Help to help a friend understand BTC


#1

I have a friend who has been asking about bitcoin. I am a big believer in Bitcoin myself and like to think I am quite knowledgeable on the subject. He did put a question to me that I could not answer very well and is probably quite an important question. The question was: “Why would the layperson bother switching from fiat to BTC?” Especially in developed countries where banking is very functional transfers and payments are virtually instant and free. I am sure most of us understand the banking system and how corrupt it is, we love and trust crypto because it’s outside of banks and govt control. His point is that 99% of people trust the banks and govt and it’s just easy for people to use fiat. I have explained that crypto is very much in its infancy. I still struggle to explain to him what it will be in say 10 years time that will make the majority of people in developed countries use crypto. I know its trustless, imutable, decentralised and borderless but again how does this benifit lets say 60 yr old joe bloggs who wants to go and buy a TV.

Does anyone have a good answer for this? Perhaps even a specific video that explains it well?


#2

@David_Wyness here is my attempt at answering your question :slightly_smiling_face: I am not going to answer your question in a technical manner (I assume you have already done that), I am going to appeal to his past experience and current feelings tied into his dependence on existing “better” technology. Also it should be noted, I don’t think the masses are going to switch from fiat to BTC in regards to everyday currency usage, but that aside, I switched the word BTC to cryptocurrency in your question for discussion purposes below.

Ask him for his cellphone, and then once it is in your hand move your fingers quickly and randomly around on the screen and let him know that you are going to wipe it because who needs all that fluff? A wiped phone can make calls because that is all that he needs right? Why did he switch from a flip phone to his smartphone anyway?

Before he got a smart phone, did he care about criminals using his old type of flip phone as a possible burner phone? probably not. Did he care that the tech is better in the smart phone and it can do a few more things than the flip phone? probably not. Did he care if many others are using something else? maybe/maybe not. Did he start to care when every phone vendor was offering the smart device, everyone was using it, businesses started making employees carry one and then everyone started telling him/her that life will be better…try this great new app…get with the times…etc,…that is probably when he switched. Fiat is like the flip phone, it is good, but crypto is a little better. In the next 10 years crypto will be the smartphone to fiat’s flip phone.

Radio vs TV, Icebox versus Refrigerator, horse and buggy vs the car. History is repeating, technology is a catalyst and a change is happening now with money.


#3

I fear BTC might be more of an investment vehicle rather than a replacement for Fiat. Rather than convince folks to use BTC as an everyday use currency I feel it’ll be a safer and easy to maintain asset than traditional gold or even stocks in immediate future.

Would you like to buy a few cups of hot chocolate for 0.001BTC or hold it for an year and see it grow up 200% or more? Choice is yours!


#4

@David_Wyness

I think BTC and blockchain is a fun experiment with a new technology. I think it’s worth a try to learn about the tech and become familiar with the processes of using crypto.

You can invest a small amount of money to learn about wallets, transaction fees, private keys, etc. You learn better when you have skin in the game.

At the moment, BTC has been a good investment. This is another argument to get into it. If Lightning happens, then I think BTC will continue to increase in value. It’s very volatile and risky with the potential for good gains in the long run.

Well-those are my arguments for buying BTC. Learn about the tech and maybe make some money at the same time.

It’s not yet a replacement for fiat currency in the US. It doesn’t ever have to completely replace fiat currency to be useful, however. It can be an alternative currency with certain advantages that, hopefully, get stronger over time.


#5

Well sure fiat is used by 99.9 percent of people and that is one of the reasons to get into BTC your price appreciation will be huge. Just imagine getting in just a few months ago wow you would have doubled you value or wealth. Try doing that with fiat or leaving it in your local bank you might get a 1% -1.5%. That should be reason enough. Besides I am not saying stop using fiat as fiat is accepted everywhere and it is easy to use. BTC is a storage of value no a builder of value. Just imagine putting $10,000 in a bank account and then putting another $10,000 in BTC. 1-10 years later you will have much more value as related to fiat and when you need to spend some fiat. Cash in some satoshi’s for fiat to buy that new TV or clothes at your favorite store that only accepts Cash and CC’s. Fine you will have some capital gains to track but who cares if you have some taxes to pay if your bank account reflects 200%+ gains over fiat bank account you will still be way ahead at that time.

It will take time and BTC might not ever replace fiat and I don’t think that it will at least at it’s current level of involvement. Core developers and the community over time will make it easier to buy and store your BTC and it will then gain more and more adoption over time. So don’t wait until it is so easy to use that your grandmother can do it. Tell them to get in now so that they can ride the wave up and make them gains.


#7

Bitcoin is going to change the world.

It already has.

I would compare government issued currencies to that of:
- a horse before the car was invented
- a candle before the light bulb was invented
- an encyclopedia before the internet was invented

The future of money will not need banks and goverments to control it. The people control the money. It is democratic currency. It is fully transparent money. Everyone on earth knows the value of every one else. And that can be scary, but at its core its honest. So once more and more people become as passionate as I am about this currency it will spread…A LOT…FAST. Politicians and CEOs will be forced to be honest. Entire companies and charities can be scrutinized with ease. No more cash filled handshakes. This has huge impacts on the entire lobbying industry. Distributed ledger technology will make it essentially impossible that government officials can be corrupt.


