Fiat, gold, or Bitcoin?

In this article, I would like to list the advantages and disadvantages of the above fiat money, gold, and Bitcoin. I would like to explain to the reader the difference between money and currency, what fiat is in general. Next, I would like to show the history of the US dollar and its transition from the gold standard to fiat money, then we will do a comparison of fiat money to gold. Finally, we'll focus on Bitcoin, how and why Bitcoin came to be, and a little bit of how it works. We'll compare fiat, gold, and Bitcoin, and then we'll break down more about the advantages, disadvantages, and myths of Bitcoin.

Money and currency

Before explaining the difference between money and currency, we will show their different functions.

Money - functions

• Store of value
• Medium of exchange

Currency – functions

• Convertibility
• Medium of exchange

As you can see, money differs from the currency in the store of value; money can be gold, for example. But why gold? It's simple, gold is rare (limited number on Earth), durability (doesn't spoil), verifiable (hard to counterfeit), divisible and transferable. Historically, gold has simply proven to be the best money and a very good store of value.

The currency is excellent in convertibility, the currency can be exchanged just for money. Historical examples are banknotes (currency) that could be exchanged for gold (money). Currency was created to facilitate daily payments.

Both money and currency can be a medium of exchange. The disadvantageous barter (barter trade) has been replaced by transactions in which payment can be made in money or currency. Previously, either gold coins (direct money) or banknotes (currency that could be exchanged for gold in a bank).

A ten-dollar bill from 1928, notice what it says: "Ten dollars in gold coin payable to the bearer on demand."

Fiat - deformation of functions and concepts

Even in the title of this article, there is the magic word "fiat", in my experience a lot of people don't know the meaning of this word or have never even heard the word itself. The fact that they have never even heard the word is indeed something to ponder.

The definition of the word fiat is already suggested by its very synonyms, command or order; from these synonyms arises (from my point of view) the first disadvantage, and that is the obligation, the absence of voluntary use.

The moment money is not voluntary, but is money with forced circulation (Fiat definition), the first fatal problem arises and that is its value because in such a case the value cannot be determined by the natural system of supply/demand, but by some officials and the trust of the people. And as we know historically, what is in the hands of officials never turns out well, but more on that with the history of the US dollar.

It's not a requirement for fiat, but in practice, it's like that all over the world - fiat is not backed by anything, neither gold nor silver, it's just paper (nowadays mainly in electronic form). In addition, all central banks in the world do inflation targeting, typically inflation of 2% per year, which means 2% more money in circulation per year, every note depreciates and the store of value function of money disappears.

Currency (paper, banknote) is not backed by any money (gold), so it suddenly loses its convertibility and becomes money that everyone must accept.

Fiat has completely distorted the concepts of currency and money. Because of the above facts, it is not even possible to say whether fiat is currency or money because fiat is neither a store of value nor is it convertible.

United States dollar

The situation before the dollar

Paper money in colonial times

A very interesting event for us is the battle for the French colony of Quebec, which was attacked by the English colony of Massachusetts in 1690. The battle ended very badly for Massachusetts, with soldiers barely surviving instead of sharing in the spoils, and the colony's administrators facing the problem of a mutiny by unpaid soldiers.

However, the colonial administrators solved this problem very well indeed (for them), printing paper vouchers for the soldiers to exchange for money (gold or silver) in the future. In fact, the vouchers could not be exchanged for money, paper money became popular and the number of new vouchers increased rapidly.

With the increase in unbacked paper money (fiat) in circulation came an increase in price inflation over time, in 1750 Massachusetts had an inflation rate of approximately 1000%. Such inflation can only be ended by stopping the printing of money, but it doesn't stop there, after the end of a huge inflation usually comes huge price deflation and depression.

This whole inflationary massacre in the colonies was finally ended by the Bank of England ordering the colonies to use only paper printed in England. As you know, the colonists didn't much like England itself, and this idea didn't work. The colonies reverted to what was best, gold and silver.

