1 month ago
17
Sometimes, the best conversations happen in the most unexpected places. Recently, while unwinding in the hot tub at the gym, I found myself in a spirited debate with an economist about Bitcoin vs Fiat Currency. What started as a casual discussion quickly turned into a deep dive into the future of money, the role of commodities, and the power dynamics shaping global finance.
As we got talking, the economist confidently stated that Bitcoin is going to zero. His reasoning? "Bitcoin has no intrinsic value—it's not backed by anything."
This is a common critique from traditional finance experts who believe that all forms of currency must be backed by a tangible asset like gold, real estate, or government enforcement. In their view, Bitcoin is nothing more than a speculative bubble that will eventually pop.
I countered by pointing out a few key facts:
1. Bitcoin’s Scarcity: There will only ever be 21 million Bitcoin in existence. Unlike fiat currencies, which central banks can print indefinitely, Bitcoin has a hard cap. This makes it inherently deflationary rather than inflationary.
2. Bitcoin’s Liquidity: Bitcoin has $2 trillion in market liquidity. That’s a serious level of adoption and usage, far beyond a mere "bubble." Large institutional investors, hedge funds, and even some governments are now holding Bitcoin as a reserve asset.
3. Bitcoin and Ethereum Are Commodities: Bitcoin is Digital Gold, and Ethereum is Digital Silver. Unlike fiat currencies, which are controlled by central banks, these digital assets are decentralized, meaning no single entity can manipulate them at will.
We then moved on to gold, historically seen as the ultimate store of value. I explained to the economist how gold is the most manipulated commodity in the world.
Central banks actively control its price through a simple mechanism:
- When gold’s price rises, they sell gold to push it down.
- When gold’s price drops, they buy more to stabilize it.
This cycle allows central banks to maintain gold within a certain price range, ensuring it doesn't disrupt the status quo of fiat currencies.
Bitcoin, on the other hand, doesn’t operate under such constraints. It is decentralized, immune to central bank manipulation, and its price is set purely by supply and demand.
The core difference between Bitcoin and fiat is that fiat is controlled by governments and central banks, while Bitcoin is controlled by mathematics and code. Governments can print trillions of dollars out of thin air (as we saw during the COVID-19 stimulus), devaluing the currency in the process. Bitcoin, however, cannot be printed, diluted, or artificially controlled.
This is why Bitcoin continues to grow in adoption. More people are waking up to the reality that fiat is a tool of central control, while Bitcoin represents financial sovereignty.
The economist left the conversation with something to think about. The idea that Bitcoin is "going to zero" simply doesn’t hold up when you consider:
- The institutional adoption of Bitcoin
- Its role as Digital Gold
- The increasing distrust in fiat currency systems
- The fact that governments and central banks are now accumulating Bitcoin
While we didn’t completely see eye-to-eye, the discussion reaffirmed what many of us already know: Bitcoin isn’t going anywhere. If anything, it's becoming the most important monetary asset of the 21st century.
English (US) ·