When people ask me “Why do you trust in Bitcoin/Cryptocurrencies? I have a counter-question: “Why do you trust in FIAT currencies and are you aware of how the money in your pocket is created?”
Most of the time this is enough to make people think about it. Even if you do not understand the concept of cryptocurrencies, the first step towards understanding this is knowing how the classic money system works.
A FIAT currency is a currency that is declared as legal tender by a government. It is centralised and can therefore come in physical form e.g. coins and notes or it is represented by zeros and ones electroni- cally. There is no way the supply is limited.
The risk of hyperinflation at some point is 100 % – there is no FIAT currency that has been able or will be able to last forever. Cryptocurrencies, on the other side, is not legal tender and not backed by a bank or government. It is or let’s say it should be decentralized. Transactions are verified through a network. Every transaction is locked-in on the blockchain and there is no way to delete it. The supply is limited by an algorithm.
These few points alone should make clear what kind of disruption is possible in the long term. With cryptocurrencies you are able to send money around the world at any time. No problems with borders,bank holidays, limitations of your bank account, trust issues when itcomes to where you store your money, because you are your own bank.
More and more people are losing trust in the FIAT system, with this growing lack of trust it is making a lot of people bullish to the new currencies. A good example of this is Venezuela. Their currency, the Bolivar, got into a four-digit hyperinflation. Money was printed without end by the government which led to chaos and poverty in the whole country. To counteract this the people of Venezuela jumped into Bitcoin; they spent every Bolivar or Dollar they could spare directly into Bitcoin, other cryptocurrencies or mining equipment. This move rescued a lot of families and put food on their table.
With decreasing trust in FIAT currencies, cryptocur- rencies can profit from this in the long run!