💰 "Digital Cash" may be an outdated concept 💸 Money itself is due for an upgrade (BTC vs BCH vs Alts) 💰 by pandorasbox

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· @pandorasbox · (edited)
$1.20
💰 "Digital Cash" may be an outdated concept 💸 Money itself is due for an upgrade (BTC vs BCH vs Alts) 💰
**There is a lot of discussion on which is the 'one true Bitcoin' and which digital cash solution will reign supreme in the future. Today I want to talk a little about why I think this situation is being approached from the wrong angle, and from an outdated paradigm that should not be applied to the new paradigm.**

<h3>"Bitcoin is a peer-to-peer electronic cash system"</h3> That's what the Satoshi Nakamoto says when it describes what Bitcoin is, and it's in essence what is causing the split between Bitcoin and Bitcoin Cash. I'm not going to delve into the specific reasons of each of this camp, because they are wellknown and because I'm starting to believe more and more that both of them are mistaken.

<h3> What is 'money' or 'cash' and why do we need it? </h3> We have to go back to the beginning, unfortunately, to undertand where I want to take this train of thought. What's money, we have to ask once more? It's a store of value, a means of value exchange. All the things we tend to ascribe to Bitcoin/BitcoinCash as well when we categorize them. 

_But why do we need money in the first place?_ 

It's because a barter economy simply didn't work. When you've got a chicken, you can't cut off part of that chicken to trade for some potatoes. As such money was invented, which was more of a virtual value system. It removes the constraints of barter trading and increases liquidity and the flow of the economy. We have gotten so used to the idea of money that it seems almost impossible to imagine a world where we _don't_ have money-as-money-alone to pay for things.

<center>![U5dt3arEXeyCRdAfBb5vcfXiigYYuNA_1680x8400.jpg](https://steemitimages.com/DQmTesgH3f2JNzqRbepaaoiYNCtQmJU5zPX7NEXuVgzEPCs/U5dt3arEXeyCRdAfBb5vcfXiigYYuNA_1680x8400.jpg)</center>

<h3> Crypto allows us to go back to a barter-economy, with all the benefits of money</h3> With the introduction of cryptocurrency as a means to transfer and store of value, we are once more able to trade more than _just_ money. You don't _need_ an intermediary 'item' that represents a virtual value-token such as Cash, but instead you are able to trade the good itself (or the tokenized variety, atleast).

With Tokenomics (Tokenization, other terms may apply as well) we are introducing so much more than 'just' money. We're going to tokenize _all_ value papers, for starters. Gold will be tokenized, property will be tokenized, and it will all be tradeable and interchangeable. In fact, I think we're going to head to a future where you could put your 'money (as in: value) into (for example) a tokenized House, and go grocery shopping with it and spend tiny amounts of 'House' on your groceries. 

Suddenly, it's not so clear anymore if you're spending _money_ if it's a House you're paying with, is it? This may sound far fetched to some of you, but it really isn't. A lot of cryptocurrency projects currently being worked on, are not really _currencies_ in the truest sense of the word. In many cases, by holding a token you 'own' part of the network and may even receive some kind of profit-sharing from the network's usage. Holding that crypto may give you dividends, and paying with that crypto means you are able to spend it just as if it were money. Anything of value, will be exchangeable for anything of value.

My question is: Why do we even need an intermediary 'coin' that represents money when we could cut out the 'middlecoin' and just trade one 'thing' for another 'thing'? 

<center>![U5dtN3qf4QqoUzoEbPduRMy9eAxnQLR_1680x8400.jpg](https://steemitimages.com/DQmVCEk27aArMwFDohD8p27wXe3GebPXvGRC315uvNtg2xM/U5dtN3qf4QqoUzoEbPduRMy9eAxnQLR_1680x8400.jpg)</center>

The only solid answer I could think of myself to answer this question is: Because we want to be able to uniformly price items and talk about the same prices. But this is a non-argument, as many currencies exist in the world already and every country pretty much deals with currency conversion all the time already. 