American Revolutionary War - 1775

For Americans, the most important war in history, which made the United States of America an independent country. It's certainly an interesting historical event, but this article is mostly about money.

The educated and smarter ones are aware that printing new banknotes does not create wealth, it merely transfers wealth from the hands of society to the hands of the one who prints it. This fact is typical of any war, as people would never voluntarily start and pay for almost any war, the statesmen simply have to take the money to finance the war from the rest of society.

They can take the money both through taxes and just by printing new papers. States usually choose to print new money because whoever wants to be in power has to be a populist and raising taxes is not a very populist gesture. In return, printing new money doesn't bother so many people, since they don't see that you are taking money directly from their paycheck, as you do with taxes.

So the Americans started printing continentals, which were initially defined as 1 continental = 1 gold dollar.

At the start of the war in 1775 the money supply was 12 million dollars, the Americans won the war in 1783, but the money supply was no longer 12 million dollars, but several hundred million dollars, 1 continental was no longer equal to 1 gold dollar, but approximately 0.01 gold dollar, so again high inflation and a big devaluation of savings in paper money. So the only positive thing was US independence.

Origins of the dollar - 1785

In 1785, Thomas Jefferson convinced members of the Continental Congress to make the dollar the official currency. Interestingly, it was not the American dollar, but the Spanish dollar. One Spanish dollar was defined as 24.443 grams of silver and was already quite popular in the colonies.

Congress had not forgotten all the paper hyperinflation of the pre-war and wartime periods, plus it feared dependence on Spain, so it defined its own US dollar at about 24.05 grams of silver. The Constitution forbade the states to accept any money other than gold and silver.

Subsequently, a constitutional safeguard was added in the form of the Tenth Amendment - The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Bimetallism - 1792

The dollar's fatal flaw was the introduction of so-called bimetallism, the double monetary standard of gold and silver.

In addition to the silver dollar, there was a legitimate demand for the gold dollar. However, there was a concern about the gold dollar, lest it is cheapened as a gold coin in the future, as has been customary in the history of silver and gold coins (examples include the denarius, aureus, and solidus).

Congress has come up with the right solution on the face of it by precisely defining the gold dollar to 10 silver dollars.

Ratio problem

As written above, Congress, with good intentions, also defined the golden dollar. However, we run into one big problem - gold and silver do not have a stable market price for each other.

At the time, gold was 15 times more expensive than silver, which is how Congress defined silver and gold dollars at a ratio of 15:1.

Gresham's Law

This law claims that bad money drives out good money, or rather overvalued money drives out undervalued money.

Gresham's Law was in practice from 1792 to 1873. It showed itself because the reciprocal fixed ratio of congressional prices always differed from that of the market.

Typically, gold rushes changed the gold-silver ratio rapidly, for example, because of the famous gold rush in California, the gold-silver ratio changed in favor of silver. Thus, silver money began to disappear from circulation and gold money became widely used.

As you can see from the chart, the market price ratio of gold to silver was 15:1 only at the beginning of US bimetallism, when Congress defined the fixed ratio.

Change of fixed ratio - 1834

In 1834 the reciprocal fixed ratio of silver and gold was changed from 15:1 to 16:1. This did not improve the situation, on the contrary, it made it worse, silver was undervalued against gold and disappeared from circulation.

Debasement of silver coins - 1853

In 1853, the majority of silver coins were debased by 7%, the historical experience of debasing coins did not disappoint again.

American Civil War - 1861

Between 1861 and 1865, the American Civil War was going on, so as is customary, the government had to establish fiat money. The government introduced greenbacks, which were nothing more than unbacked paper, so it could print as much of it as it wanted, steal from the citizens, and fund the war.

On these papers, you will no longer find a sentence about the possibility of convertibility into gold or silver. You will find on them, however, the phrase legal tender, meaning that money must be accepted by individuals or individuals will face punishment.

