I'm going to keep this somewhat brief and simple so as to make sure the point is understood.
What is fiat, and why is it important to understand?
"Fiat" refers to a certain top level monetary basis whereby the value of currency is based around for lack of a better word, confidence. Also know as speculation.
First, let's look at what fiat ISN'T.
In ye olden days currency was backed by physical or specific quantities. It varied from gold and silver, to gunpowder, even so abstract as physical labor hours. Whatever it was backed by, it was backed by some specific and quantifiable asset.
The simplest version was of course the gold standard.
1$ = 1oz of gold. (Not a real exchange, just an example.)
What this meant was that the government acted as a guarantor for the mercantilism of its citizens. Money is issued into circulation as backed by proportional physical assets of a nation or state. The wealth of a nation was decided quite literally by the projection of their economic might.
It's not quite so simple, but that's the basic idea.
So what's that whole fiat thing then? What does this matter? Wtf are you talking about?
The reason WSB is called Wall Street Bets is right in the name. Our financial markets have become glorified casinos. However, it's so, so much worse. Those in charge of the markets: The Federal Reserve, Wall Street, deep rooted pseudonational conglomerates; they are the House, and the House always wins.
Value is created or destroyed out of thin air as it benefits those in control of the system.
When the FED prints a trillion dollars to feed and inflate the market, where do you think that that value comes from?
They're betting against the common folk. They're betting against your potential. Shaving away an ounce of flesh to indulge their excess.
I say it so flamboyantly because there is no value there. It's all fake. An illusion. It's a house of cards that stands only as long it's safely tucked away out of sight.
Every dollar you own is only as valuable as the confidence in the system that issues it.
That statement is the reason why the Great Depression happened.
The problem of Bitcoin
So Bitcoin. What does that have to do with anything?
Bitcoin is a fiat currency.
The value is entirely codependent on a system of confidence in the system itself having value.
If that sounds like a tautology that's because it is a tautology.
Bitcoin has been shooting up in value over the past few years. "Bitcoin is the future!" people say. Sure. Maybe. But what do you think changes?
That it has grown so fast and continues to grow to excessive proportions should terrify you. What that means is that it's taking the confidence that was once given to other fiat currency. It's not some cycle of infinite growth.
Should Bitcoin grow to eclipse other currencies it will become a captured asset under a centralized system. It was created entirely to replace national fiat for an international fiat. Those who control the exchanges will control the financial foundation.
How many bitcoins are there total? How many are held out of circulation? Who do you think is buying them to support such a massive growth of valuation? What happens in 20 years when the global banking apparatus owns the majority of bitcoin as well as the major exchanges?
Be warned.
You hear about things like the "Great Reset" a lot these days. Be aware that these plans have been underway since before most of your were born. Bitcoin is not something outside of that plan.
We either end fiat-based policy or we continue to live as slaves.
A currency needs to have relatively stable value and wide acceptance. I know I can buy a loaf of bread for $3-4, or 5 pounds of flour for about the same. How much BTC do I need today, vs. 3 months ago for the same? Fuck if I know...
I like the idea of BTC, but hate the implementation. Dealing with forks, wild fluctuations in value, creepy exchanges that are frequently robbed, forgotten passwords or corrupted data, transaction costs and time, is not something I'm interested in.
Wake me up when those problems are addressed and I'll convert some dollars into BTC.
Not trying to sell you, as Ive only been investing for a couple years, but I am a bit bullish on it longterm.
Dealing with forks - just stick to BTC, the original. Stay away from the rest of the shitcoins
wild fluctuations in value - getting better, as a lot of institutional money has coming in the past year or so, and continues to. use dollar cash averaging to help ease the fluctuations of investing if you decide to
reepy exchanges that are frequently robbed - just use cash app, and a hard wallet or something. cash app makes it ridiculously easily to use and invest. get a hard wallet when you have more than you want tied up online
transaction costs - cash app has some of the cheapest purchase fees around, and they pay the withdraw/transaction fee on their end when you remove money
just some things to think about
We've been on fiat currency since paper currency and fractional reserve banking, the infinite money printer, was invented 100s of years ago.
National or international fiat, central banks are still outside of your control.
The US Federal Reserve just printed $5 trillion in 2020, to cover the coof-induced stock collapse. $3 trillion went to elites and not the wagies. National or international fiat, it's the same shit.
Since I'm not on crypto, the real vulnerability in the tech is when someone owns 51% of bitcoins, then they control the currency or something.
They can stop transactions from happening with 51% of mining, but this won't be a problem until after the first time it happens. Wallets could be effectively frozen. The ledger can easily be forked once in a crisis like that, then the powerful people will start trying to force and manipulate forks.
We might even see a 'Currency War' in the future as individual crypto innovators try and keep ahead of hostile takeovers by globalists.
What will you do if the system itself was from the beginning created by those globalists? If from the start it was always under their control?
