Comment: I'm no rabid defender of BC,

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I'm no rabid defender of BC,

I'm no rabid defender of BC, but some posts here smack of paranoia and inflexibility of thought. It's certainly possible that BC will fail, but I doubt it will be for the reasons cited in this thread. I even think it likely that an unforeseen problem will pop up that will make it fail. But that doesn't mean that any of the arguments that are stated here hold true.

You see, I don't just swallow propaganda and hold it as an unalterable truth. For every rule that exists, an exception also exists (most of the time). If RP says that fiat currencies will always fail, I'll not just swallow that as truth. I first think about WHY he said that they will always fail. I also think about why fiat currencies fail in the first place. This gives greater understanding and soon one can see situations where these general rules may not apply. Reality is often too complex for absolutes to exist afterall.

For starters, you cannot call BC a true fiat money. Because it doesn't derive its value from government regulations. It derives its value from FREE MARKET PRINCIPLES. The only thing that is the same as fiat, is that it isn't backed by anything.

But why was it necessary to back the currency with a commodity? Why do governments prefer fiat in the first place?

For starters, the advantages of the gold standard, was that it prevents INFLATION. This is THE most important function of the gold standard. How does it prevent this? Well, the mining of gold is constant, which means that supply and demand is relatively constant as well. This keeps the currency stable. Furthermore, you can't PRINT any money with the gold standard. You are forced to be disciplined and you cannot overspend, preventing the accumulation of debt. IMO, these are the most important advantages of the gold standard: Constant production and the inability of printing more money. Both of these aspects are mimicked with BC.

There's a third advantage of the gold standard and that is that it has intrinsic value. So theoretically, even if all confidence in the gold currency fails, it will still retain value, because of its intrinsic value. Gold can still be used for jewelry, electronics and other stuff.
IMO, this is the most unimportant aspect of the advantage of the gold currency. The intrinsic value of gold isn't worth THAT much. And I can't remember a single time that a situation ever occurred where this reason was relevant enough that it somehow was a factor in retaining significant market confidence. If there ever was a situation where the worth of a gold currency fell back to its intrinsic worth, that currency can already be considered a failed currency. It might add SOME market confidence to a gold currency and its ability to retain value, but IMO this added confidence is marginal at best.

Now mind you, it's perfectly possible that this third advantage could prove more important than I regard it. But it has never been tested how important this aspect truly is. Before I start shouting that this third aspect is da bomb and makes it all worth the effort, I want to keep my mind open to see how currencies do with only the other two advantages.

Because let me answer the second question as to why governments prefer fiat: Control of the money supply (being able to manipulate the currency) and the ability to spend and print money. Governments like the absolute feeling that they can control everything. And they don't like the idea of being limited in spending either, so they want to be able to print money. BC prevents both of these aspects.

Bottomline, BC prevents most of the disadvantages that are wrong with fiat currencies. Its biggest weakness is not having intrinsic value. But I'm willing to give this currency a chance for this reason alone: NO PERSON CAN CONTROL BC.

Some say that this is a scam. But for it to be a scam, SOME people must profit at the expense of others and they have to do this scam with THIS PURPOSE IN MIND. That BC is decentralized tells me that they really want to have a currency where no person can control it. Most scams need the scammers in control of the system. Or at the very least, scammers WANT control.

Now it's certainly possible that BC will still fail. It's done through technology afterall and the complexity of technology can make unforeseen problems pop up and make it fail. It may even fail because it has no intrinsic value. BUT, if it can demonstrate that it performs BETTER than fiat money DESPITE this....Do you know what that means? It will be the first step in breaking down the monopoly that bankers have. Irrevocable proof that government controlled money really doesn't work. That consideration is important enough to give BC a chance.

And keep one other thing in consideration. The production of gold cannot be kept up indefinitely. It was one of the advantages of the gold standard in the first place. Experimenting with other currencies might not be so bad. If it fails, that's more knowledge to developing a new better currency similar or better than the gold standard. Because to think that the gold standard is the best thing we can do and that mankind can do no better, that's last century backward kind of thinking.