Which Money Is Crazier: The U.S. Dollar or Bitcoin?
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 25 August 2021
⏱️ 29 minutes
🔗️ Recording | iTunes | RSS
🧾️ Download transcript
Summary
We compare the U.S. dollar with Bitcoin on their key attributes to determine which is better for transactions and preserving wealth, which is most absurd and which has serious flaws.
Topics covered include:
- How are new U.S. Dollars and Bitcoin created
- How much has the supply of each currency grown
- How both the dollar and Bitcoin have had rule changes
- Why Bitcoin transactions are faster than non-cash U.S. dollar transactions
- Why both the dollar and Bitcoin require add-on layers to facilitate transactions
- How tax treatment of a currency can encourage or discourage its use for payments
- Why divisibility is a critical attribute of any currency
- Why Bitcoin has been as volatile as the Russian ruble
- Why Bitcoin is energy inefficient while having built-in incentives to use renewable energy
- What will determine the long-term viability of Bitcoin and the U.S. dollar
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Show Notes
Check Processing—Federal Reserve Bank of New York
Gold Reserve Act of 1934—Federal Reserve History
Creation of the Bretton Woods System—Federal Reserve History
A Complete Guide to Understanding and Protecting Against Inflation—Money For the Rest of Us
Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto—Bitcoin
Mapping the Major Bitcoin Forks by Ashley Viens—Visual Capitalist
Total Circulating Bitcoin Chart—Blockchain
There’s Enough Bitcoin For Everyone by Paul Opoku—Nasdaq
Lightning Network: Scalable, Instant Bitcoin/Blockchain Transactions
Bitcoin Energy Consumption Index—Digiconomist
The Bitcoin vs Visa Electricity Consumption Fallacy by Carlos Domingo—Hacker Noon
El Salvador Readies Bitcoin Rollout With 200 ATMs for Conversion by Michael D McDonald—Bloomberg
Related Episodes
316: Paper, Rocks, or Digits—What Makes the Best Money
335: Are Non-Fungible Tokens (NFTs) Good Investments?
339: How To Make Money with BlockFi, Dai and the Evolving DeFi Ecosystem
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Transcript
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| 0:00.0 | Welcome to Money for the Rest of Us. This is a personal financial show on money, how it works, |
| 0:06.2 | how to invest it, and how to live without worrying about it. I'm your host, David Stein, |
| 0:11.6 | today is episode 355. It's titled, Which Money is Crazier? The US Dollar or Bitcoin? |
| 0:21.7 | Consider for a moment if you arrived on the planet and you're being introduced to two different |
| 0:29.6 | monetary systems. The US Dollar and Bitcoin, you know nothing about them and someone is going to |
| 0:36.8 | explain both of these monetary systems to you. So you can decide which is better or which is more |
| 0:44.6 | absurd. The thing about the US Dollar and the Fiat currency system is we're used to it. We're used |
| 0:52.3 | to the fact that currencies fluctuate relative to each other, that they're not backed by anything. |
| 0:58.7 | But there have been developments and currencies that have required us to adapt, such as buying |
| 1:05.8 | stuff online, something we didn't do 25 years ago. Using PayPal or Venmo to send payments to |
| 1:16.0 | each other. 100 years ago, people didn't use credit cards. We've had to adapt to that. |
| 1:23.6 | So what I thought we'd do in this episode is let's just step back and compare the US Dollar |
| 1:29.2 | to Bitcoin. What is it? How is it created? How its supply has grown? How it's used? How volatile is it? |
| 1:39.6 | How often is it used in illicit activities? What about its energy use? And when we're done, we'll |
| 1:46.5 | circle back to see is one form of currency better than the other. When seeing that Bitcoin is the |
| 1:53.5 | new currency on the block, should it even be around? Is it even useful? Let's start with the question |
| 2:01.6 | we should ask about all financial instruments. What is it? US Dollar is a non-interest bearing |
| 2:09.1 | liability of the US Federal Reserve, the central bank that was established by US Congress in 1913. |
| 2:16.7 | It's a debt instrument. It says it right there on the currency. The Federal Reserve note, |
| 2:24.4 | what is the Federal Reserve? It's a financial institution that's at the heart of the US Dollar System. |
| 2:33.0 | The Federal Reserve has assets of over $8 trillion and liabilities of about $8 trillion |
| 2:41.4 | including $2.2 trillion of this currency and circulation. The Federal Reserve only has $50 |
... |
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