#8

#9

This is what I thought when I first entered the space but money corrupts the best. Sad but true and we are seeing this play out in front of our eyes. The biggest problem here in this space is that the high ideals being floated about crypto is only true in it’s purest form which has yet to be realized. The biggest fallacy is the scarcity issue.
Bitcoin in itself is scarce at 21 million but the problem is that we can create as many as we want. By creating another coin that has a monetary value we are just printing money. With no regulation as to who can do this, we could really fuck things up in a Global economy. This seems like a good thing right now but what happens if Fiat does fail and is no longer around as a backup?
All this talk of Fiat failing would actually be a huge disaster in near term. Back to Bitcoin, about it not being scarce. It is not scarce and we have examples of that like Bitcoin Gold, Bitcoin Private, Ripple and many more. Those coins are meant to be of monetary value so everytime a new one is created we are creating new money. We are printing money which is inflation in simple terms.
We know the worth of Bitcoin and as it increases in value does it buy more or does the price of everything just go up? Right now it is very volatile and increases faster than inflation which is why it seems so promising but in the future will it? When another coin is minted and people start jumping on it, the money has to come from somewhere. If Bitcoin is the currency then it will come from there thus taking money out of that pool, diluting it to another. In that scenario now we have more and 21 million doesn’t mean so much does it?
Well, that’s my rant for today.


#10

No, By forking Bitcoin, you do not create more Bitcoin. There are only 21 Million Bitcoin possible and Bitcoin is the longest chain based on the Bitcoin protocol. So Bitcoin is scarce even if you creare a fork of Bitcoin, it is not said that this new version has some value - many don’t. Only if the people see some value in the new chain, it will have some value.


#11

Forking is different than creating a new coin. An exact replica is possible because the code is open source. Therefore the scarce thing is really a fallacy or trust that no one will create more coins. While not possible to do so for Bitcoin we have examples that many will do this. Bitcoin Cash, Bitcoin Gold and on and on. Although good for crypto right now I am thinking in the future when or if Fiat is no more.
I could be wrong here and would like an argument telling me why I am wrong.


#12

Anybody can fork Bitcoin, it is not hard. But the actual strength of the coin is in its network and community. That is not so easy. Bitcoin cash could gather a strong community backed by enourmos financial power, that’s why Bitcoin cash has a relatively high value. But that is the exception and not the rule.


#13

Bitcoin is also just printing money; I’m not sure of the point you’re trying to make in this regard. Governments also simply print money, which isn’t backed up by any specific stored value; actually cryptocurrencies have a cap of the number of coins they will ever issue, while fiat doesn’t carry such a cap.

Ripple and many others are not a fork of Bitcoin. They are their own in every sense of the word, while Bitcoin has created the founding principle and example of how cryptocurrencies can exist. Why would having other cryptocurrencies in existence be a threat to Bitcoin?

I do agree - to an extend - with the Bitcoin forks, but such is a limited group and some are having a hard time staying afloat (like Bitcoin gold which is down almost 92% from its all time high price, rightfully so I’d argue as I don’t really see the need for this fork).

How do we know the worth of Bitcoin? You can argue that the worth of bitcoin is determined by the willingness of people to invest in mining bitcoin, which gives it a value. If people no longer see this value and stop investing in mining then bitcoin will rapidly decline in value. Like with fiat, the value of cryptocurrencies is determined by the value that people attribute to it and the economy it is supported by; without that attribution fiat nor crypto has any real world value.


#14

A fork is only an exact replica at the exact point in time that the fork is created, as soon as minuscule transaction is done after the fork on either coin, they are no longer a replica. Also in most cases of hard forks, the forked coin has different principles in it that differentiate it from the original (Bitcoin gold with no ASIC, Bitcoin Cash with higher block size, etc.) so as soon as the fork happens they are different in nature. As far as I’m aware, there are no identical coins out there to-date and I doubt creating an identical coin with garner much support from the community (I.e. it would die out rather quick).

As MonkeyKing472 outlined, the strenght of any coin is in its code, its network, its community and its global distribution; those form the ecosystem and as such the economy that backs the coin. Not that different from fiat.

The reality is that you could print your own fiat starting today, you are not allowed to counterfeit an existing currency, but you are allowed to create a brand new one, but without an economy to support it, your fiat would be worthless and unspendable.

What is limiting cryptocurrencies to date is use cases, global acceptance and a means to use it anywhere any time; as adoption increases it has the power to replace fiat.

BTC is currently linked to the USD to give it a point of reference, otherwise people wouldn’t be able to understand its value. It could just as easily have been linked to chickens (1 BTC = 1 chicken, 1 Satoshi = 1 feather) but since there is no universal understanding of the value of a chicken, this would have made it much harder to comprehend.


#15

Thanks for your reply!

