Except fiat currencies also have that fiat behind them that gives them value. If you want to do business with the US government, you do it in USD. If you are one of the millions employed by the US government, you are paid in USD. If you manipulate USD, you have to answer to the US government. Those things add tremendous value and they are something that Bitcoin does not have.
With Bitcoin you only have trust in value of Bitcoin. Fiat currency is given added value by having trust in the power, reach, and stability of the nation that issued it.
More specifically, you have trust in the continued trust that others have in it. It's a self-fulfilling prophesy: as long as people continue to trust it, it continues to be valuable, but as soon as people start to doubt that others will continue to trust it, it's instantly worthless. There's no real value backing it up. This makes it very vulnerable to hype and hysteria.
In the 70s we made a number of agreements with a variety of Mideastern nations. We gave them what seemed like the world and asked that simply require payments of oil to be transacted on the dollar, and that they invest their excess revenues into US securities. In fewer words, the petro dollar.
And those agreements, for the most part, persist to this very day. A US dollar guarantees you access to oil. And so long as oil is the most in demand commodity in the world, the US dollar will remain the most in demand currency in the world - guaranteeing access to the goods and services of any country.
This is why the US dollar is the world reserve currency, or the money most countries keep under their bed in case of a rainy day. However, if this changes (renewables, Saudi Arabia deciding to switch allegiance to Russia/China, etc) what happens? We've a lot of debt that's only increasing and it's unclear to me how tall the USD would stand without its crutch.
Bitcoin, by comparison, isn't used for everyday transactions by a lot of people (though there are some). There's no real economy it's native to (unless you count Silk-Road-style markets), and there's no guarantee that you'll be able to use it there in the future.
Ultimately it seems that any material you treat as a store of value, rather than as a commodity or material that is valuable to you for its own properties, includes this trust that others will value it. If others do not value it, it is not a store of value, its usefulness to you is reduced to its own intrinsic properties rather than the value others place on it.
It might be trust that you can't double spend BTCs, trust in the issuing algorithm, trust that you can only lose your bitcoins if you do something stupid with your wallet, etc.
Of course, we can't compare right now bitcoin's ecosystem with the ecosystem of the fiat currency, but who knows what will happen in the future if more and more people and businesses choose to adopt it.
The Fed themselves wrote an article [2] expressing some concern about the "nontraditional monetary policy" that instigated this sharp change in the monetary base. In their closing words, "Recent increases in the monetary base are far greater than any previously in American history (even adjusted for the size of the economy), surely a "noble experiment" in policymaking. Will these policies be successful without accelerating inflation? The epitaph to this curious case of monetary base expansion is yet to be written."
And really I think that final line quite succinctly sums up the state of modern economics. We've entered into an age of currency growing, inflation chasing, debt drive economics. And it's been working great for the briefest glimpse of time that we've been carrying out this experiment. Does that mean we've finally 'solved' economics, or does an epitaph that looks back somewhat less fondly on our decisions await? I don't know, but I do think the inherent stability of the fundamentals of bitcoin (e.g. - everything except the exchange rate) and the lack of trust it requires makes it a nice balance to our fiat experiments.
[1] - https://fred.stlouisfed.org/series/BASE
[2] - https://www.stlouisfed.org/Publications/Regional-Economist/J...
basically, citizens dealing with the US government. I think it's the same category.
bingo
If you want to do business with drug vendors over the internet, you do it in BTC.
(Altnerately: If you want to donate to Wikileaks...)
Nope. All of these are derivatives of Bitcoin, but none of them are forks. A fork, by definition, shares a genesis block with the parent currency. This is in contrast to a "client fork", where the Bitcoin codebase was modified to create a new blockchain with or without changes in protocol.
Most forks of Bitcoin have been intentional, and the "lesser" chain has died on purpose. Off the top of my head, existing forks are:
BitcoinXT: created in late 2014, it allowed 8MB blocks instead of the 1MB limit for Bitcoin. As of mid-2016, it died due to lack of miner support.
Bitcoin Classic: created in early 2016, it allowed 2MB blocks. It was effectively dead as of early 2017.
Bitcoin Cash (a/k/a BCash, BCH): created in August 2017. It eschewed SegWit, and increased block size to 8MB. It's not dead yet and seems to have a base level of support both in terms of miners and in terms of price. I expect that it will die eventually... but who knows. It is by far the best-supported Bitcoin fork, and there are many who believe that it's the "real Bitcoin" in the sense that it conforms more closely to the original whitepaper.
There are a couple of other forks planned in the near future as well.
edit: is this account a bot that I triggered?
Currency speculators don't give a damn about trust. They're not in it for the long term value that derives from the usefulness of Bitcoin, and that's the only thing you need trust for. They'll cash out when the price gets to a point where they're happy with their return. At that point either new speculators will get on board and keep the price high or the price will fall back to real value of Bitcoin.
Neither really changes the usefulness of Bitcoin or it's long term value as a currency.
We see this globally with the huge effort the USA puts into keeping oil priced / settled in USD. It matters.
USD has a store of value because if I hold USD I know the US govt is going to make people hand over a portion of their labour in taxes which keeps USD demand up.
Of course, the US dollar has the whole US economy and the biggest army in the world as its plus, but it also has its minuses: the US treasury can and does print as many as it wants, in the detriment of ALL USD holders.
Bitcoin's pluses when comparing it to other crypto currencies are:
- the first to market advantage
- almost 9 years of virtually 0 hacks of the protocol or concept
- no sudden moves
- the whole ecosystem that formed around it
- etc.
Let's not forget - ETH is less than 3 years old, Ripple is centralized, Litecoin, zCash, Monero and most of the others are bitcoin forks.