Crypto Bitcoin and Fiat

Of course it still relies on trust. You have to trust that everyone else will continue to place value in digital 1's and 0's. Not much different to trusting everyone will continue to place value on little bits of plastic and metal. Or before fiat money that everyone would continue to put value in bits of soft shiny metal that served no real purpose beyond looking pretty.

It's all built on trust.

 

Yes, it's all built on trust, everything is.
But here we're talking about 2 different kinds of trusts: trust in something vs trust in someone.
With gold, you place your trust in the physical ounces of it, something tangible.
With fiat currencies, you place your trust in the government, someone.
With Bitcoin, you place your trust in the algorithm, and as such not in someone.

Where trust should be placed is a different argument altogether, of course.

 

At this stage, indeed Bitcoin operates more like a store of wealth - that probably has something to do with the exponential growth of it over the last few years. I mean who wants to spend something that is increasing in value?!
We can ponder whether at some stage, once price discovery has done its thing, the price of bitcoin will become a lot more stable and less volatile. If this was the case, then it could be used as a medium of exchange I suppose. But there are better platforms out there for that - take XRP for instance, instant transfers, minuscule fees. Or it could be further scaled, or maybe other off-chain layers could be ran on top of the blockchain (like lighting is for instance) - there are just many, many possibilities and at this stage I feel we don't know what we don't know.

Regarding DAPPS, here is a short intro you can watch to give you a bit of an idea:



That is basically what Etherium does with smart contracts.

 

Hi @Ouga,

I just want to say thank you for always actually listening to people who aren't as well versed in crypto and taking the time to explain it to them or give genuine explanations of why what we say might be wrong rather than some others who sometimes just come off as condescending to anyone who has their doubts about crypto.

 

Gold has no intrinsic value. Sure, you can make jewellery and some other things with those tangible ounces but those things only have value if people place value in them. As such, tangible or not, the only value gold has is what people place on it.
Same with fiat currency.
Same with Bitcoin.

None of it has any value except what people place on it. You are trusting people to continue to value it. Nothing more than that.

When the zombie apocalypse hits do you think bitcoin or even gold will be worth much?

 

Entirely agree with this.
Yet, I still think it's 2 different kinds of trust we are talking about here.
Gold, like bitcoin, cannot be created at a whim unlike fiat currencies, it needs to be physically extracted from the ground and refined. As such the supply is limited and cannot be altered (although I suppose there is always the possibility of finding a new massive deposit of gold).

 

Thanks for the kind words!
And worth noting that I definitely do not think that other's opinions might be wrong, we are all learning as we go.
This is a rapidly evolving space and quite a complex one too. And I am far from an expert, so always do your own research

 

Very true. However, limited supply only matters if people value the item in the first place.

 

Absolutely - hence why so many alt coins are not worth anything.

 

Yep, and could happen to any alt coin at any time if people lose trust in it and subsequently stop placing any value on it.

 

I see what you did there - well, same could be said of anything really! From Bitcoin to Gold to Venezuelan bolívar to other fiat currencies

 

So very true.

 

Another company, Snappa HQ, has decided to store all their asset reserves in Bitcoin! The CEO explains his reasons here:

Why We're Holding Bitcoin as a Reserve Asset

 

Another great article , thanks!

 

Sorry this is gonna be an epic post.

I think there's a massive public missunderstanding of bitcoin which I'm guessing stems from how it was born. Blockchain was developed as a means to create an electronic cash system that can be used to transact with. This initial birthing simultaneously coupled with its first ever use-case application is what everyone now refers to as bitcoin. Unfortunately this has made the concept of blockchain and bitcoin intertwined. If you extract them out everything becomes more clear and you should start to see the world changing potential and opportunity.

I use this analogy when explaining to first timers. Think of blockchain as the internet. It is the infrastructure that powers everything built on top. Bitcoin was the first ever application on top of blockchain. Yes bitcoin is an application, the original DAP. Bitcoin is like netscape, or yahoo, or netflix. It is an application running on top of blockchain just like how netscape, yahoo and netflix are running on top of the internet. The original use-case for bitcoin was a fiat alternative and like netscape and yahoo it has failed. It will never have the properties necessary to replace fiat. It is now seen as a store of wealth. A digital gold. I believe its still too early to say if it has succeeded.

Although Netscape failed, companies did not stop exploring use cases for the internet. Each generation become more product fit. We got explorer, then firefox, then chrome. The developed world now runs on top of the internet. The same is happening within the blockchain space. A lot of bright minds are working on countless applications and use-cases for blockchain. The opportunities are limitless. It is much more than just bitcoin. To give some examples:

• I'll address the original thread title about how bitcoin replaces fiat. It does not. There are other blockchain applications that will. We have stable coins that are pegged to every major currency. Plus central banks across the world are exploring developing their own crypto. In fact, compared to our current version of fiat, cryptocurrencies offer a far better option in all aspect that people and governments look for in an exchange medium.
• Drilling down, blockchains can also underpin the fiat system. For example EFTPOS are exploring micropayments with hedera hashgraph. I'm sure you've heard of EFTPOS. Somebody mentioned Ripple and xrp and cross-border payments that are cheap and instant. Try sending fiat overseas through the regular banking system.
• You can go outside the financial system and see other use-cases being explored. Supply-chain logistics, tackling counterfeits, distribute computing power, file storage. The list is endless.

 

Great post, well worded and I agree with it.

With the hard part being how does one get exposure to the blockchain space? There are many many projects out there, but picking the future winners at this stage is extremely hard IMO. Hence why BTC is still seen as a relevant way to get exposure to the space. ETH is also well established & regarded.
But there could very well be a flippening at some point in the future (and not necessarily between BTC and ETH). Too many unknown unknowns at this stage IMO. Hence why I personally stick to these 2.

 

You can get exposure to blockchain through ETF, HBLK It has ran hard the last few months with the price more than doubling.

 

Thanks for your reply. It’s a different perspective with investing into equities with exposure to the space.
How that exposure is determined would be crucial in evaluating whether these companies are worth being in there at all. Would be interesting to know how the etf would treat an emerging company in the space.

Personally at this stage I feel there is a much better risk/reward ratio with holding actual crypto’s.

But thanks for sharing your thoughts interesting to hear a different perspective.

 

Think HBLK is just trying to ride the blockchain hype by using the term without having much to do with blockchain itself. A quick look at HBLK holdings doesnt reveal much blockchain exposure. Just legacy tech companies.
Gotta be always cautious and constantly critical in this space. I see a lot of questionable practices in this space. Pivot, rebrand, insert some buzz words and you automatically attract interest and investment.
There are some fantastic funds out there with proper blockchain exposure. Just make sure you DYOR, like for any other investment.

 

That begs the question, are there any international ETF type blockchain solutions that are anchored to the price of a basket of select cryptocurrencies, without the smoke and mirrors and without exorbitant fees?

I'd much prefer that to trading on the crypto exchanges, but I feel we might be some way off?