I mean if you're asking me if I like the idea that shadowy figures can control my finances I'd say fuck no. But the dollar already functions as a semi-global currency anyway, at least while it is still solvent. Why is it used in movies as the cash transfer? Why is it that I can bet with reasonable certainty that a store or cab in another country will take my dollar? So what should I care that globalists are buying into crypto? It just means we have to combat the same issues we have now. I'm personally more concerned about being able to track my transactions, but coins with that kind of encryption exist now or are being developed.
If I want my own currency that I control and can trade with for the apocalypse its guns and ammo, medicines, and food and water.
Not exactly.
With nationalization of banks there is potential for a reclamation and reformation of the currency.
It's happened twice in the US already. That's why what we have now is a second version of the FED.
Not really.
You don't need to control a majority of something to influence it. Especially in a highly distributed system.
Let's say an individual controls 20% and the next highest ownership is 5%. The rest is highly fractured between many owners.
This might imply that if the masses then collectivize under some singular social hegemony they'd have the ability to direct the flow of the system. In reality such a thing doesn't happen and the majority of the output of effort is captured in artificial campaigns.
You can already see that effect in current structures. This will only be made worse in global hegemonistic control schemes that have been and will continue to be orchestrated.
How's that old saying go again?
Appear weak when you are strong, and strong when you are weak. A good lawyer never asks a question he doesn't already know the answer to. Well, unless he's Phoenix Wright. Then the plot lines up as it's revealed. ✌?
I asked that specifically because there is an answer. Bitcoin has a theoretical and a realistic maximum.
It also just so happens to have millions of bitcoins held by an anonymous figure with a Japanese name, banking consortiums, and intelligence services.
When you want to make someone think you don't just give them the answer, you have to lead them to it on their own or they ego will reject it.
Who decides this?
In Europe the people have been disarmed. They're trying to do it in America though it's proven difficult and slow.
At the end of the day it comes down to who can exert the most violent pressure. As of right now those globalist cabals are in the lead.
If you think bitcoin can't be regulated you should really ask yourself why. Control over the internet is something that has been debated hotly for many years. There's a reason, mind you, why Obama gave up US control over domains.
I would disagree harshly with that assessment. It is after all the end goal of the project to place the system under control.
Bitcoin is sound currency. There isn't a mechanism by which more can printed. It can only deflate and completely ignores borders. The state can't hold you hostage. The banks are still terrified of it which is why you see them attempting their own digital currencies.
Rad Lib and friends are much better at explaining it.
Bitcoin is an idea. That idea is spawning technologies based on it. Those technologies have real value. The Bitcoin protocol itself seems too bloated to me to really do too much with, but it's a beautiful iteration of people having a financial incentive to act as a decentralized node of information exchange.
What real value?
What physical asset is backing that valuation?
What is stopping the valuation from becoming exactly the same as current USD?
Currency is only as good as the confidence people have in it and even the physical backer isn't a guarantee. People didn't trust paper money when it was first introduced, preferring to use whatever precious metals they had been before.
And if we're talking total apocalypse, gold might be worthwhile to those who already have access to resources, but to an average person gold is worthless; you can't eat it, use it to cure sickness or injury, or shoot it.
So why are so many wealthy elites, businesses, and nation states buying in to, developing their own, or mining crypto? Because confidence is being lost in their own rapidly inflating currencies due to continued lockdowns and stimuli.
I said it in the top level post and other comments here.
From what I've seen that's been the plan the entire time.
Crypto is just a way for the international banking consortiums to shift from individual national currencies to a globalized currency.
Satoshi Nakamoto is the fake persona created for the publication of a consortium's effort.
There has never been a single moment where crypto was outside of the control of the globalist elites.
The cost of the electricity to mine a bitcoin at least approximates a floor, since you'd be unlikely to sell a bitcoin for significantly less than it cost you to mine it.
Bitcoin may be a poor example, but Etherum is a good example of what a cryptocurrency can become - programmable, in a sense. Actual utility (you can tie a transaction to an external trigger, allowing the currency itself to act as arbiter in a low-social-trust exchange of goods or services, for example) has value.
All that said, you missed the distinction between currency and money while talking about fiat.
Money has value. Currency has trust... until it doesn't. Anyone got change for a $Z100,000,000,000,000 bill?
I don't make a distinction because as of today there is no distinction.
The last guy who tried to make a realistic distinction ended up getting analy raped to death by a bayonet.
There's potential but my issue remains the same.
Until it becomes intrinsically tied to some physical quality it will be inherently unstable and manipulatable.
It can be done but as so far has not so the argument in my eyes is dead in the water.
First and last is the end of fiat. That is ultimately the only thing that matters.
You and I disagree on the meaning of value, it seems. I'm willing to accept a utility value (beyond mere transactional/trust); you are not. Cryptocurrency has the ability to evolve into something approaching money, although it's a long way off yet.
I agree on not wanting to end up like Gadaffi. Crazy son of a bitch had a good idea with the Afro, if a terrible name.
Right now, specie or specie-backed currency is the only way to have a physical store of value; it's too difficult to have a form of money backed by a less movable commodity like oil or a more-difficult-to-store commodity like electricity, regardless of its inherent value.
Silver coinage should make a comeback.
