical details

But if you look from higher level...

Due to its deflative nature, bitcoin will seldom be used as a medium of payment, more likely to become a store of value which you can transfer to anywhere in the world. These properties might not be so important for a domestic user, but when you dealing with another country, it is highly valuable. We all know that most of today's countries are trying to debase their currency through inflation so that they can export more, none of the currency are enough trustworthy world wide if they are issued by a single government. Even a currency portfolio like SDR does not hold its value over time, since all the underlying components are inflating

So from an international perspective, bitcoin is no difference than any other foreign currency that are traded on exchanges, you don't need to know how a japanese yen works in Japan, as long as you can exchange it to dollar, it has value. And due to bitcoin's deflative nature and not backed by any single government, it has the highest credit rating

I explained here: https://bitcointalk.org/index.php?topic=288335.0
Why I think that bitcoin will never extend more.

Yes, bitcoin might be used as a store of value.
Yes, bitcoin might be used by some people to get paid for their service.
Yes, bitcoin might be used for buying drugs.
Yes, bitcoin might be used for other kind of things.

But no, bitcoin is never gonna replace fiat. It's just like gold.
People trust fiat, people trust gold. But they trust fiat more than gold, because they know that they can go to walmart and buy some fish with fiat, and not with gold.

People have always been able to exchange USD for gold, but suddenly one day 1971 US government refuse to exchange dollar for gold and then it goes for hyperinflation

What if one day Walmart refuse to accept USD in exchange for their goods? All it takes is ONE supermarket accept bitcoin as payment and it could happen during one night

Bitcoin will not replace fiat, they serve different purposes. But if some day fiat really crashed, bitcoin will definitely come to save, and you can not rule out that risk totally, there are many possibilities for fiat money to fail, even they are not that obvious now

There is a very obvious reason that could cause fiat money's failure: Why should any merchant use their product/service to exchange for a piece of paper which is backed by nothing (gold used to back fiat money has been removed since 1971)? Maybe they don't understand how fiat money works, but exchange some valuable things for nothing is an absurd logic that even a children can understand

[crumbs]

...
People have always been able to exchange USD for gold, but suddenly one day 1971 US government refuse to exchange dollar for gold and then it goes for hyperinflation

Factually wrong.  Hyperinflation is defined as 50%/mo or greater.  Never happened.  The expression you're looking for is "inflationary rhetoric."

What if one day Walmart refuse to accept USD in exchange for their goods?

What if one day Wal-Mart refused to take money & insisted on being paid in Vestal Virgins, hmm?

All it takes is ONE supermarket accept bitcoin as payment and it could happen during one night

The only thing that will happen overnight, in this case, is one supermarket accepting bitcoins.  Some meatspace stores already do.  No biggie.

Bitcoin will not replace fiat, they serve different purposes. But if some day fiat really crashed, bitcoin will definitely come to save, and you can not rule out that risk totally, there are many possibilities for fiat money to fail, even they are not that obvious now

Fiat can fail, and currencies did, more than once.  If fiat fails, another fiat will pick up the slack.  Or Bitcoin.  Or Sexcoin. Or Herpaderpcoin.  Everything's possible, i suppose.

There is a very obvious reason that could cause fiat money's failure: Why should any merchant use their product/service to exchange for a piece of paper which is backed by nothing (gold used to back fiat money has been removed since 1971)?

Bitcoin is also not backed by gold, and has the further disadvantage of not being backed by the government, or even by Haxor B0b.

Maybe they don't understand how fiat money works, but exchange some valuable things for nothing is an absurd logic that even a children can understand

Perhaps it's *you* who doesn't understand how fiat works?  The *only ones* who find your logic persuasive *are* children.