My point here is that this is a huge selling point for Crypto and Bitcoin and why it is so much better. It is also one of the biggest arguments of why it is different than Fiat. At its base it is scarce but when you factor in anybody can print money/coin then isn’t it the same thing as Fiat? I am not against the idea by no means, I am just pointing out the obvious. We can debate that Bitcoin is different code from other coins and that 's true for most but they are essentially the same thing. Some would say you can actually use Smart contracts on Bitcoin but not really useful right now. https://www.coindesk.com/smart-contracts-bitcoin-lightnings-tadge-dryja-working/

Here is where I struggle and have asked many people to explain to me why this isn’t so. If we have a pool of Coins (Bitcoin) that is worth such and such amount and used worldwide. The actual amount doesn’t matter here. Someone adds another coin to the mix and now we have more coins in the market. More than 21 million, let’s just say another 21 million. People like this coin and start trading bitcoin for this New coin. This dilutes Bitcoin making it worth somewhat less. This, in my eyes, is inflation and negates the whole idea of scarcity. The mining could go on because there is still money to be made in both coins just maybe not as much. The whole pool is diluted. Just like Fiat, when they print more money the whole doesn’t stop it just gets diluted.
This is where I am getting hung up lately. It bothers me to no end.


#16

You’re most welcome :slight_smile:

I think here is a flaw in your reasoning, for your statement to be accurate to me this should be: “if we have a pool of coins”

The actual amount doesn’t matter, someone adds another coin to the mix and now we have more coins in the market.

= absolutely correct.

However, if we have a pool of coins called Bitcoin, which is limited to 21 Million existing. And someone adds another coin, called BananaCoin, and there’s only 21 million BananaCoins then you have 21M Bitcoin and 21M BananaCoin. The existence of one does not prevent the existence of the other. Nor, assuming they’re equal, does the existence of one dilute the other.

However, let’s assume that BananaCoin is a far superior product; and as such, users and miners decide to migrate to the use of BananaCoin over Bitcoin. The result of this will be a price increase of BananaCoin and a decrease of Bitcoin; this decrease in price is due to quality of the product, not quantity.

This isn’t dilution but distribution of value. Yes the result of this may be that Bitcoin becomes worthless over time but such is the nature of a free market. The effect on the cryptocurrency space and use of cryptos in general would not suffer, it would migrate to the coins with the best value proposition.

If you look at the past, Bitcoin cash and bitcoin gold created new coins by hard-forking from Bitcoin, the value of these news coins was and is determined by the demand, and neither are anywhere close to Bitcoin; they were not even close at the time of forking but they did start out higher. It is well known that the Bitcoin Cash price has been artificially inflated (pump and dump) at least once, which they can do because of having massive holdings in it.

After forking however, their existence has had little impact on the price of bitcoin (aside a little from when they moved mining to pump, which was more of an effect on transaction speed and as such an indirect effect on price).

Lastly, it isn’t written anywhere, nor law that Bitcoin is to be the only cryptocurrency in existence and the only one that will be used to drive the internet (despite statements); god forbid that such would actually be the case. There are numerous far superior products out there now (obviously thanks to Bitcoin) that could be a replacement to-date. In 10-20 years the end the best coin(s) in terms of quality and quantity will survive, and likely Bitcoin won’t be one of them.


#17

So hear me out one more time and I’ll let it go.:face_with_raised_eyebrow: If we say all that to be true then can we say that the products we buy will never increase in price outside of demand? By that I mean, as I see it, the reason things get more expensive are either because everyone wants it and there isn’t enough or the dollar is worth less than it was yesterday so we have to pay more.


#18

Yes, anyone can fork Bitcoin but the fact that none of the forks have been accepted as Bitcoin strengthens Bitcoin. It is no longer a theoretical threat that someone can simply copy it and pass it off as Bitcoin. These other projects will fail but their failure will eventually strengthen Bitcoin.


#19

The fact that BTC cannot be printed at will is eventually what will combat inflation. Whilst the is being devalued BTC will remain static (or increase in value as gets dumped). So, you are right but it is possible for the dollar price to increase whilst the BTC price is decreasing.


#20

Ok, i’ll give it a try. :slight_smile:

First of all not many people are fans of banks. They’re just stuck with them. For most (living to day) it’s the only thing they know. And some don’t have enough knowledge about crypto to trust or use it (yet). But as crypto keeps growning and spreading it will lure more people and keep the cycle going until financial institutions are forced to act. Banks and such will not really dissapear in the near future, but they slowly will lose power and will have to adapt to stay alive. (Ivan said this i believe in one of his vids the other day :p)

And that’s the simple story. What if there are plot twists. What happens to your money when a bank goes belly up? A couple of weeks ago people in my country (and i believe other european countries) couldn’t use our debit cards. Not in the store, not at the machine. Visa had problems recently. Ofcourse there will be news that is against crypto and will try to work against it. But the progress of technology can’t be stopped. Ask him, if he thinks people and esspecially stores just instantly adapted the debitcard system. Or visa. Its clearly taken away a lot of cash sales.