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Author Topic: Is bitcoin actually protecting fiat money?  (Read 379 times)
Jacques_Bittard
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March 21, 2018, 08:43:43 AM
 #1

The biggest threat to fiat money is inflation. Inflation can be cured by injecting wealth into the economy and by that rising enough belief to keep the system afloat. This can be done for instance by occupying foreign countries and by that opening up new markets to the companies that are essential to the economy. Or this can be done by loose regulations with the derivatives markets, that will create wealth out of thin air and high hopes.

Can it be that pumping of the crypto markets is just another financial shenanigan created to keep the old system afloat?
They are creating new wealth out of nothing with cryptos, just like with derivatives. The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.

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March 21, 2018, 04:19:57 PM
 #2

I don't think the link would work out, because while the crypto ecosystem does remove a lot of fiat transactions and act to combat inflation it also does the opposite, there are still so many fiat transactions attached to cryptocurrencies that would have an inflationary nature on fiat.

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March 21, 2018, 04:32:25 PM
 #3

Can it be that pumping of the crypto markets is just another financial shenanigan created to keep the old system afloat?
They are creating new wealth out of nothing with cryptos, just like with derivatives. The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.

It is true that economic activity is created by crypto and that can stimulate GDP. That's one reason Japan, for example, is quite keen to introduce regulations that don't prohibit or prevent its use. Jumping from that to tinfoil hat conspiracies takes a very vivid imagination though. It certainly doesn't back the value of fiat and they are not creating new wealth, it is just being transferred into to new asset class and to different people. The benefit comes from all the service industries that have popped up and the money spent by early adopters that have struck it rich. The regulators are not blind and they have taken action where it is necessary, don't believe all the FUD you read.

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March 21, 2018, 05:03:55 PM
 #4

The biggest threat to fiat money is inflation. Inflation can be cured by injecting wealth into the economy and by that rising enough belief to keep the system afloat. This can be done for instance by occupying foreign countries and by that opening up new markets to the companies that are essential to the economy. Or this can be done by loose regulations with the derivatives markets, that will create wealth out of thin air and high hopes.

Can it be that pumping of the crypto markets is just another financial shenanigan created to keep the old system afloat?
They are creating new wealth out of nothing with cryptos, just like with derivatives. The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.
I saw this from different point of view like people are transferring their money value into the bitcoin so the fiat money may lose its value in some years.But we are still in the early stages of adoption so it needs time to settle down and to understand what will happen.

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March 21, 2018, 05:13:37 PM
 #5

Highly doubt the governments and nations who are in charge of fiat money decide to create a system that challenges the status quo. Sure they could be behind it, but are they really operating a decentralized system all by themselves? Are they really controlling hundreds if not thousands of people to get this objective done? I would answer no to both and because of that, it doesn't really matter if they created the system to protect fiat or not. The system is what it is now, and no one single entity or person has any control over it, Bitcoin is a system and product of the world we now live in.

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March 21, 2018, 05:22:11 PM
 #6

Inflation is an irretrievable loss. Have you ever seen deflation in developed countries? Banks give loans to enterprises for development. Loans they give your money. Then they get that money back with more interest. You are given a minimum percentage that is leveled by inflation so that you do not have profit and could not buy more goods. On your money all have a profit except you.

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May 16, 2018, 05:56:56 PM
 #7

i dont think crypto market and money flow in cryptocurrencies can be controlled or done for a specific reasons for spome groups. it is very unpredictable thing and hard to manage such thing using crypto currencies.


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May 16, 2018, 08:46:30 PM
 #8

The biggest threat to fiat money is inflation. Inflation can be cured by injecting wealth into the economy and by that rising enough belief to keep the system afloat. This can be done for instance by occupying foreign countries and by that opening up new markets to the companies that are essential to the economy. Or this can be done by loose regulations with the derivatives markets, that will create wealth out of thin air and high hopes.