<h3> FIAT money and Digital FIAT money</h3> I've heard it said that the value of Bitcoin is derived from the fact that people _believe_ it has value, just like FIAT. I believe this is true, but I also believe this is a problem. Let's backtrack for a second: FIAT. Wasn't that the thing we wanted to get _away_ from? Money without intrinsic value, _that_ was one of the problems of the old system, wasn't it? 
Then why do we insist on applying this faulty paradigm to the new world of cryptocurrency? Why are we so eager to look for a coin that has no apparent intrinsic value, _just_ so we can place our belief in it?

Why not simply choose a type of 'money' that _does_ have intrinsic value? If you have the choice, why would you even _touch_ the one without clear intrinsic value?


<h3> Dividends and utility</h3> Money that is simply money is one-dimensional. Other than money, it doesn't "do" anything. But other things are just as good as 'just money' in the world of cryptocurrency. There are a lot of crypto's that represent a stake in the network, or are almost akin to owning part of a company. Many crypto's will pay the holder a certain dividend for holding it, or it may have other unique features that are beneficial to the holders/users. This can be quite significant: Owning a Dash Masternode today pretty much means means you can retire. 
Many crypto's give 6-10% dividends to the holders.

This is a feature that 'just money' cryptocurrencies do not have, and it will come to haunt them some day when emotions run cooler and logical minds prevail. Because truly, if you had the choice to have 2 kinds of dollars in your pocket-wallet: One that is worth 1 dollar, and another that is also worth 1 dollar except it pays you for using and holding it, which would you prefer?

I would prefer the dollars that paid me extra interest. Because, _why not???_

<center>![U5dsQt1LTWKRnu4qx8sQbfoCDCrWnWs_1680x8400.jpg](https://steemitimages.com/DQmas3B3pE22aApgofrg5xSzmt6SHEzGJYjzFvyLeD49WYh/U5dsQt1LTWKRnu4qx8sQbfoCDCrWnWs_1680x8400.jpg)</center>

Don't just believe me. Also think about all the Bitcoin naysayers like Jamie Dimon, who make it a point to point out that Bitcoin has no intrinsic value and is 'like FIAT', and I do believe he is making more or less the same point. I believe the Jamie Dimons of the world are in abundance and despite exuberance within the crypto community, there will be a day when he will show up to say "I told you so!" when the value of crypto's becomes disputable once more. Because truly, there _is_ nothing really backing 'just money' crypto's other than belief and PoW electricity and when belief starts wavering (maybe when growth slows) then there's not much left to keep the prices up.

On the flipside, if you own part of a company/network/tokenized item, there's not much 'belief' involved, because the price of the token will be derived from the token's value proposition with regards to thing you owned. For example, OmiseGO (OMG) pays out  part of the transaction costs on the network to the holders. Even if 100% of all belief in crypto were to disappear, the profits derived from holding the token will _still_ give it value. This is, I believe, the 'true' value of the token - devoid of any hype, bubble or speculation.  Even the Jamie Dimons of the world cannot and do not deny the value of such tokens.

<h3> Gresham's Law</h3> I stole this from [Lexiconical's last post](https://steemit.com/bitcoin/@lexiconical/bitcoin-and-bitcoin-cash-can-co-exist-if-bitcoin-cedes-digital-cash-status), which along with a discussion we were having earlier, inspired me to write this post (Hi Lexi!). My own thoughts were the same, but Gresham's Law puts it a lot more clearly:

<center>![U5dsELYGiaLwJrc8tDCzwk8Du6L5FEN_1680x8400.jpg](https://steemitimages.com/DQmQtBTVJBHu5AYrnYFcfHgGQvB9kxFpte2gYKUsMpThaeE/U5dsELYGiaLwJrc8tDCzwk8Du6L5FEN_1680x8400.jpg)</center>

I believe the above is correct. Once the hype and emotions are taken out of the picture, I believe that people will eventually all be drawn to the crypto that is the 'best' and most profitable to hold. Logic dictates that perhaps Bitcoin Cash may be 'better' than Bitcoin, it would _still_ be better to have all the features of BCH yet _also_ get paid for using it.