The end of bimetallism - 1873

In 1873, the minting of silver coins was banned, bimetallism ended, and the U.S. began a gradual transition to the gold standard.

The last definition of the golden dollar - 1900

In 1900, one dollar was defined as approximately 1.5 grams of gold. Unfortunately, as you will soon read, the gold dollar existed for an even shorter period of time than the silver dollar.

Federal Reserve System (Fed) - 1913

The long-standing motivation, not just of bankers, was to create a central bank and switch to unbacked paper money, sometimes called debt-backed money. Backing something with debt makes a lot of sense... *sarcasm*

The Fed has been preceded by 3 attempts at a central bank in America, but they have all always ended.

• Bank of North America (1781-1783), after the end of the Revolutionary War, the bank ceased to be supported by the government and became private.
• First Bank of the United States (1791-1811), the bank loses its license, most of its stock is bought out, and later becomes the new private bank Girard Bank.
• Second Bank of the United States (1816-1836), the bank loses its license and becomes private.

Reasons for the creation of the Fed

There are three main reasons for the creation of the Fed - cartelization, lender of last resort, and debt-based paper money.

Cartelization protects existing banks from the competition from the very creation of competition. If anyone wants to compete with banks in the marketplace, they will first have to get a license from the government, have a minimum capital, have approval from the Fed itself, meet many other requirements, and comply with many other regulations.

Lender of Last Resort is nothing more than protecting a bank from bankruptcy, the Fed will always hold a bank from bankruptcy.

Fiat money is, as we have written before, a very good tool for governments and banks. It is a good tool because wealth can be transferred very well from the hands of society into the hands of banks and government.

Secret Bankers' Meeting - 1910

Before the creation of the Fed, famous bankers like Rockefeller, Rothschild, Morgan, and many others met secretly on Jekyll Island.

The goal of these bankers was to create a system that would protect their banks from runs on the bank (a run by a large number of depositors who go to withdraw their deposits from the bank). Since the banks were already operating on a fractional reserve system at the time - lending people more than they actually had, they logically could not pay out all depositors in a run.

Ideally, the bankers wanted to establish a system of paper money based purely on debt, but they were aware that this was not popular at the time, so they "just needed" a creditor of last resort who would always save them from ruin.

But the bankers needed to get the government on their side to carry out this plan, but as it soon turned out this was not a problem at all, because the government was aware that it could also profit from such a system. The government would not have to raise taxes if it had a practically unlimited source of money.

The constitutional safeguard and its circumvention

Thomas Jefferson was certainly proud of the Tenth Amendment to the Constitution - The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people - but he himself later found that it could be well circumvented on the subject of paper money.

In fact, the federal government is constitutionally allowed to go into debt. Thomas Jefferson rightly considered this unfortunate and later regretted that he had not yet passed a constitutional amendment that would have prohibited the federal government from borrowing.

Unbacked paper money, fiat money if you like, can therefore legally exist. The trick is that the money will not be created by the state, but by banks on the basis of government bonds. The banks will accept the government bonds, create new money, "lend" the money to the government, and the government will start spending the new money, thus sending new money into circulation.

The word "lend" is in quotation marks because it is not really a loan of any money saved by the bank, but a direct creation of new money. With each repayment, on the other hand, the money disappears from circulation.

Basically, I have now explained how current fiat money works around the world, I have described how the US dollar, the British pound, the euro, or the Czech crown works. This trick, an effective way of shifting wealth into the hands of banks and governments, is not hidden even by the central banks themselves.

Let me show you the confessions of 3 central banks.

Original text:

Whenever a bank makes a loan, simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

Bank of England, 2014

Original text:

Peníze vznikají typicky v momentě, kdy komerční banka poskytne nějakému člověku či firmě úvěr. Na účet takového klienta připíše banka částku ve výši poskytnutého úvěru a o takto vytvořený (či navýšený) vklad se ve stejném okamžiku zvýší i peněžní zásoba. Ano, chápete správně, banka nepůjčuje peníze, které má uloženy někde jinde (mysleli byste zřejmě, že nejspíše v centrální bance, že?), respektive nepůjčuje ani již existující vklady. Ve skutečnosti při poskytnutí úvěru vytvoří „tahem pera“ či ťuknutím do klávesnice peníze zcela nové, které tu dosud nebyly. A teď tu zničehonic jsou.