Can it be that pumping of the crypto markets is just another financial shenanigan created to keep the old system afloat?
They are creating new wealth out of nothing with cryptos, just like with derivatives. The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.
I think you got some concepts wrong, you cannot generate wealth by just printing currency that is precisely what causes inflation, you have an higher amount of currency chasing the same amount of goods and services, wealth is generated when new products and services enter in the economy, if governments did not printed more currency or at least they did at a slower pace than the real growth then you will have the opposite effect of inflation, every year you could buy more with the same amount money but that will make the population richer and they do not want that.


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May 16, 2018, 09:23:55 PM
 #9

i dont think crypto market and money flow in cryptocurrencies can be controlled or done for a specific reasons for spome groups. it is very unpredictable thing and hard to manage such thing using crypto currencies.
if it's controlled in my opinion it's quite difficult, because the market is where bitcoiners are transactions, so it's not just one transaction but a lot too, so we need to adjust everything

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May 16, 2018, 09:30:23 PM
 #10

The biggest threat to fiat money is inflation. Inflation can be cured by injecting wealth into the economy and by that rising enough belief to keep the system afloat. This can be done for instance by occupying foreign countries and by that opening up new markets to the companies that are essential to the economy. Or this can be done by loose regulations with the derivatives markets, that will create wealth out of thin air and high hopes.

Can it be that pumping of the crypto markets is just another financial shenanigan created to keep the old system afloat?
They are creating new wealth out of nothing with cryptos, just like with derivatives. The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.

I think yes, but only partly. I say that because cryptocurrency is in a different playing field compared to traditional money. And so, although it mostly interplay nowadays, there are still some differences and distinctions in terms of the factors that affects and keeps it value. Money is the more stable of them two, so it would be difficult to say that cryptocurrency is the one protecting fiat money. I think the better description is their interaction leads to better gains for both of them.

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May 16, 2018, 11:54:54 PM
 #11

bitcoin does not protect fiat money, on the contrary, bitcoin wants all transactions easier and faster, we do not need to make banknotes and coins that make it require substantial funds, all transactions and money stored in digital data, thus financial transactions will be cheaper, but our money will remain safe

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May 17, 2018, 05:40:07 PM
 #12

--snip--
The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.

What you mean is that for the economy to keep running, you need people to keep spending on something. Those who invested in bitcoin initially are now millionaires and thus have wealth created out of "thin air" because the price has been artificially pumped by goxdollars and tether.

Your first assumption is that most of the price rise is due to the Tethers being printed by bitfinex without there really being any USD behind it.
Second assumption is that all of the millionaires/ bitcoin holders are actually spending their money by converting it into Fiat and thus helping keep the economy running.
The first assumption is hard to verify or reject. The second one means that people are getting actual Fiat from someone else in exchange of the BTC. But then that takes out an equal amount of Fiat away from another person. The total in circulation remains the same because people who are buying/ selling at the exchanges are doing it with their own money. This is the benefit of bitcoin being a peer-to-peer, decentralized system.

The theory that bitcoin is enabling circulation of new fiat is pretty baseless.


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May 17, 2018, 05:52:23 PM
 #13

So far I have not seen that, the government just cannot open itself to receive cryptocurrency. If the reason the government is reluctant to accept cryptocurrency because of inflation, it's a fatal mistake they do not know about cryptocurrency. Even, in my opinion, cryptocurrency can overcome the problem of inflation. Their simple thought is only if all societies use the payment with the money cryptos then fiat money will be leave by humans, but not as simple as that. Fiat money will continue to be used even if money cryptos exist because not all payment systems will use the money cryptos.

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May 17, 2018, 06:05:30 PM
 #14

I agree that bitcoin is not subject to inflation. Given that the supply of bitcoins is limited, in contrast to fiat money, the only thing that can lead to inflation coming out of control is the lack of demand. And for this reason people use this crypto currency. But I'm not sure that we can say that bitcoin protects fiat money. Rather, it is an alternative to fiat money, which "lures" users.

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May 17, 2018, 06:16:15 PM
 #15

Why do people always think that inflation is a bad thing? Remember Inflation can also be translated to demand, to make you understand deflation is when the prices of goods and services are getting cheaper as the demand is lower than the supply does giving your dollar or any fiat currency more buying power. Injecting more money into the economy does not help solve inflation as well they can also see this as an oversupply of money which can also trigger a greater inflation. Now to answer your question any investment (stocks, real estate, cryptocurrecies) is a protection to inflation as long as your returns are greater than the inflation your buying power will still be equal or even greater than what it was used to before.

