Cryptocurrencies VS Fiat. Something that Bitcoin critics don’t like to talk about.

Cryptocurrencies VS Fiat. Something that Bitcoin critics don't like to talk about.

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Alexander Vilganov, CEO of ToGETher and Marketing Officer of Crypto A marketing agency, shared his opinion on the nature of cryptocurrencies and fiat.

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Bitcoin is one of the largest financial bubbles of our time. Opponents of the cryptocurrency market often operate with this statement, believing that such a (dubious) fact is quite enough to put forward a vote of no confidence against BTC.

The adherents of the old school, accustomed to the fact that only something material can serve as a means of preserving and expressing value – these people are simply not able to give up their own beliefs and therefore, they continue to come up with various fables, just to support their point of view, no matter how much nor was it a weighty argument.

It is not customary to talk about this, but are cryptocurrencies so different from fiat, as bitcoin opponents present to us? Both BTC and the dollar are means of expression of value. But what is “value” and where does it come from?

Let’s turn to world history. Many of you, since school, have heard about how financial transactions were carried out in the days before the first minted coins. Right. People resorted to barter, or used various materials and products, the function of which was to express value. For example, in ancient Russia, before the appearance of the first money, cowrie shells or precious items served as exchange currency. But if everything is more or less clear with jewelry, then how could shellfish shells become a medium of exchange?

It’s all about trust, which was based on a generally accepted fact in society – shells can be exchanged for goods. Such an agreement forced people to “trust” this “currency”, which ultimately shaped its value.

So, the key factor in shaping the value of a currency is the presence of public trust. Some of you may tell me that the value of money comes from a country’s gold reserves or debt obligations, but no. This is not entirely true. Gold and treaties are only needed to bolster public confidence in the currency. To create the illusion that the purchasing power of our money is protected. By themselves, they have no value. We ourselves attach great importance to these things and believe in it. In other words, if thousands of years ago it had occurred to someone that glass is much more expensive than gold, then today our attitude towards these materials would be completely different.

Later, when the practice of producing minted money spread throughout the world, each major city could have its own currency. And the value of this currency was based on the trust placed in the ruling family. Any high-profile scandal associated with the issuer of banknotes, the difficult financial situation of people in power, or a change in the amount of precious metal in the composition of the coin could lead to a loss of confidence on the part of the population. Loss of confidence and subsequent death of the currency.

Hopefully, in the example above, you can see similarities to what is happening with tokens and weak cryptocurrencies these days. Their value is also highly dependent on the trust placed in them by the community. And in order to earn this very trust, cryptocurrency issuing teams are spent on expensive listings and new partnerships.

The power and value of any money is primarily based on our trust in it. Whether it’s fiat money or cryptocurrencies, the value of both types of money depends only on people’s attitudes. And any other security is nothing more than a deliberate invention. You and I are forced to believe that paper money has value backed by gold or securities. But in reality, the ruble, dollar, euro or any other traditional currency is a bubble that has existed for many years and lives only because its existence is artificially supported. And if BTC is a bubble, how is it different from paper money? Due to its autonomy from governments? Limited emission?

Any money is a material expression of value. But progress does not stand still. With the advent of the Internet, our lives have changed. Study, business, relationships – our whole world is moving into digital space, and it is more than foolish to expect that such an “evolution” will not affect the world of finance.

Yesterday we created payment systems, proving to ourselves that value does not have to be materially transferred. Today bitcoin was born. He appeared and reminded us that money does not need intermediaries and fake collateral. Only human trust.

Cryptocurrencies are a new form of money. Therefore, they must be purchased and used. We are at the origins of the modernization of the financial system. Modernization, which can no longer be stopped.

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