What is the difference between Fiat, Crypto and Bitcoin?

• Fiat → the currencies we use where central banks print money

• Crypto → the thousands of tokens available, and anyone can make these

• Bitcoin → no one can print money, absolute scarcity

The fundamental is that in fiat a central bank controls the money supply. In theory, a central planner can stabilize prices or maximize employment. But this is never the case because having a central planner does not lead to the optimum use of resources. Fiat is not a perfect system. It is designed to dilute savings year after year due to the increase in money supply.

Cryptocurrencies are digital assets traded on various blockchains. There are thousands of different tokens, reflecting an open market where you can buy, sell or create these tokens. You can create your own token easily, just as anyone else can. Essentially this means that anyone can print their own money.

Bitcoin is different. Bitcoin is based on scarcity. It is a fundamental principle. There will only ever be 21 million. No more. You can easily verify this by downloading Bitcoin core and run a full node on your laptop. Bitcoin is proof of work, it cannot be just “created”. History has shown time and time again that the economic system converges on the best form of money. The whole purpose of money is to solve the problem of barter. Money is chosen because it is the most liquid and salable good. Society, time after time, century after century always converges towards the best form of money.

That perfect money is now bitcoin. It has the best properties of money including portability, scalability, and scarcity. It is digital gold.

Shout out to Joe Burnett, MSBA for the excellent video https://x.com/IIICapital/status/1914303937278095398