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May 17, 2018, 07:06:48 PM
 #16

you're thinking out of the box plotting to create money out of thin air alt_coin or crypto, coins have been made manage to assist by so many person with interest on their given field of knowledge talking advice to the supporter of the crypto they making, it just not being made out of the thin air and high hopes for the customization being the top one crypto, alt_coin, it is tackle sensitively before its final success. 

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May 17, 2018, 07:39:45 PM
 #17

The biggest threat to fiat money is inflation. Inflation can be cured by injecting wealth into the economy and by that rising enough belief to keep the system afloat. This can be done for instance by occupying foreign countries and by that opening up new markets to the companies that are essential to the economy. Or this can be done by loose regulations with the derivatives markets, that will create wealth out of thin air and high hopes.

Can it be that pumping of the crypto markets is just another financial shenanigan created to keep the old system afloat?
They are creating new wealth out of nothing with cryptos, just like with derivatives. The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.

It its purest meaning the inflation is an increase of money supply. Considering the fact that we live in the world with fiat money and central banks, the only way the money supply can significantly increase is by governments swiching on printing presses. So the root of problem lies in governments which have a monopoly over money. Crypto has all chances to change the state of things.

Also, crypto doesn't create any wealth at the moment, it mostly just redistributes it.

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May 17, 2018, 08:09:56 PM
 #18

you're thinking out of the box plotting to create money out of thin air alt_coin or crypto, coins have been made manage to assist by so many person with interest on their given field of knowledge talking advice to the supporter of the crypto they making, it just not being made out of the thin air and high hopes for the customization being the top one crypto, alt_coin, it is tackle sensitively before its final success. 
I really don't see any correlation between the two at all, And even if that's the case OP should at least state the currency which is being protected by the cryptos since we are all not using a single universal currency.



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May 17, 2018, 08:40:59 PM
 #19

The problem with your theory OP is that BTC isn't backing a certain fiat currency. It's being exchanged into many different ones and if you divide the market capitalization by the currencies for which it's being traded you'll end up with such a small sums compared to the GDP of each of these countries that it simply couldn't have an impact on their economy. So, IMO it just can't be protecting fiat from inflation, at least not at this stage.
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May 17, 2018, 11:27:39 PM
 #20

The biggest threat to fiat money is inflation. Inflation can be cured by injecting wealth into the economy and by that rising enough belief to keep the system afloat. This can be done for instance by occupying foreign countries and by that opening up new markets to the companies that are essential to the economy. Or this can be done by loose regulations with the derivatives markets, that will create wealth out of thin air and high hopes.

Can it be that pumping of the crypto markets is just another financial shenanigan created to keep the old system afloat?
They are creating new wealth out of nothing with cryptos, just like with derivatives. The made up wealth that is created, is actually backing the value of fiat. This would make sense why regulators seem so blind on goxdollars and tether.

Inflation describes a condition where money is printed at increasingly higher volumes. The supply of money inflates causing the individual value of the currency to decline. These inflationary circumstances carry a number of known and documented implications and if it becomes enough of a problem can achieve the opposite of injecting wealth into an economy over the long term. Examples of inflation achieving the opposite of "injecting wealth into an economy" are current era venezuela, hyperinflation of the zimbabwe dollar years ago and germany post world war II.

Occupying foreign nations via military force also typically does not "inject wealth into economies". An example of this is the united states spending more than $6.5 trillion on war in the middle east. Debt and cost liabilities associated with war are typically far higher than any purported value the US economy gained in return. War can often have a negative side effect of destroying markets, infrastructure, economies, jobs and other things which cause economic decline on a global scale. Loose regulations in derivatives markets can have negative side effects. An example of this are leveraged derivatives attached to subprime mortgage assets which played a role in economic issues in 2008.

I for one wouldn't mind if crypto were utilized in a role of helping economies, families and nations stay afloat. It wouldn't matter where it came from if it exerted a positive influence on the world, that would be great.

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