English translation:

Money is typically created when a commercial bank grants a loan to a person or company. The bank credits the account of such a client with the amount of the loan and the money supply is increased by the deposit thus created (or increased) at the same time. Yes, you understand correctly, the bank does not lend money that it has on deposit somewhere else (you would probably think that it is probably in a central bank, right?), or even lend existing deposits. In fact, when it makes a loan, it creates, with the "stroke of a pen" or tap of a keyboard, entirely new money that wasn't there before. And now, all of a sudden, it is here.

Česká národní banka, 2016

Original text:

Banken können also allein mittels eines Buchungsvorgangs Buchgeld schaffen: "Das widerlegt einen weitverbreiteten Irrtum, wonach die Bank im Augenblick der Kreditvergabe nur als Intermediär auftritt, also Kredite lediglich mit Mitteln vergeben kann, die sie zuvor als Einlage von anderen Kunden erhalten hat", schreiben die Bundesbank-Ökonomen.

English translation:

This means that banks can create book money just by making an accounting entry: according to the Bundesbank's economists, "this refutes a popular misconception that banks act simply as intermediaries at the time of lending – ie that banks can only grant credit using funds placed with them previously as deposits by other customers".

Deutsche Bundesbank, 2017

Creation of the Federal Reserve System - 1913

In 1913, the dreams of bankers and rulers began to come true; the Federal Reserve System was created under the pretext of banking stability and protection against recessions. From now on, the US dollar will only get worse.

From now on, commercial banks are protected from competition and bankruptcy, but they still have to back at least part of the dollar with gold, which limits their ability to create new money. Incidentally, it is no coincidence that this institution is called the "Federal Reserve" and not the "central bank" since American society has still not been very fond of European central banks and their paper money.

Credit expansion and its impact - 1920

After the creation of the Fed, which among other things was supposed to maintain stability and protect against recession, a major credit expansion began. This credit expansion caused the boom of the 1920s, companies were overvalued and stocks rose, but they rose above their real value. Inflation was very high, the money supply almost doubled over the next 10 years.

Credit expansion had to begin to ease, which always leads to depression, in our case the well-known Great Depression of the late 1920s.

The issue of the actual credit expansion of central banks in the fractional reserve system is explained by Austrian business cycle theory.

Executive Order 6102 - 1933

President Franklin D. Roosevelt issues Executive Order 6102 on April 5, 1933, ordering all U.S. residents to surrender all gold by May 1 of that year or face a fine of up to $10,000 (more than$200,000 today), 10 years in prison, or both.

Sample Executive Order 6102.

It seems completely illegitimate to me to take away everyone's gold or to force them to exchange it for unbacked paper money.

Even more sadly, some citizens tried to defend themselves in court, but no one succeeded. The Supreme Court itself upheld the constitutionality of the mandatory gold surrender in 1935, which only goes to show that the Constitution fails to restrain government. The government can always find a way around the constitution, for it is ultimately the only interpreter of the constitution itself.

The greatest wish of the bankers and rulers is beginning to come true, gold is no longer in the hands of the citizens, but in the hands of the Fed. Banks can offer even more credit (create new money) and citizens cannot make runs on the bank (nothing to withdraw, gold is forbidden). The only thing that still bound the Fed was the obligation to back the dollar with at least 40% gold

It has only been possible to own gold since 1974, but it cannot be used as money, or more precisely, anyone who has tried has been punished in some way (see Liberty dollar and E-gold).

Bretton Woods system - 1945

After World War II, 45 countries agreed on a new monetary system. The essence of this agreement was to link the US dollar to gold and all other national currencies to the US dollar.

