Why are fiat/banks destined to fail and bitcoin to succeed? Explain.

[J603]

On pretty much every thread about bitcoins I see the majority of people saying that fiat is destined to fail, but that bitcoins are the future. I have to ask, what is it that makes bitcoins such a flawless currency?

I said this in another thread, but the euro (the overall most valuable currency) has been around since 1996, and it is the second most popular currency behind the USD, which admittedly has been around for a few hundred years. I can buy anything I want with the euro (although I live in the US so I don't use it) in multiple countries. Asian and African countries have pegged their currencies to it as well, and the euro and usd are accepted in a lot of countries where they aren't even official.

Bitcoins have been around since 2009, a 1/4 of the Euro's lifespan, and I can't use them to buy even the most basic of things. Looking at bitcoin.travel, there are two places in my state where I could use bitcoins. One is a guitar shop and the other is a Asian (probably Vietnamese) café. I like Vietnamese food, but neither of these are relevant to me whatsoever. I also have to drive an hour to get there, and I need to pay money for gas, so it's a deal breaker.

Looking at these two currencies (let's use the USD for fiat because it's what I'm familiar with) side by side, one is useful and popular, and the other is (currently) useless unless traded as a sort of stock. Bitcoin's value is measured in comparison to fiat on all exchanges. Now, a lot of people bring up the argument "Well, 1 BTC doesn't equal $100, it equals 1 BTC." This is true. 1 BTC does indeed equal 1 BTC. What exactly does this mean? Yes, if I have 1 bitcoin I have 1 bitcoin. But what is the value of this bitcoin, and what is it measured in? Without fiat to back it up, it is worthless. There is nothing for me to buy with it, unless I'm going to pick up playing the guitar. 1 USD = a drink at the gas station. 50 USD = my groceries. 1 BTC = nothing, so far.

As for fiat's supposed instability, where is the evidence? Yes, there is inflation, but bitcoins fluctuate far more than fiat. Bitcoins can drop half their value in one month and then go right back up the next. This does not happen with fiat currencies usually.

It appears as though fiat is more valuable than bitcoins. Don't get me wrong, I want to and I do invest in bitcoins. But I invest to make fiat money, which I can actually spend. However, I would like to see some arguments/evidence that show that fiat is crumbling, and bitcoin is going to overtake it.

[waspoza]

Because history repeating.

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.

http://dailyreckoning.com/fiat-currency/

[semaforo]

Checkout bitmit.
    I buy homebaked bread for bitcoin from a guy in my city. You can get books, coffee, motorcycles, land, gold, clothes, computers, phones, snacks, medicine and on and on delivered right to your door. Except the land. But you can buy it and hold it as an investment without going there.

    When the dollar fails, the EU economy will collapse because it's dependent on exports to the US. The dollar has been debased for a long time, but its not showing due to demand caused by oil being dollar denominated and its role as reserve world currency. Too big to fail, in other words. When cracks start to show things will move very fast.

[semaforo]

Checkout bitmit.
    I buy homebaked bread for bitcoin from a guy in my city. You can get books, coffee, motorcycles, land, gold, clothes, computers, phones, snacks, medicine and on and on delivered right to your door. Except the land. But you can buy it and hold it as an investment without going there. Oh yeah, and drugs and guns.

    When the dollar fails, the EU economy will collapse because it's dependent on exports to the US. The dollar has been debased for a long time, but its not showing due to demand caused by oil being dollar denominated and its role as reserve world currency. Too big to fail, in other words. When cracks start to show things will move very fast.

[J603]

Checkout bitmit.
    I buy homebaked bread for bitcoin from a guy in my city. You can get books, coffee, motorcycles, land, gold, clothes, computers, phones, snacks, medicine and on and on delivered right to your door. Except the land. But you can buy it and hold it as an investment without going there.

    When the dollar fails, the EU economy will collapse because it's dependent on exports to the US. The dollar has been debased for a long time, but its not showing due to demand caused by oil being dollar denominated and its role as reserve world currency. Too big to fail, in other words. When cracks start to show things will move very fast.

While that site is cool, it's far from convenient to have food shipped. I'm not going to order my groceries and wait 3-5 business days to be able to eat.

