Is Bitcoin better than Fiat money?

Hey, I’ve been thinking about our conversation from two weeks ago.

Which one? Is it Gold vs Bitcoin?

Yes, that one.

What about it?

In retrospect, I feel like it wasn’t the right pairing.


A more rounded conversation should have been between Fiat and Bitcoin.

Fiat? Like, dollars, pounds, and naira? The government-issued currency not backed by a commodity such as gold?

Yes, exactly that.

What are you thinking?

Oh, nothing. I was just wondering what kind of scenario will make cryptocurrency replace fiat.

You don’t have to wonder too far since Bitcoin is already in use in two countries — El Salvador and the Central African Republic. Nevertheless, there are a few things to note:

Before anything can be called money, it needs to satisfy three conditions.

Go on.

First, it has to be accepted as a means of exchange for the buying and selling of goods and services. Next, it needs to store value — savings — and act as a unit of account. Finally, it needs to be easily divisible and portable.


Bitcoin fulfills these characteristics. It has become accepted by millions of users and thousands of businesses as a means of exchange. You can convert your fiat or gold into Bitcoin to store value.

Bitcoin is digital which means that it can be easily carried from one place to another without any major effort — all you need is a wallet to store your coins either via a hard wallet or soft wallet.

The digital nature of Bitcoin also means that you can easily divide it into smaller bits for transactions. For example, if a hat costs 0.003 BTC, all you need is to input the value in your wallet and send directly to the vendor selling the hat.

So you can see that Bitcoin already possesses the qualities of fiat money that we use for our daily activities. Bitcoin takes the quality a step further by introducing decentralization and money not bound by borders.

Wait a minute. Isn’t the dollar considered a universal currency?

The dollar is considered the universal currency because of international trade. Ask yourself how many people in the world use or hold dollars — not many. This is because you need third party intermediaries like banks to get dollars.

In developing regions, like Africa or some parts of Asia, it is harder to even get dollars from the banks. You’ll need to meet black market dealers who charge exorbitant fees to sell dollars.

Bitcoin is different as you are not bound to banks or black markets to access it. In other words, anyone in the world can transfer Bitcoin to your wallet and vice versa.

Even if you stay in a village, as long as you have access to the internet, you will be able to transact Bitcoin. Think of the freedom of spending a universally accepted currency anywhere across the world. That’s what Bitcoin provides.

Nice try but I still trust my banks.

Banks have existed for hundreds of years so I’m not surprised that you trust them. However, do you know that the money you own in the bank is not fully yours and can be frozen at any time? With Bitcoin, you get full ownership of your assets when you use a non-custodial wallet.

What is that?

It’s basically a way of storing your crypto funds while being in full control of the process. Think of it as being your own bank.

Ah cool. So, what’s the advantage again?

For one, you’re in control, unlike fiat currencies that are subject to manipulation by central banks.

Case in point: During the covid-19 pandemic, the United States government printed trillions of dollars to stabilize its economy. In fact, in June 2020, the U.S. printed more dollars than it had ever done in two centuries.

Bitcoin solves this problem as we know the total number of BTC that will ever be issued — 21 million. So no one can manipulate Bitcoin by printing more than the total amount coded on its blockchain.

Is this the hill you’re willing to die on?

Lol. I’m not done.


Another advantage of Bitcoin is speed. Compared to traditional banking systems that take multiple days to process intercountry transactions, Bitcoin transactions take less than 2 hours.

Hello? Have you used PayPal or Venmo?

Yes, I have used PayPal and Venmo to complete fiat transactions. However, you should know that these are credit, not cash systems.

What is the difference?

The difference is that the cash system deals with the physical settlement of money while credit is a promise to do so.

For example, when you send a payment on PayPal, the company updates its accounts to reduce the value in your account and adds value to the recipient accounts. There’s no cash changing hands at PayPal because they simply change numbers on their computer.

What matters to PayPal is when you send the payment to your bank account. This is because they must physically send cash from their accounts to your bank account which usually takes one to three days to clear.

Bitcoin as a cash system provides physical settlement of your Bitcoin. This means that the money is in your account, as opposed to a promise that it will be. Therefore comparing Bitcoin to PayPal is like comparing apples to oranges.

Let me process the authenticity of your statement. While I’m doing that, what is your argument for the anonymity of Bitcoin? My bank can track unwanted transactions, crypto can’t.

This is where many people get it wrong. The fact that Bitcoin transactions are anonymous does not mean that they cannot be tracked. You can take a Bitcoin wallet address and paste it into the Bitcoin explorer to view all the transactions in that wallet.

In the fiat system, once the money is taken away from the bank, there’s no way to track transactions. This is why cash remains the biggest way for criminals to receive money. In certain parts of the world, you can buy a car with lump cash sums and no one can track where the transactions took place.

With Bitcoin, it is impossible. Law authorities simply need to get hold of the wallet address and view the transaction history of the user. So using Bitcoin is safer and more transparent when compared to fiat.

I simply don’t believe you.

Moving on: Compared to Fiat, Bitcoin feels exclusive. For example, how can people without internet-enabled devices participate in crypto?

Yes, crypto is heavily reliant on the internet and this makes it difficult for people without internet-enabled devices. However, think of it, we’re in 2022 and not 2002 when there was less access to the internet and phones.

In most regions of the world, there’s some form of internet and the number of smartphone users has increased over the years. There are also other ways to use Bitcoin without the internet but they’re complex.

This limitation is why many crypto enthusiasts believe that a perfect reality is one that combines crypto and fiat systems.

Ha! I finally caught you.

No, you didn’t. It’s just the reality of things.

Say whatever you want.

Question for you: How do you grow your crypto? It’s pretty clear for fiat.

If you are still confused about the investment options for crypto, I recommend you read this interesting article on decentralized finance (DeFi). DeFi provides you with an ecosystem where you can access different investment options in crypto.

You can save or lend your crypto for interest. Lock your assets in a liquidity pool — a pool of funds used by an exchange to complete transactions — for yields and more.

What makes crypto investment options unique is that you don’t need huge collateral or regulations that are the norm with banks. You can easily invest in different options on a platform like Binance and get better returns than your bank.

I’m glad you brought up banks. Since there are no financial institutions like banks, who do I hold for missing transactions in crypto?

Bitcoin requires that you’re responsible for your financial well-being. You can lose your Bitcoin if you lose your private keys — A private key is a code that gives you access to the crypto stored in your wallet. This is a cost of the decentralized system of Bitcoin which does not allow you to reverse transactions…

Hahahahhahahahahahaha. I knew it!

Wait. I’m not done.

As I was saying: However, if you want a system that can help you recover your private keys then it is best to open an account with a crypto exchange. Crypto exchanges serve as the crypto version of “banks” and help you manage your private keys.

So this way you don’t lose your Bitcoin when you forget your private keys or lose your internet-enabled device. All you need to do is to go through the recovery process and the exchange will provide your details to access your funds.

Still not satisfactory. For fiat, I’ll just hold my account manager’s shirt.


I’m tired of whopping your ass in the argument, do you want to give up?

But you haven’t…

I thought we were still discussing…

I’m leaving you behind to go make some fiat for my family

Lol. Till next week then?

Maybe. Maybe not. Let’s see.

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