Main terms of the system

• The US dollar was fixed at 1/35th of an ounce (≈ 0.8 g) of gold.
• Only governments, not citizens, could exchange US dollars for gold.

A result of the Bretton Woods system

The Fed has always had to exchange dollars for gold at a fixed rate to each central bank. The problem arose when the US government began to create more and more paper money, dollars lost their value, and thus gold was artificially undervalued. The central banks of other countries reacted logically and started to exchange dollars for gold, which led to an outflow of gold from the US.

Of course, the United States government tried to prevent the outflow of gold, to change the original agreements of the Bretton Woods system, or to manipulate the market price (see London Gold Pool), but nothing prevented the outflow of gold.

The absolute end of dollar convertibility - 1971

Due to the outflow of gold from the United States, President Richard Nixon in 1971 abolished the convertibility of the US dollar into gold for central banks. The US dollar is completely unbacked, it is "backed" by debt, it becomes pure fiat.

The previous, bad Bretton Woods system is replaced by an even worse system, the US dollar is based on debt, other currencies are based on debt and hold debt dollars as reserves.

US dollar-based on debt only - 1971

We have briefly reviewed the history of the US dollar - the pre-dollar situation, the silver standard, bimetallism, the gold standard, the creation of the Fed, the creation of the banking cartel, the creation of the lender of last resort, the gradual move away from gold, credit expansion (creating new money), gold confiscation, the Bretton Woods system, the complete move away from the gold standard, and the current dollar-based entirely on debt.

Since 1971, the US dollar has functioned just as it does today, the US dollar is fiat money.

Some sad charts

In this chart, you can see the debt of the US federal government. Notice how high it has been climbing since 1971, clearly, there is no plan to ever pay off such a debt.

As you can see, a couple of times after 1971, annual inflation was more than 10%, and the average annual inflation was about 3.9%. If you add up all those years, you get inflation of about 200% over those 50 years.

We can see from the CPI chart that the index has risen almost 7 times since 1971. This is what I call "beautiful" inflation.

This visually pleasing chart shows how many of today's dollars are equal to $1 in history.

• 1913 - At the Fed's creation, $1 was worth today's$26.14.
• 1930 - After the great credit expansion and the Great Depression, $1 was worth today's$15.14.
• 1933 - After the gold ban, $1 was worth today's$19.91.
• 1945 - After the advent of the Bretton Woods system, $1 was worth today's$14.71.
• 1971 - After Nixon's abolition of the entire gold standard, $1 was worth today's$6.39.

Every year, the purchasing power of the dollar is shrinking. You can see from the chart that in 1913 $1 was worth today's$26.14, in fact, it's worth a bit more in today's dollars again, for the current value I recommend dollar purchasing power calculator.

More charts can be found at WTF Happened In 1971.

Cantillon effect

After the advent of debt-only money, it would be useful to see the Cantillon effect.

Surely you know that the more money the bank creates, the more inflation and prices will rise. The problem is that prices do not automatically and uniformly rise after the creation of new money. The one who prints is at a considerable advantage, he can spend the new money before prices increase. The rulers, central banks, and other organizations close to the new money benefit from the Cantillon effect. The middle and lower classes, on the other hand, have no chance of benefiting from this effect.

The Cantillon effect can also occur in precious metals, whoever mines the new gold first can spend at unincreased prices.

However, this effect mainly applies to fiat money because the central bank can create an unlimited amount of money at any time, there is still a limited amount of gold on Earth and it has to be found first.

Those who care about the average and the poor certainly cannot support the central bank, the state, and its monopoly on money. Inflation becomes a reverse tax due to this effect - the poor pay the rich.

Fiat vs. gold

In history, gold was mostly used as money, nowadays it is mainly fiat money. So let's compare fiat and gold.

Fiat by definition is no longer optional, we all have to use it, which I consider a disadvantage.

