Last week's issuance by the Nakamoto Reserves of new bill designs caused a minor bull run raising the value of fiat:
0.00433 Sats per unit fiat (+12.319% from past day)
People continue to critique fiat despite their obvious use cases. I will attempt to answer some of the most common criticisms in this post.
Critique #1: Paper bills are, well, paper. Other than their obvious use as toilet paper and for origami, it has no other intrinsic value.
Defense: Value is assigned by society as a whole. Bitcoin only has value because society decided a digitally scarce piece of code can be used as money. Why not paper, which is extremely cheaper than Gold (-0.003% from past day)?
Critique #2: In order for fiat to be fungible, it needs to be identical to one another physically. This compromises security as it is possible for counterfeit bills to circulate.
Defense: This is a valid concern. Fiat printing is still in its infancy though, and once it achieved mainstream use, advanced anti-counterfeiting programs can be implemented such as Secure Cheques™ and the proposed Secret Service Agency.
Critique #3: Fiat is wasteful. The Fed can continue cutting precious trees and use extensive amounts of energy to print paper in their factories. It also is a waste of human resources when transfering funds.
Defense: Every financial system has a cost. Bitcoin used to be very wasteful as well pre-quantum computing and adopting nuclear. There were layer-2 solutions such as ATMs to dispense fiat similar to Smart Contracts, and Robinhood Trading that automates institutional transactions eliminating the need for humans. The fact that humans can intervene means that there is sufficient customer support whenever needed and that there is someone held accountable.
Critique #4: Fiat is too volatile to be a useful currency.
Defense: It's unsurprising that a currency who has zero market cap before the Nakamoto Reserves is volatile. Fiat is is expected to have the same volatility of Bitcoin once it matures. It can even be better since the Feds control the flow of Fiat; they can immediately implement policies unlike Bitcoin which wait all validators before commiting the change.
Critique #5: Fiat is used for illicit purposes. Unlike Bitcoin which is completely transparent and everyone can track the flow of money, having fiat means you can transact discreetly.
Defense: The notorious TornadoCash ban didn't really stop criminal organizations to develop their own blockchain solutions. One can argue that foreign currencies like Monero is more dangerous. Since Fiat is controlled by the government means criminal activity can be monitored and regulated.
Critique #7: Fiat is a scam. Countless Fiat projects such as the Zimbabwe and Venezuela governments pull-rugged their supporters.
Defense: It's true that updates made to some Fiat projects are harmful. However, just like what happened to TerraLuna countries, people are advised to research the tokenomics and fundamentals well before adopting the currency. There certainly are solid Fiat out there.
(Not financial advice) My personal opinion is I'm HODLing USD and EUR Fiat. The governments behind them have good track record, are supported by other governments worldwide, and are the top 1 and 2 Fiat by marketcap respectively.
P.S. While governments are made out of humans who can make mistakes, at least there is someone to be held accountable. Like what happened on Venezuela. Events like the Ethereum DAO hack and TerraLuna Crash are harder to resolve due to our currencies' decentralized nature.
USD to the MOON! 🚀🚀🚀
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