BR #2: Fiat dropped 10% this week
May 06, 2023
(1 minute read)
“Hey George, bitcoin just grew 10% and surpassed $30k per one coin.” a friend tells me.
I quickly revert:
“I fear you are getting this wrong. Bitcoin did not grow. Nothing changed for bitcoin. Rather, fiat currencies changed. And they lost 10% this week compared to bitcoin.”
He goes on:
“What do you mean? People speculate with bitcoin and that is why it is growing higher, isn’t it?”
I hit back:
“Nope. You are still missing the point.
“Hey George, bitcoin just grew 10% and surpassed $30k per one coin.” a friend tells me.
I quickly revert:
“I fear you are getting this wrong. Bitcoin did not grow. Nothing changed for bitcoin. Rather, fiat currencies changed. And they lost 10% this week compared to bitcoin.”
He goes on:
“What do you mean? People speculate with bitcoin and that is why it is growing higher, isn’t it?”
I hit back:
“Nope. You are still missing the point.
Bitcoin was exactly the same a week ago, a month ago, and years ago.
Its monetary policy never changes. It has been the same since bitcoin’s launch in 2009. There will only ever be 21 million bitcoins and the rate at which they enter circulation was defined in 2009.
On the other hand, the monetary policies of all fiat currencies keep changing literally every month. The supply of fiat has been growing forever - sometimes faster, other times slower…but it always grows.”
Aaand here he gets it better than I expected:
“I see. So would it be fair to say that Bitcoin is staying still like the earth, while fiat currencies keep moving like a train on top of the earth. Is that a good analogy?”
Exhilarated I reply:
“That is exactly right! It seems like Bitcoin’s price is growing and dropping. In reality, bitcoin stays the same, while all fiat currencies get consistently repriced lower and lower in BTC terms. My only clarification to you analogy would be that the earth is older and bigger than trains, which is why it is obvious to us that the train is moving and the earth is still. Bitcoin, on the other hand, is smaller and newer than fiat, which is why it seems like bitcoin is moving and fiat stays the same.”
Indeed, from a engineering standpoint (or a physics standpoint) bitcoin is a solid rock like the earth while every other currency moves like a train.”
I hope this metaphor helps you deepen your understanding of bitcoin’s clear superiority over any fiat currency.
Its monetary policy never changes. It has been the same since bitcoin’s launch in 2009. There will only ever be 21 million bitcoins and the rate at which they enter circulation was defined in 2009.
On the other hand, the monetary policies of all fiat currencies keep changing literally every month. The supply of fiat has been growing forever - sometimes faster, other times slower…but it always grows.”
Aaand here he gets it better than I expected:
“I see. So would it be fair to say that Bitcoin is staying still like the earth, while fiat currencies keep moving like a train on top of the earth. Is that a good analogy?”
Exhilarated I reply:
“That is exactly right! It seems like Bitcoin’s price is growing and dropping. In reality, bitcoin stays the same, while all fiat currencies get consistently repriced lower and lower in BTC terms. My only clarification to you analogy would be that the earth is older and bigger than trains, which is why it is obvious to us that the train is moving and the earth is still. Bitcoin, on the other hand, is smaller and newer than fiat, which is why it seems like bitcoin is moving and fiat stays the same.”
Indeed, from a engineering standpoint (or a physics standpoint) bitcoin is a solid rock like the earth while every other currency moves like a train.”
I hope this metaphor helps you deepen your understanding of bitcoin’s clear superiority over any fiat currency.
Money is changing forever.
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