Different from Gresham's Law, I do not think that in cryptocurrency it necessary leads to one coin being hoarded and another one being spent: Instead I believe it will lead to one coin being hoarded _and_ spent, and the other one being ignored because you don't need or want it. 

For me, the above is a large part of the reason why I am so heavily invested into alts. I feel that Bitcoin is largely dependant on some kind of shaky belief system, whereas many other crypto's offer a solid value proposition and offer benefits that far exceed just the function of 'cash'.

Let me point out that the majority of money in the world is NOT cash and is NOT kept in a wallet, but instead of stored in a bank so it pays you an annual return. I foresee the same happening to cryptocurrency: the majority of wealth will be stored in the places where it can benefit the most (probably through interest/dividends) and with the technological breakthrough that is crypto, you don't really _need_ a seperate savings account from your payment account: You just pay with whatever crypto functions as your savings account. Generate interest all the way up to the moment of spending, always available. Why would you ever want regular money that _doesn't_ have those features?

So when people argue back and forth over Bitcoin vs Bitcoin Cash, I don't really care because I think both of them aren't very good or scalable. Worse yet, _they are like FIAT_. Our current monetary system isn't backed by anything but neither are BTC/BCH (other than the electricity cost). So when they go up against more or less identical crypto's that _are_ backed by something, I do not see how FIAT-like money will continue to exist over the long term. But I may be wrong. As they say, the markets (people, mainly) can remain irrational for far longer than anyone thinks.

I'm curious to know what you all think of this! Do you agree, or disagree? Please note, I'm not trying to start any arguments or hurt anyone's feelings, but welcome thoughtful discussion on this subject!


<center>_Please consider **Upvoting, Resteeming** or **Following** if you liked this content! I write frequently about crypto-related things, so consider following me if you are interested in that sort of thing! Thank you!_</center>

<center>⚙️_**Level 7 [Steempunk](https://www.steempunk.net/) Adventurer**_ ⚙️
  _**Come battle me through @STEEMPUNKNET!**_  </center>
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@steemthat ·
<p>This post has received a 50.00 % upvote from @steemthat thanks to: @pandorasbox.
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@stealthgoat ·
@pandorasbox payed 0.2 SBD to @minnowbooster to buy a stealth upvote.<br><br><a href="https://steemd.com/tx/af7659805f0720cb2f6d07ce6a8ebf95a6aa37f0">transaction-id af7659805f0720cb2f6d07ce6a8ebf95a6aa37f0</a><br><br><img src="https://steemitimages.com/DQmTXdfMSPGNzsdQRoPAUAm8Xc9gDDM47QfiBLsJAck4iA4/goat-2153622_640.jpg"><br><br>@stealthgoat
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@pbgreenpoint ·
$0.02
I definitely agree. Gresham's law makes sense to me. That is what happened with gold. People used to shave off the edges of gold and eventually melt down the shavings into a new coin. After coins were shaved enough, they were lighter and people would spend those coins while hoarding the more valuable untainted coin. The same could said for fiat. People will use that for spending or changing excess fiat into more valuable cryptos that pay out rewards or are deflationary in value.
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@rockwellontherun ·
When Bitcoin would be created now, would it rise to the top of cryptos, or just be one of many?
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@pandorasbox ·
I think the latter!
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@pandorasbox ·
Yes, I think so too
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@morwhale ·
This post received a 1% upvote from @morwhale team thanks to @pandorasbox! For more information, [click here](https://steemit.com/@morwhale)! , [TeamMorocco](https://steemit.com/@teammorocco)! . <br> STEEM Price : 3.096 $
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