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Could BTC theoretically continue to exist even if all fiat currencies in the world disappear?
Why BTC doesn’t need fiat currency
It is not at all necessary to use fiat currencies to make BTC payments. Fiat currencies are required for the first purchase of BTC on crypto exchanges, only if, for example, you do not have other cryptocurrencies.
In a world where fiat currencies no longer existed, each of us would receive income directly in BTC or cryptocurrencies, so in theory we could do without using fiat currencies. However, this is probably only a theoretical and unrealistic scenario, because BTC is a deflationary currency, while the current economic system is based on inflationary currencies.
It is necessary to distinguish between theory and practice, ie. between scenarios that are possible, though unlikely, and those that are very likely. The scenario in which the fiat currency disappears and the Bitcoins remain is one of the theoretically possible but hardly probable scenarios.
The role of BTC in the current economic system
The answer to the question of whether BTC could theoretically survive the demise of all fiat currencies is certainly yes, but it is probably more interesting to focus instead on the role that BTC can play in today’s global economic and financial system, as no such revolution seems to be this moment on the horizon.
The current economic system is largely based on debt, ie. where consumers, companies and states can borrow money for expenses or investments that they are unable to pay from their current funds. Debt is sustainable only if the borrower can repay it in full on time, but the true value of the monetary debt changes over time. Its face value always remains the same, even if it decreases with debt repayment, but its real value is constantly changing.
The fact is that due to changing prices, the purchasing power of money always changes from year to year. For fiat currencies, which are inflationary, purchasing power always tends to fall because prices tend to rise. This is also partly due to the expansionary monetary policy of central banks issuing fiat currencies.
Purchasing power is actually the real value of money, so if it decreases, the real value itself decreases. Inflationary fiat currencies tend to reduce their purchasing power, and therefore their real value, and this also applies to debt. Assuming debt in inflationary currencies helps to repay it, especially if there is persistent inflation.
The deflationary nature of BTC
BTC, on the other hand, is deflationary in nature, as its monetary policy becomes less and less expansionary, until at some point it simply ceases to be fully expansionary. Therefore, unlike fiat currencies, its value tends to increase over time, so borrowing from BTC will be a bad idea.
For example, someone who borrowed 1 BTC four years ago when it cost less than $ 7,000, and if he repaid it today, would still have to repay 1 BTC, but worth nearly $ 70,000.
In a debt-based economic system, you need inflationary currencies, while deflationary currencies are not only not useful for lending, but can even be harmful. However, they also have other uses, such as the ability to protect savings from the risk of losing purchasing power due to inflation.
In conclusion, we should not ask whether BTC could theoretically survive without fiat currencies, because the answer is obvious but extremely unrealistic, but instead we should ask whether BTC could replace the economic system we are all used to. In this case, the answer seems to be no.