If the dollar and euro fail, bitcoin will fail because it will have nothing to back it up. 100 BTC is "valuable" because it is worth ~10,000 dollars. If 10,000 dollars were to become virtually worthless, then 100 BTC would be as well, because why would vendors accept something that has no intrinsic value?

[waspoza]

While that site is cool, it's far from convenient to have food shipped. I'm not going to order my groceries and wait 3-5 business days to be able to eat.

You can't order it with gold either, so gold is failure too, right?

[J603]

While that site is cool, it's far from convenient to have food shipped. I'm not going to order my groceries and wait 3-5 business days to be able to eat.

You can't order it with gold either, so gold is failure too, right?

Well gold has certainly failed, at least as a form of currency. Nowhere is going to accept your gold instead of money. Gold also is no longer the standard for currency; now currencies are backed by assets and the state of the economy.

[Weyland Corp]

First of

Bitcoin is not a flawless exchange currency. (the person who told you that was improperly informed)

Bitcoin cannot give any guarantee about anything. the system is "As is" and it is still under development.

Bitcoin is just a dream of Satoshi Nakamoto and we are playing inside that dream:

If we think of good things and make conscious choices the dream will last.
But if we think of bad things and make unconscious choices there will be chaos.
I can already tell you that this dream has a beginning and it has a end.

Ironically the same applies to our current financial system. Which is someonelses dream
they are diffirent dreams but similar rules apply.

the good thinking and conscious descision making are no longer in balance for current world operating conditions therefore; there is choas.

if your currency remains in chaos long enough, it goes to currency heaven.

[EmperorBob]

Now currencies are backed by assets and the state of the economy.

This suggests you misunderstand the actual nature of fiat money. I can go into more detail if you like.

You asked two very distinct questions, I'll start with "Why will Bitcoin succeed?"

Obviously, these are still early days, and I wouldn't pretend Bitcoin's success is a guarantee. Since you're looking to invest I'll start by warning you that there's still a lot of risk and unknowns here.

That being said, what is bitcoin good for right now?

- Safe, irreversible online payments, from $0.005-$1G in value, at fees that are flat and a minuscule fraction of those imposed by paypal and credit card companies.
- You don't have to trust the other party with more than what you're spending. With a credit card, any dishonest merchant can start using your card to buy things in your name.
- Completely anonymous (if you're careful), unseizable, no geographical limitations (Half the world pretty much can't use credit cards online right now because they're considered fraud risks)

These are properties inherent in Bitcoin that give it an edge over currencies, right now. Some other cool stuff is coming down the pipeline, but isn't really usable yet.

You'll notice most of your examples as to why Bitcoin isn't better than fiat are not inherent to the respective currencies. Acceptance of currencies does change, sometimes dramatically (Many countries have seen their citizens completely refuse using the national currency, switching to dollars or euros instead). Bitcoiners are betting on the fact that a currency whose properties as a means of exchange are inherently better will eventually displace fiat currency, fixing the acceptance problem. Think of it this way: Bitcoin has barely had a chance to prove itself yet and has no big players (states, companies, banks) backing it in any real way, and already many people around the world are willing to accept it for payment. Doesn't that say something about its practical value?

The only things at which fiat currency is inherently superior is:
- You can pay your taxes with it.
- It doesn't require a network to actually work.

I think in the long run (20+ years) the advantages are so stacked in favor of Bitcoin (especially online) that it's a likely outcome that it will be directly competing with (if not replacing) national currencies.

[justusranvier]

On pretty much every thread about bitcoins I see the majority of people saying that fiat is destined to fail, but that bitcoins are the future. I have to ask, what is it that makes bitcoins such a flawless currency?

Currencies fail because humans can not be trusted with the power of the mint. Sooner or later, the temptation to use inflation to steal becomes too great and the persons with control over the issuance of the currency indulge. They can get away with it as long as they keep the level of theft below the point at which the average person notices and abandons the currency but human nature being what it is, the thieves can't maintain that level of self control forever.

[Behemot]

On pretty much every thread about bitcoins I see the majority of people saying that fiat is destined to fail, but that bitcoins are the future. I have to ask, what is it that makes bitcoins such a flawless currency?

Currencies fail because humans can not be trusted with the power of the mint. Sooner or later, the temptation to use inflation to steal becomes too great and the persons with control over the issuance of the currency indulge. They can get away with it as long as they keep the level of theft below the point at which the average person notices and abandons the currency but human nature being what it is, the thieves can't maintain that level of self control forever.

