Receive all Cointelegraph news immediately in Telegram.
It is time to reveal the top five reasons why bitcoins are superior to dollars, both now, and in the future.
It is time to reveal the top five reasons why bitcoins are superior to dollars, both now, and in the future.
I’ve limited this list to the top five, but there are certainly many other reasons. The dollar has its own advantages, but they will prove fleeting in the coming years. The dollar’s reign as the world’s global reserve currency is running out, and bitcoin’s time as the world’s first and only global digital currency is just beginning. Here are five reasons why.
Inflation occurs partly due to the number of currency units in circulation. U.S. dollar circulation continues to increase at a rate of about $1 trillion annually. The rate of inflation wasn’t always this high, but it has inflated ever since WWII.
The U.S. government sinks deeper into debt. Each dollar is a debt instrument, loaned out by the Federal Reserve, with interest, or more debt attached to it. This is a bad thing, since the more dollars there are in circulation, the less each dollar is worth.
In other words, the dollar you hold is losing its purchasing power as you read this right now. Here’s an example. When the Federal Reserve began in 1913, $100 could buy you a car. Today, it will buy you a monthly bus pass.
The increased money printing leads to inflation at levels of 5% or more, per annum. This is quantified if you look at the average transaction prices for things like meat, gas and eggs over the past five years. The U.S. government will tell you inflation is around 2% annually, but they base this on 25 items that they change conveniently to fit the inflation rates they want to show in their inflation index.
If beef prices are rising 10% a year, beef is simply removed and replaced with something that doesn’t reflect the actual current rate of inflation. It’s an economic shell game, or a game of Three-Card Monty, and you are the mark.
Bitcoin is anti-inflationary by design. There is always a set amount of bitcoins in circulation — 25 new coins are added into circulation every 10 minutes — which is capped at a maximum amount of 21 million in total. Thus, bitcoin’s value will increase based on standard supply and demand economic ideology, or “sound money” principles.
Next July, Bitcoin production is set to halve to 12.5 BTC produced every 10 minutes, forcing its value to appreciate, assuming demand stays at current levels or increases. There is no reason to assume this won’t continue. As more people enter the Bitcoin ecosystem, Bitcoin value per unit increases over time. This is a very foreign concept to anyone brought up to use a fiat or paper currency, as they almost never rise in value, because governments love printing more money at will. This helps governments and hurts citizens every time.
Would you like your money to grow in value over time? Critics will bring up Mt. Gox and the corresponding bubble from 2013. Today, bitcoin is worth about twice what it was worth before Mt. Gox’s bubble and collapse. This is true even with the constant downward price pressure from tens of thousands of merchants accepting and exchanging bitcoin over the past two years.
Things are looking up for Bitcoin’s value. This is not the case when it comes to dollars or fiat currency, in general.
Have you ever tried to move $1 million dollars? What if you were to physically, or otherwise, move $1 million from your bank to ... anywhere! Assuming you had $1 million in your bank account, try to walk up to a teller and remove it from the bank. As a former banker myself, I can attest that this will not go unnoticed, or unavenged. The bank manager will come to see you, and the interrogation will begin.
They will create an SAR (suspicious activity report), which they currently do for any cash deposit or withdrawal for amounts as small as $5K, depending upon your location. You will definitely be on a few lists you don’t want to be on. The bank and the government will track your movement. These days, they may assume you are a terrorist, domestically or abroad. Where your money, with your name attached to it, ends up will be far from private, and it will be cross-referenced multiple times — your punishment for taking your money out of a bank to do with it as you please.
Not only would the process be arduous, and so would your interrogation by multiple layers of bank personnel, you might be tailed and mugged. Good luck taking $1 million on a plane, or through any TSA checkpoint or customs area. At that point, you and the $1 million will spend a few hours in a room for another round of interrogation. You will make plenty of “law enforcement” enemies along your journey. It’s just a pretty bad idea, overall.
In contrast, someone moved $150,000,000 in bitcoin in 2013, from one Bitcoin wallet to another, in seconds, for the cost of fractions of a percent of a bitcoin. This is not possible in dollars without a major identity shakedown from multiple fronts. No pseudonymous protections for you.
Let’s say you wanted to do the next best thing and wire your money overseas. Head down to your bank and see a teller or banker. This process involves a certain amount of costs and time lost. Fill out a form. Pay the bank’s fee, which will cost in the range of $30 for wiring a relatively small amount, up to a percentage of the amount for larger sums.
Let’s assume your bank didn’t go JPMorgan Chase on you and tell you that you can’t move your money because they said so, and you actually are able to wire it. Now, you have paid the bank to know who you are, what you’re doing, and how much you’re doing it with. You are still on the same list, if you moved $1 million, and you will get the same 20 questions. Privacy is a cute concept, but it’s not for the real world of fiat currency.
