>Is x a scam because I don't understand it/I'm priced out?
Uh, no. Though fiat currency is definitely a scam.
Uh, no. Though fiat currency is definitely a scam.
That's very much how I feel about Bitcoin. The more I see and the more I understand the less I believe any of the peoples explanations. Not least because if you ask 5 different Bitcoin proponents, you'll get 5 completely different answer about why it's valuable - from the unlikely (USD is going to inflate like we're living in Venezuela), to the untrue (BTC is decentralized), to the unprovable (BTC is digital gold).
Sometimes the reason the explanations don't make sense is because they're not right - and the alternative that BTC is a bubble or manipulated, atleast needs to be considered.
The Regression Theorem, first proposed by Ludwig von Mises in his 1912 book The Theory of Money and Credit, states that the value of money can be traced back ("regressed") to the goods and services it obtains. In other words, money is backed by some commodity that has intrinsic value.
Recently, there has been a debate about applying Regression Theorem to Cryptocurrency such as Bitcoin.[1] Since Bitcoin (for instance) is not backed by any commodity, it appears to fail the definition of a currency according to the Regression Theorem. Others hold the view[2] that Bitcoin does fit the definition as it is at once a payment system and money, with the source of value being the payment system.
Well, in US and Europe this is certainly true. I've yet to see a reasonably large shop accepting bitcoins. But my vision is blurred by the fact I am living in a wealthy Western country that has a comparably free banking system.
In other parts of the world, South America for example or Asia the situation is difficult for the average Joe to earn savings either due to galloping inflation or tight banking regulations. In those countries street markets are practically run by crypto currencies or derivatives.
Here's a fact though, Bitcoin is the hardest form of money ever created. With "hardest", I mean the most difficult to mint new quantities of it. That's why some people call it digital gold, because up until now, gold was the hardest form of money available.
I think it's actually the most difficult for people in rich western countries to see the value proposition of Bitcoin, since they're used to having strong, stable currencies and rule of law.
If you live in a country with 20% inflation and/or expropriation of assets, then Bitcoin is a way out.
Bitcoin does have a payment system, but IMO people who compare it to Visa or think that it should scale to handle everyday transactions are misguided. Eventually only very large and very valuable transactions will be made directly on the blockchain, and other transactions will be done on higher layers, like the lightning network.
Concerning Bitcoin being decentralized, it is, but I guess you dispute that due to a lot of hash power being in China. The Chinese miners are however individuals and not some uniform block who all think and act the same. Also, the mining pools are made up of individuals who can fairly easily switch to other pools at a moment's notice. Of all the cryptocurrencies, BTC appears to me to be the most decentralized.
This is a very concise summary of most of the crypto/blockchain projects out there. Ideas are cheap, and calling out that you understand the CAP theorem and basic distributed systems theory doesn't mean you will be able to effectively solve problems as they practically arise.
However, it makes a lot of sense if you consider who the target audience of such whitepapers is. (I'd argue it's not engineers.)
I also don't think this generalization applies to all projects out there, but at this point, it seems like it's become more than a full-time job to see beyond the cargo culting, shiny landing pages and jargon-filled "whitepapers".
Fiat currency also has the nice property of being able to be used as money (payment for goods and services). So no, a well managed fiat currency can be extremely useful.
They also add and remove items from the CPI index, to remove ones that inflate and add ones such as consumer electronics that deflate.
Check out the chapwood index or a different unbiased inflation metric.
"Fiat" at this point is just a loaded term used to try and dismiss all the things that actually make money worth something. Regulation, governance, monetary policy, and enforcement.
The second someone finds a repeatable double spend attack in bitcoin, the whole market cap crashes to zero and everyone will be screaming "why isn't anyone stopping this???"