That is why regimes have to fall. Governments have all the power (and no responsibility) to operate with other peoples money and also pretty much rule their lifes. But corruption is human nature. So how can you stop the harm? Cancel states. People can't misuse something only if they don't have it. So it is with money and power.

As for the question regarding euro and dollar: US have been exporting the green paper all over the world, if somebody didn't want it, they've sent their army to deliver that. Pretty good tactic to spread yur surrency. As for euro, it pretty much the same: if half a bilion ppl forming together one of three largest economies are forced to use it, what can you do if you want to sell them goods? Right, you adapt. That's the principle of (anarcho)capitalism by the way. If ppl weren't forced to it, you bet they'd use everything else incl. bitcoin.

[CurbsideProphet]

What makes you think the Euro is the most valuable of all fiat currencies?

[Behemot]

Good question, isn't sterling still higher?

[Itcher]

I love my Euros Regardless what many people say - it's the second strongest currency in the world, it gives the holder accept to the biggest market of the world, its strength makes wares from all over the world cheap for euro-holders, cause everybody wants to give his goods against this lovely euro. So you can pay with them in a lot of non-euro countries, because everybody wants it. It's geat, and it's not gonna die, and even if I love and have Bitcoins, the death of the Euro would do really big harm for me and for a lot of people I love, so even in my dirtiest Bitcoin-dreams I don't wish it.

But you don't have to think in this terms: Euro die, Bitcoin live. It's no zero sum game, where one succeeds and the other fails.

What's the problem to have two currencies?

I expect Bitcoin to works better than other currencies in the following fields:
a) something like gold (it is already)
b) the great currency of the internet making the cyperspace the largest free trade zone of the world
c) a tool to overcome currency-crisis

Nothing of this conflicts with the glory of the Euro

[semaforo]

While that site is cool, it's far from convenient to have food shipped. I'm not going to order my groceries and wait 3-5 business days to be able to eat.

You can't order it with gold either, so gold is failure too, right?

Well gold has certainly failed, at least as a form of currency. Nowhere is going to accept your gold instead of money. Gold also is no longer the standard for currency; now currencies are backed by assets and the state of the economy.

  Imagine sitting at the cash register with a spoon and a jet lighter trying to divide your .05 oz ingot into a .0124 oz and a .0376 oz ingot.
 Not a problem with bitcoin!

   People seem to often make the mistake of considering or criticizing bitcoin on one level- only as a currency, only as a payment method, only as a means of storing value. It has major advantages not just in one of these categories, but in all of them. Do you know how much money is made just in fees on international wire transfers every year? It's got to be in the billions, and bitcoin offers a 90% improvement on efficiency over traditional methods. This means that naturally businesses dealing with bitcoin will have an edge over companies dealing with traditional banks in the long run. Think the difference between dinosaurs and birds.

[meanig]

Fiat currencies are backed up the unfunded pension and social welfare liabilities of their issuing governments 

This is the future of all Fiat currencies in the Western world

[meanig]

As for the banks they're finished because we've reached peak debt. Society on a whole is at the limit of its debt servicing ability. That's why interest rates have crashed. When the market decides that it's time for rates to go back to the mean all of the banks will be insolvent.

[marcus_of_augustus]

The idiot troll arrives to talk "Economics", demanding explanations, lol.   

.... day late and a dollar short? train left the station without you.

[herzmeister]

Bitcoins have been around since 2009, a 1/4 of the Euro's lifespan

That's a rather ridiculous comparison. € was introduced (enforced) top-down and large-scale. BTC has to grow bottom-up by grassroots effort.

[semaforo]

The idiot troll arrives to talk "Economics", demanding explanations, lol.   

.... day late and a dollar short? train left the station without you.

Come on, that may be a little harsh. Bitcoin is going to have to be comprehended by much less informed people than the OP down the line. I detect no malice intended in this thread, just lack of research. I'm sure the OP has many valuable qualities and is very intelligent on the right subject. Who knows, with time bitcoin could become such a subject and he/she could help others understand and benefit from bitcoin, but by being insulted he/she might become disillusioned with the bitcoin community, stop researching, and spread misinformation about bitcoin like that contained in the original post.
     I'm just saying having patience with new people will probably benefit us all more in the long run...