The Fiat wars have started and Bitcoin is going to win
If more countries decide that they're done taking infinite fiat paper for their finite resources, then the fiat experiment is doomed.
The journey to Bitcoin becoming the global unit of account has been picking up speed triggered by the war in Ukraine and the growing global inflation problem.
Ever since the end of the gold standard era in the 1970s, global trade has been complicated and hampered by all the different country-created fiat currencies. Doing complicated economic calculations across borders has created a giant foreign exchange industry that brings little value to trade itself.
Before 1971, the Gold Standard was a globally recognized single form of money, independent of the control of any single country, government or authority.
Everyone in every country had a single unit of account that they could rely on to determine the fair value of goods between different economies.
The problem was that gold is heavy and this is where central banks came into the picture and settlement between 2 parties required a 3rd entity to coordinate trustworthy transactions.
Over time, once gold was centralized, governments took over control and then replaced the gold standard with Fiat currencies which they could control and can print to infinity.
And that is what they have done.
In The Bitcoin Standard, Saifedean writes about whether Bitcoin could potentially play the role of a global unit of account for global trade saying that “for this to happen, Bitcoin would need to be adopted by an extremely large number of people which is not likely anytime soon”.
He goes on to say that there is still too much volatility now and this will take many years.
I believe the process has started for sure.
I wanted to share StackHolders tweet thread on what's going on in currency markets in the world right now.
He explains how the war in Ukraine coupled with the infinite printing of Fiat dollars in the United States, Canada and other countries has started what could be the beginning of the end for US dollar as the global unit of account for trade.
It’s a great thread and worth a read.
Here are the best tweets below for you to read or click through and check out the entire feed. It’s a great analysis and perspective.
Why is this happening?
Why it Matters?
Hyperinflation is a real serious threat. Global inflation is running very hot right now.
Here are published numbers but my guess these are severely under reported.
Worst case scenario
What are your thoughts on this?
Makes me very bullish for Bitcoin, especially when El Salvador just hosted 44 central bank leaders and who learned how to use Bitcoin and it’s value as a globally recognized single form of money, independent of the control of any single country, government or authority.
For these countries Bitcoin is the advantage they have over the G7 central banks.
If they start to choose Bitcoin and decide that they're done taking infinite fiat paper for their finite resources, then fiat is truly screwed and Bitcoin will take another step forward to becoming a global unit of account.
If you have questions or need more clarification, please leave a comment below or come reach me on Twitter @CraigOnBitcoin.