Maria Bustillos, the founder of the alternative news portal Pop on Cryptocurrencies and Blockchain, wondered why people who believe fiat currencies live in illusion.
Fiat currencies as illusions?
Many people still believe that Bitcoin is based solely on the trust of a few fools who buy it for real fiat currency. However, some people may find it quite difficult to understand that fiat currencies such as the US dollar are also illusions.
“U.S. dollars are not backed by anything other than the faith of the fools who accept it as payment and of other fools who agree in turn to accept it as payment from them. The main difference is that, for the moment at least, the illusion, in the case of dollars, is more widely and more fiercely believed.”
In 2012, financial expert James Surowiecki published on his blog that only 10% of US money is in the form of paper cash and coins. In 2012, this was about $ 1 trillion from around $ 10 trillion.
There is nothing to prevent the existing US banking system from creating more dollars. The same is true for other countries around the world.
The difference between the dollar and Bitcoin
There are several big differences between the most important cryptocurrency in the world and the US dollar. All transactions in the bitcoin network are recorded in a blockchain that does not fall under the control of any authority such as a bank or government.
Another thing is that the records created by a decentralized computer network can be protected against manipulation, which can also, as opposed to government money, have the credibility and soundness of such a currency.
In response to traditional money, Bitcoin was created to address this long-standing weakness. The cryptocurrency was set to a final figure of 21 million BTC and, according to mathematical calculations, it will no longer be possible to extract new coins by around 2140. The final number of BTCs is thus fixed.
If we want to understand Bitcoin, it is important to look at the history of money development. Bitcoin has only been with us for a few years and is still at an early stage of development. But we can already see the huge potential for outdated traditional financial systems.