The other huge disadvantage of fiat is its purchasing power, which is decreasing every year, governments are still in debt and banks are still creating new money. Because of this fiat is not really a good store of value, no one can save in fiat, instead, they have to keep investing if they don't want to get poorer.

Bitcoin

Origin of Bitcoin - 2009

Whitepaper - 2008

An individual or group hiding under the pseudonym Satoshi Nakamoto publishes a whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System on October 31, 2008.

The whitepaper clearly shows the disadvantage of fiat or gold, the disadvantage is trust in a third party. Whether it is sending money electronically or storing gold in a bank, we must always have trust in a third party. We know from history that third parties always abuse their position.

What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.

Bitcoin Whitepaper, 2008

He continues in the whitepaper to explain how this P2P system will work, how transactions and blocks will work, what proof-of-work is and why it is so important, how the network will work, the motivation of miners, and the associated reasons for the network to work, how to economically store all transactions publicly, how all transactions will be verified, what anonymity is when using Bitcoin, and finally explains the calculations and the chances of an attacker destroying the network.

Network launch - 2009

Satoshi Nakamoto lives up to the words of the whitepaper and launches the Bitcoin network on January 9, 2009, a network that runs without any interruption to this day. It is still running today because it is not dependent on one central point, it is decentralized, any one of us can have all the bitcoin transactions stored on our computers, which is all we might need to eventually restore the network.

What is Bitcoin?

I'm sure quite a few of you reading this think Bitcoin is a (crypto)currency. But that's not true, Bitcoin is (crypto)money. Bitcoin is not currency as paper, Bitcoin is money as gold.

Bitcoin logo.

Bitcoin is electronic, non-state money. It is money that does not need a third party like fiat or gold. No bank, no state, no authority can control Bitcoin, can change it, can even ban it.

You can't fully understand Bitcoin in one day, this article doesn't focus on Bitcoin from a technical point of view at all, if you are interested in how Bitcoin works, you can read a bit about transactions and mining.

Fiat vs. gold vs. Bitcoin

Bitcoin and its benefits

Absolute scarcity

You can see from the table that Bitcoin is the only absolutely scarce one. This is because bitcoin is set to have a maximum of 21 million bitcoins in circulation, there will never be more, on the contrary, they will tend to disappear.

Of course, there is also a limited amount of gold on our Earth, but we still haven't mined all the gold. In terms of the distant future, it is also possible that we will mine gold outside our planet, which will result in the value of gold shrinking.

Immateriality

Bitcoin stands out for its weightlessness, which is definitely an advantage. Unlike gold, we don't have to store bitcoins in banks, we don't have to carry them in a complicated way, and no one can easily take them away from us (1933 experience).

Decentralization

Decentralization and the associated operation without a third party is one of the biggest advantages of Bitcoin. Our experience from history is that sooner or later a third party abuses its position, every ruler debases coins and every bank lends more than it actually has.

Aside from the difficulty of the impossibility of seizure, the very beginning of using Bitcoin is an advantage. Just download any software wallet and start receiving or sending bitcoins. No one can prevent you from using Bitcoin in any way, as theoretically can happen with a bank account that is just provided by a third party.

Antifragility

Bitcoin is the only antifragile, meaning that any negative property of Bitcoin improves. Every attack, every internal dispute, or volatility makes Bitcoin more resilient, more stable, in short, better.

Gold is certainly not antifragility, gold only resists attacks well, but it has not been able to defend itself against the abuses of states and central banks. It has failed to defend itself precisely because of the need to have a third party.

Monetary policy

Unlike gold and fiat, bitcoin has a predetermined supply.

Only with Bitcoin do we know

1. How often and how many new bitcoins will circulate
2. When the last bitcoins will be mined
3. The maximum number of bitcoins in circulation (21 million)

For gold, we don't know when and how much will be mined, and in terms of the future, we don't know the maximum number of gold in circulation.

For fiat we know nothing at all, the money lords will probably never stop creating new money.

