Bitcoin Forum

Naturally, bankers then soon realized that virtually all banking was happening through promissory notes. They also knew that digging more gold out of the ground to increase the money supply was more trouble than it was worth. So the solution was simple. Banks would simply print more promissory notes, or tender, and stop trying to tie the paper notes to actual mined gold.

Now banks could print money at will, without worrying about digging gold or silver out of the ground.

The idea of fiat money was introduced.

Fiat currency is simply money that has no backing other than the value it is perceived to have. The U.S. dollar is always fluctuating in value depending on how others perceive its value, for example.

Since only governments or government appointed agencies can now legally print official government money, value is determined by economic factors as well as the amount of money that is actually printed and allowed into circulation.

This is essentially the same concept behind Bitcoins, but without printing presses or government fiscal games.

I think fiat money is one reason inflation has increased worldwide. There is too much money in circulation, back when currency was tied to mined gold, inflation was held in check, now the world economy is getting worse.

The value of bitcoin is about to go higher up, now that the halving is at hand.

With couple exceptions - basically FIAT money have ONE purpose and it is to 'be used as means of payment'.
And many believe that true value of bitcoin is blockchain which can be used as the best and ultimate ledger and in the process successfully eliminate notary services.

Fiat works because governments have imposed a monopoly (in their respective countries) over means of payment.
In some extreme cases (hyperinflation), even this doesn't work as people lose faith in their government.

I believe it possible that the problem of fiat money deepened after the collapse of the USSR. USA as the only remained super power, afford to do what it wants through political, economic and military pressure. Group countries reached an enviable prosperity at the expense of the whole world. But every beginning has an end. In our case, that end involves the reduction of the existing financial order, resting on the hegemony of the dollar, in a new and fair order in which the place of the dollar will be similar to other national currencies.

Except BitCoin's can't be printed, nor counterfeited. There's a limited supply, like 27,000,000 (I think). Nobody can create BitCoin, and I like that.

Even when the USSR was present, the dollar was the reserve currency of the world. If anything, problems with fiat have increased post the financial crisis and adventurous quantitative easing by central banks across the world.