If you don't want to watch the video then here's the transcript for your reading pleasure
Cryptocurrencies vs. Fiat Currencies
This is a bit of a complex topic and we will be making many videos, but this one will be simple and to the point so that everyone is able to understand the fundamental differences between current “regular” money, and cryptocurrencies. Now let’s get into it.
So first we have to ask, “what’s wrong with the current monetary system?”
The current system is called a “fiat money” system, so currencies like the US Dollar, the Euro, etc. are what’s called “Fiat Currencies”. This basically means that money had no REAL value, and is a trust based system relying on governments that will always back them. Meaning that if a government were to one day no longer ensure the value well, then Venezuela happens. So the main problems with Fiat are:
Fiat:
Very difficult to know how much money is in circulation
Inflation causes people to lose money over time
Governments can do what they want to favor themselves / political agendas
If a government can no longer afford to do what’s necessary to keep up with their currency’s value (ex. Pay their debt) then the currency can become worth less than the paper it’s printed on.
So what’s different about cryptos is:
Cryptos:
Decentralized
No central power can control/ manipulate it
No inflation
No fraud / corruption / counterfeiting
Best available store of value
No fees, instead of examples like Visa where they take 3% of any transaction.
Cyptos are able to rid all of those flaws by running on something called the Blockchain. I’m not going to go into all of the nuances of the blockchain right now but what you need to know is that it’s like a big notebook or ‘ledger’ that is distributed. This means that anytime someone makes a change to their notebook, it needs to be verified as a valid change to everyone else’s notebook. If it’s not verified then no transaction, if it is then the transaction will go through.
While it sounds simple this is huge, and will completely change how the internet works.
The closest analogy would be roads. We’ve had roads for thousands of years except now instead of horses and mules dragging a falling apart wagon we can drive a Ferrari going 250 miles per hour. And the blockchain is that Ferrari.
And here’s a bold, on the spot prediction: A lot of people are wondering what Web 3.0 will be, 2.0 was the change from the original web to the social network age. 3.0 will be moving from centralized to distributed. Essentially, almost all of the internet as we know it today will run on the blockchain in the future.
And so back to currencies, where the main question is “will cryptos ever be as big or bigger than fiats?” It’s not a question of ‘if’, but ‘when’. When will cryptocurrencies hit enough critical mass to essentially replace every major currency, from the US dollar, to the Euro, the the Chinese Yuan? It’s only a matter of time before one of them falls. And when one does, they all will.
So if you’re looking for a good investment throw whatever extra cash you have lying around, something like Bitcoin, Ethereum or other might not be such a bad idea. And if this all ends up happening, then in the famous words of The Beatles: “Baby, you’re a rich man