For this example, you send US$100,000 to a person in China doing business with you. They have to travel to their bank, which is both a financial and time cost. They can pick up the transfer after exposing their identity and the fact that they are receiving money. They may have to pay a fee as well, just for picking it up. They will have to answer some questions. And usually the time involves a full day for the transfer to take place. It could be several days, depending on the amount and where the transfer is going. It’s inconvenient, costly, and time-consuming, and not at all private. A quadruple threat!
With Bitcoin, you can send any amount to someone’s QR code or BTC address. Just pay a miner’s fee one to four "centibitcoin" (0.001 BTC), and have the transaction reconciled within 10 minutes, usually less. No tellers, bank managers, interrogations, trips to the bank, ID verification, etc., are necessary. Just fast, effective service of your money. A little thing called freedom that we used to take for granted is now gone for the 99% of the population who haven’t yet discovered the convenience of Bitcoin.
Do people really like using Western Union to send money overseas? Fees can run as high as 20% of the amount transferred! That’s why the remittances market is such fertile ground for Bitcoin in places like Africa and Indonesia. The Third World has been waiting for a better option than Western Union transfers. It will take time for people to overcome separating from a trusted brand like Western Union. While you can trust them to get you your money, you can also trust them to take a massive chunk for themselves. With Bitcoin, now people worldwide do have a choice on whether to get fleeced or not.
How many times have you lost $20? How many times have you lost your wallet in you lifetime? Five times? Ok, how many times have you lost your computer or digital wallet? Stupid people can do a lot of things, but let’s agree it is much harder to do, and will happen less often over time. Some things are a lot less likely than others.
Losing paper money is relatively easy to do. Forget the actual theft of it. And identity theft is now somewhat commonplace. Plus there are counterfeit bills out there.
Bitcoins cannot be counterfeited. They are digital in nature, so they can be backed up and saved to other servers, computers, protected by multisig, passcodes, paper wallets, offline vaults, cold storage, brain wallets, and so on. The security options are only limited by your imagination.
Leave your smartphone at a bar, with a passcode protecting a bitcoin wallet, if not the phone itself. Then leave your leather wallet at the bar, with it’s spiffy zipper for protection, and $500 cash inside. With your keys backed up on your hard drive, your bitcoins are perfectly safe. Your $500 in cash, not so much.
You may have heard of the “almighty dollar,” but this is not 1965 anymore. Today’s U.S. dollar has arthritis, Alzheimer’s, and a runny bladder. The U.S. dollar hasn’t been backed by gold for over 40 years. The only reason other countries use it is at the barrel of a Western gun. (See U.S. invations of Iraq or Syria in recent history, based around the discontinuation of dollar use by their governments.)
Russia's Putin hates the U.S. dollar so much that he made a world bank to work around it. Russia, China, Brazil, India, and South Africa have also created a world bank called the BRICS Development Bank for the sole purpose of hating the U.S. and the dollar it rode in on. These countries represent 40% of the world’s population and 40% of the global currency reserves, so it is a very big deal when they all form hate groups against the “greenback.”
Central banking interest rates are already at zero. In Europe, interest rates are now going into the negative! Fed Chairman Janet Yellin knows she can’t raise the rates, so she just says they’re thinking about it. This is enough to control the stock market for the next couple of years.
Meanwhile, dozens of countries have been performing bilateral trade agreements to avoid the dollar since the recession of 2008. The U.S. is already approaching $18,000,000,000,000 in national debt, and most economic experts have the dollar pegged for a full collapse by the end of the decade. In reality, they’re hedging their bets because they know things won’t last another five years like this. It is not a matter of “if” the dollar collapses under the weight of its own debt, social entitlement programs, and massive inflationary practices — but “when.”
* * * * *
The typewriter. The buggy whip. The rotary phone. Every technology has a lifespan. Fiat currency is a technology. You don’t think of it as such because it is just a piece of paper, unlike Bitcoin. Compare dollars to the “tally sticks” of yore, used in Europe to account for monetary transactions for centuries, and you’ll understand this better. We have been trained, conditioned, like dogs — even coerced — to believe that fiat currency is not only valuable, but invincible.
The world of fiat currency continues to show its inherent mortality in places like Cyprus, Greece, Zimbabwe and Argentina. The U.S. dollar is also on currency’s death row. It's not a guess or a matter of opinion. It is, in fact, a mathematic and economic certainty. It’s not a matter of when this may happen, but when it must.
Fiat currency is not the standard of economic value. It is the previous generation of value facing its own demise against the value of the money of the future. That money of the future is called Bitcoin. Fifteen years from now, do you really think the world will continue to use paper currencies?
Perhaps Ernest Hemingway said it best, and he may as well have been talking about the U.S. Dollar: “Never send to know for whom the bell tolls. It tolls for thee.”
What do you think of Bitcoin’s value versus using dollars or other fiat currency? Share and comment below
Follow us on Facebook
For updates and exclusive offers, enter your e-mail below.
Thank you for contacting us! We will reply to you as soon as possible.
Thank you for your interest in our franchise program.
We are considering your request and will contact you in due course. If you have any further queries, please contact: