Bitcoin, Fiat, Gold – living happily ever after?

Let’s compare Bitcoin, fiat and gold, from the practical point of view. May be the differences are smaller than you think.

I’m not really a fan of theory, or academic sciences, I’m trying to observe cryptocurrencies mostly from a practical point of view. But as I wrote some days ago, the theory often meets the practice: if we say “Bitcoin is not suitable as a medium of store of value because of the high volatility”, that means, many people will sell it because they can’t stay wild price fluctuations.

Advantages with disadvantages

I’m also tired of cryptocurrency-skepticism, like “but I can’t touch it, it has no intrinsic value”, “no real use for it only anonymity and criminals”, “states don’t accept it at tax payment” and so on. So I made my table about practical capabilities and issues comparing Bitcoin, gold and fiat money (see below).

I think all of this three important forms of “currency” have advantages and disadvantages. For example, you can’t pay your taxes with gold, but precious metals can remain the only store of value in a heavy war or other apocalypse. (No electricity, no internet, no Bitcoin, no banking account.) You can’t touch bitcoin and can’t make wedding rings of it but try to send gold to your daughter to New Zealand. And, can you touch your bank account?

Anonymous dollars

If you have dollars on your bank account with near-zero-interests, not only the inflation, but also the bank’s fees will eat up your money. And we all know what happens in case of hyperinflation. But try to pay with bitcoins or gold in a little bar of a little village. And I think dollar bills can be often much more anonymous than Bitcoin. That’s why so many criminals are using US dollars.

May be Bitcoin isn’t a suitable value storing instrument, in theory, because of the huge volatility and the declining price in last months. But people are using it to invest.

Cryptos for the kids

Advantages and disadvantages, to whom? My 55 old friend, perhaps, never will use Bitcoins, or never will choose it as a store of value, as an investment. May be 80 percent of older people won’t. But the youth of today is using cryptos, wallets, mobile payment solutions very easily, 80-90 percent of them can use cryptos in the future, in some years.

May be a shocking truth about the mass adoption: the inconvenient use of cryptos, lack of regulation and security issues, very high volatility, fraudulent ICO-s, slowly advancing development projects, this bunch of problems are causing the adoption to last much more than fans are thinking. But I’m not saying it’s not coming, only, that it can arrive much slower.

Disclaimer:

I am not a financial advisor and this content in this article is not a financial or investment advice. It is for informative purposes only, or simply to make you think, entertain, increase testosterone and adrenaline level. Consult your advisers before making any decision.

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