Bitcoin vs The Dollar

The dollar is the most powerful currency in the world. It’s the global reserve currency — the one countries use to trade oil, settle debts, and hold savings. It’s accepted everywhere. It’s backed by the largest economy and military on earth.

Bitcoin is 15 years old, volatile, and not yet accepted at most shops.

So why compare them at all?

Because they represent two fundamentally different answers to the same question: what should money be?

The dollar is money by decree. It has value because the US government says it does, enforces it through legal tender laws, and backs it with institutional trust built over centuries. Its supply is managed by the Federal Reserve, which can create more whenever economic conditions require it. In 2020 alone, the US created more dollars than in the entire prior history of the country.

Bitcoin is money by mathematics. It has value because a global network agrees it does, enforces the rules through code, and backs it with the computational power of thousands of independent machines. Its supply cannot be changed by any government, institution, or individual.

For storing value across decades — the dollar has a poor track record. It loses purchasing power every year by design. Bitcoin has no such mechanism.

For everyday transactions in a stable economy — the dollar is more practical today. Accepted everywhere, stable enough day-to-day, integrated into every financial system.

These two things can both be true. The dollar is more convenient. Bitcoin is more honest.

Tomorrow: is Bitcoin a currency or an asset? The answer is more nuanced than most people think.

— The Daily Bit