Imagine you are an alien who just landed on Earth. You are introduced to two different systems of money. Which would you choose?
1 – How is the Value supported? What is it “backed” by?
Bitcoin is backed by math, which is a set of provable, irrefutable, uneditable facts that cannot be disputed. When applied to money, these characteristics are quite valuable.
Conventional currency does not have any of these valuable benefits.
The US Dollar and other conventional currencies are not backed by anything. They hold only the empty promise of value. Officially, the US Dollar is backed by “the Full Faith and Credit of the US Government”, which is presently almost $21 Trillion in debt and is actively lowering the value of your savings in order to reduce their debt, thru inflation.
2 – Supply
Bitcoin’s total supply is limited and has already been decided. There will never be more than 21 million coins. These rules will never be changed for Bitcoin. The rules can be changed by a hard fork which creates an entirely new cryptocurrency with different rules, but the new currency will no longer be Bitcoin. The original Bitcoin with a total of only 21 million coins will not be affected and can not be changed.
With a limited supply, Bitcoin is designed to be deflationary, meaning it will gain value as more people adopt it.
The US Dollar is designed to be inflationary, meaning the Fed can create it out of thin air. As they create more, the value diminishes, eroding away at the savings of hard-working, responsible, prudent Americans.
Look at how many USD has been printed in the last 59 years. And you thought they stopped “quantitative easing” in 2010. Nope.
If your great great grandparents put 100 USD into a safe deposit box in 1913, it would be worth $4 today.
Inflationary currency encourages spending and discourages saving. Deflationary currencies like Bitcoin encourage saving and discourage spending.
Saving is good, over-spending is bad and debt is not money. I don’t care what any Government or bank says.
3 – Centralized or Decentralized
Bitcoin’s decentralized governance removes power from a single dictator or group who can do whatever they want with your money, without your permission and without even telling you.
All Bitcoin policies are put thru months of rigorous examination, scrutiny and input by hundreds of the world’s smartest people. In order to implement any change, the community must reach 95% hash rate consensus.
This stands in stark contrast to the USD, which has central governance. A private group of people dictate the policies and value (or lack of value) of your US Dollars.
4 – Transparency
Every Bitcoin transaction is open for all to see. At first, this seems like a huge security issue but when we go deeper, we realize that there is nothing to hide because every transaction is mathematically provable. Anyone can check the math and prove that a transaction is valid.
Transactions with conventional currencies are private to people outside the transaction. This is necessary for the banks’ existence because no one can see what they do with money. The system is purposefully set up such that the conventional Money Dictators can see every move the citizens make but the citizens cannot see anything the banks do.
5 – Trust
The Bitcoin network enables transactions of value without the need to establish trust between the parties. Trustworthiness of the parties is irrelevant. Because transactions are provable with math, trust never enters the picture. A transaction either happened or it didn’t. Banks are no longer necessary to “pre-qualify” people as trustworthy.
With conventional transactions, banks determine who can be trusted and who is a bad guy. Since banks are not good judges of character, they are often wrong. They sometimes put bad guys on the good list and good guys on the bad list.
Don’t forget this is people’s access to their money we’re talking about here. If a good guy is wrongly and suddenly cut off from his money and can’t buy healthcare for his mom, tragedy could ensue. Banks don’t care as long as the amount of people who get hurt is below a certain percentage deemed by to be acceptable. The banks don’t lose a thing for their mistakes
6 – Immutability
The Bitcoin ledger is immutable. It cannot be deleted or edited. Transactions are mathematically provable and cannot be disputed. There is no such thing as a fraudulent Bitcoin transaction.
Since banks sometimes put bad guys on the good list, people sometimes get screwed. When they do, the banks are there to issue chargebacks and refunds. These effectively erase fraudulent transactions, changing the ledger after it’s been written. Transactions can be changed and falsified after the fact. Doesn’t sound very secure to me.
7 – Decentralized
Bitcoin is a decentralized, distributed worldwide network, so there is no central point of attack. In effect, the Bitcoin network cannot be compromised. It is the most powerful computer the world has ever seen, and growing fast.
Banks, as we have discussed, offer centralized control of conventional money. The centralized point of control offers one central point of attack, making it far more vulnerable than the decentralized BItcoin network.
You Decide. To me, the answer is clear.