Offering a critique to help folks understand.
All of these are false or wrong in other ways:
1) Currencies tied to fixed resources are more stable in the long run due to the limited supply of the resource, such as gold or silver.
There is no evidence for this that is in any way rigorous and conclusive.
2) [Fiat] is subject to high taxation depending on wealth accumulation and location.
Does this mean others are just easier to hide from tax authorities? And this is a “pro” for crypto?
3) [Fiat] can no longer be redeemed. Is not backed by a physical commodity.
This “disadvantage” is a function of no longer operating in a barter economy. Also, to be truly a non-fiat economy, as some in the crypto world have themselves pointed out, you can no longer permit borrowing.
Otherwise, it is subject to instability of the government. When a country is doing well, its banks are doing well and its fiat does well. However, when a country is being poorly managed or suffers for any reason, its fiat also suffers, which means the population depending on that fiat also suffers.
So, is the end-objective of crypto to minimize responsibility for good government?
5) Slow transactions. Even with the innovation of the internet and faster transaction times, electronic cash transactions often take days and are still subject to banking fees or delays depending on the bank’s schedule.
As a pure technical matter, all transactions of most widely used crypto-currencies are slow. If you are technically sophisticated and have your own wallet, have access to a good reliable internet connection, are careful about where you put your key and passcode and don’t lose these, then you’ll typically wait just 10–15 minutes. Since you can’t really buy anything with your crypto, you’ll need to go to an exchange to get “fiat”. Add that time. Your account may be credited right away (depending on amount), but you have now entered the world of fiat. Plus, you have added another dependency (again see Quadriga, Mt. Gox, etc.), the exchange. You then have to use the banking infrastructure back in to actually transact in the real world and this brings you right back into the same world you thought you were escaping.
With regard to the “Takeaway” section:
1) Both fiat and cryptocurrency are essentially the same when it comes to their use.
I can buy literally anything with fiat. Nothing in daily life or in business is purchaseable/sellable with crypto.
2) They are both dependent on economic factors and can subsequently increase or decrease depending on these factors.
There is no “economic” factor that determines crypto value in any way similar to fiat. Crypto value is almost entirely driven by demand for largely illegitimate purposes:
3) Neither have been around for very long.
This is such an ahistorical and misleading remark, it is almost breathtaking.
There are many examples, but once civilization evolved past pure barter arrangements and effectively operated with “futures” type transactions, fiat/crypto was born.
Sumerian bullae are a great example. And shell money was used by nearly every early human community.
Although later backed by gold and silver, the first USD was pure fiat.
That gold and silver were themselves a fiat value store (see history of silver particularly) is ignored.
Silver was the original “backing” of the British pound. The gold ‘standard’ began in 1800s.
In summary:
The mind-trick that has arisen with crypto is to make a distinction between gold and “fiat”. They are the same. They are both entirely theoretical. One only need look at the history of silver to understand this. The USD just happens to be the most widely used form fiat.