Fair money

Bitcoin, unlike gold and especially fiat, does not suffer from the Cantillon effect. It has to do with its monetary policy, we can predict in the long term how many new bitcoins will come into circulation.

The miners get the new bitcoins, which of course they don't get for free, they get them for the work they do - for burning electricity (proof-of-work).

Bitcoin is the fairest money - new bitcoins are circulated regularly and transparently, not by a central power, but by the miners who run the network.

Bitcoin and its temporary disadvantages

Volatility

The price of bitcoins is market-based, so it depends on the demand of people. The problem is the short-term price fluctuations (volatility) that can happen because of Bitcoin's small market capitalization.

Bitcoin's market capitalization is "only" 850 billion dollars (850,000,000). However, the total market capitalization is over $95 trillion (95,000,000,000). For a good idea, I recommend you check out companiesmarketcap.com.

Bitcoin still has a small market capitalization, so many things can still increase or decrease the price of bitcoins. The higher the market capitalization of Bitcoin, the lower its volatility will be.

Lindy Effect

The Lindy Effect is a theoretical phenomenon that assumes that things that work for a long time will continue to work for just as long. According to the Lindy effect, we can assume that gold that works for a thousand years will still work for another thousand years.

But bitcoin has the problem that it's only been with us for 12 years compared to gold, humanity hasn't yet adopted it as gold has. This problem is logically getting smaller every year, the longer Bitcoin works, the more people will have faith in it.

Bitcoin and its "problems"

Illegal activity

Bitcoin in particular has previously been accused of its anonymity and associated illegal activity.

Such criticism, however, shows nothing but ignorance of Bitcoin from a technical point of view. Bitcoin is not anonymous, but pseudo-anonymous.

All transactions are publicly available to everyone - we don't know who is sending and receiving bitcoins, but we know where they are being sent from.

Bitcoin is not very suitable for criminals; cash is still the most suitable.

Ecology

The ecological view of Bitcoin is relatively new, but here too we are encountering rather an ignorance of Bitcoin, this time both technical and economic ignorance.

Miners are increasingly switching to surplus energy and renewable energy because it is cheaper. However, for the following facts, we can safely consider any energy to be automatically non-organic (even if it's nonsense), and I will still consider Bitcoin to be greener than its competitors.

We are running into the economic ignorance of Bitcoin's environmental critics - who is Bitcoin competing with anyway? It's not just these people who mistakenly think that Bitcoin competes with entities like PayPal or Visa; if that were the case, Bitcoin would indeed be more non-ecological. But Bitcoin doesn't just compete with some payment systems, Bitcoin competes with central and commercial banks, mints, printers, the aforementioned payment systems, and theoretically the security forces that enforce fiat.

The banking system consumes 2x more energy than Bitcoin. Source: Galaxy Digital.

Bitcoin is greener than the current monetary system

The second ignorance of some critics of Bitcoin is the mining itself and its purpose. Most know that miners are mining new bitcoins, which is true (for now), but they no longer know that miners mainly validate all transactions to keep the network secure and prevent double-spending.

While confirming transactions, each miner must also burn electricity so that it doesn't pay to cheat (the concept of the mentioned proof-of-work). If we take any burning of electricity to be non-ecological, then in that case Bitcoin is and especially must be non-ecological.

In conclusion, I would like to tell the main fact to all ecological critics - burning electricity is in no way dependent on the number of users or the number and size of transactions, burning electricity is only dependent on the number of miners.

Objective value

There is no such thing as objective value because the value is a subjective concept.

Carl Menger, a representative of the Austrian school of economics, came up with the subjective theory of value at the end of the 19th century. With this theory, among other things, he completely refuted Marxism on a theoretical level, because Marxism is based on the labor theory of value.

That the subjective theory of value is the best theory of value is clearly shown by the paradox of value, a typical example being the small price of water and the large price of diamonds vs. the large usefulness of water and the small usefulness of diamonds to life.