Functional use. It's starting with the exchange of money, but I think we'll see shit like websites that are powered through blockchain decentralization, where the value of the service provides tangible value to those who host the service. Emerging tech. Decentraland, while something I'd never invest in, seems to be a decent point of progress.
In what way is that different from the tautology of fiat?
The value of the value creates the value.
For the people to reclaim the efforts of their labors the valuation of money must be tied to a physical asset. Digital is highly manipulable and unstable.
As an aside, I've been wondering if the removal of the gold standard had something to do with it suddenly becoming actually useful at the beginning of the electronics age. Gold wasn't really good for anything until electric/electronic items started wanting it, really. Jewelery? Yes, it looks nice, but originally, I think that would have been the side benefit; it's really just a way to carry your wealth around easily. But outside of tooth fillings, I can't really think of any practical pre-modern use for it.
I'm definitely with you in I don't see how Bitcoin is anything but fiat currency. So much of the crypto talk says it's not and paper money is, but in the end it's still just something of no intrinsic value that is only as good as others want it. If we're in a total world of shit where barter value is all that's left, then well paper money has whatever value an ass wipe or 2 seconds of burning fuel is, or use as cloth, etc. Crypto has nothing at all. You'd have more value spending 10 minutes gathering logs off the forest floor. Precious metals, stones, etc. have shown to be good currency for pretty much all of eternity, but again in the end they can be used for something, whether it's for the valuable properties they have or because the king wants a shiny bauble. I've got in my head if the SHTF situation ever came around and I had to pack up what I could and ride off into the sunset essentially, my tools and guns would be the priority, because if it's that bad those are what I'll need to survive.
I like crypto more as a modern day transactional method. I bought a couple hundred bucks of Ethereum last year just to screw around with how it all works and then let it sit. It's valued at something like $1300 now. Pretty much decided I'm going to leave that alone and just see what happens. It's a couple hundred bucks I pretty much wrote off as an expense last year. Otherwise, I have been buying up Bitcoin lately in small amounts. I've used it to pay for a couple things, but as I mentioned on another thread I'm torn on it. I'll probably hang on to a little bit of it, but since I'm more interested in a diversification from USD than as a growth engine.
I'm thinking instead of taking the small amounts of just general $ I was saving monthly in cash and buying silver coins. Maybe a combination of Silver Eagles, Britannias, and junk silver. I've been researching and think I've settled on coins. I might even use some of the Bitcoin I have to get started. I'm just at the point where I don't want to continue adding more cash to the bank balance to deflate away, and I've already got plans for other types of investments.
Let's have a little economics lesson, because I swear to God there are a lot of people that need one.
TL;DR: Limited supply commodities make for bad money because they cause deflation, fiat currencies try to fix that by manipulating the supply to maintain a consistent value, people are assholes that abuse that manipulation, crypto might be able to fix it.
Money has three primary functions: a medium of exchange, a store of value, and a unit of account. Its functions as a unit of account and medium of exchange are pretty obvious, so let's talk about the store of value stuff, specifically in the context of a fiat currency.
In any economy, supply and demand forces work on the money as well as on the goods. Demand is largely determined by the volume and value of transactions occurring within that economy. Determining the supply is where it gets tricky.
One way to supply it is to use a commodity as your money, ie gold. Unlike a lot of commodities, gold doesn't deteriorate over time. It's rare enough that people can't just get more of it without significant effort. But when the economy (and therefore the demand for money) grows faster than the supply, it causes a strong deflationary pressure on the value of that money. There are a lot of problems that can arise from this, but the biggest one is that existing debt becomes increasingly expensive to pay off, which makes fewer people want to take on additional debt, which means the productive capacity of that economy goes underutilized (I can go more into this if someone would like for me to). (Incidentally, this is also the fatal flaw of bitcoin. The limited supply means that its value will increase indefinitely, which means it will almost always be better to hold your bitcoin than to use it.)
The way that most governments have solved this problem is by introducing a fiat currency that can be worked to be mostly stable with a slight inflationary pressure. If carefully controlled, this can be great for an economy, but if you get people in power that are willing to manipulate the currency, you get what we have now.
Cryptocurrencies are trying to fix the problem by tying their supply / value to something that has a greater potential to scale with an economy (specifically the price of electricity and computing power) and making the generation of more of that money tied into its use in transactions rather than the whim of a central bank. It's a good solution, but I haven't been overly impressed with any particular implementations so far.
Neatly sums up my position. I've heard about how the value changes for it. It screams pyramid scheme to me since more people using/mining means all previously gained coins increase in value. But I can't give a proper explanation to it because I'm mostly reading my gut feelings.
Decentralization efforts are great and all, but it's no magic wand to erase problems.
If there were some kind of crypto that had no inflation or deflation, I'd be excited for it, but I haven't figured out a reliable way for that to exist. The desire to reconvert into other currencies kind of forces value fluctuation, so my best guess is to make an isolated currency that cannot be exchanged for other currencies.
The Bitcoin Standard by Saifedean Ammous is the Austrian analysis of bitcoin.
Sell, buy stonks.