How To Explain Fiat vs Crypto Currencies to Your Family and Friends

Explaining Money vs Cryptos

Are you also having a hard time trying to explain to people how the value backing fiat money is just as imaginary as the value backing cryptos?

Like probably most of you, during the past Christmas dinners I had a few challenging debates about cryptos and how the blockchain revolution will change the Internet just like the Internet changed our lifes at the end of the Nineties.

The biggest challenge was to convince people that the current global money system is not at all backed by anything. It is a totally fictive system, no different from crypto currencies.
Money has value because we say / believe it does.

Image source

Back in the days, yes, at one point, money was backed by the value of gold. But the value of that gold was based on what someone was willing to pay for a gram of the substance. Completely arbitrary.

Money Isn't Worth The Paper It Is Printed On

Well, that situation has long passed. Nowadays money is being created out of thin air by governments and banks to keep society and the division of wealth the way it is (the way they want it to be).

The total value of all the money in the world and how it is backed is displayed in the graph at the bottom of this post.

The Graph That Proofs It

You will see at the end of the graph that most fiat money in the world consists of nothing more than debt and derivatives (e.g. futures contracts, forward contracts, options, warrants and swaps), agreements that money will be paid back if shit hits the fan.

But there is by no means enough money to pay that all back, it simply does not exist, ergo: money is purely fictive and based upon the peoples' trust that it holds value.

In that case it makes more sense to start using currencies that are backed by the input of the people themselves, doesn't it?

Steem and Steem Dollar Are Backed By The Steem Community

For example Steem and Steem Dollars, that are backed by the fact that we appreciate the quality, the time, the effort, the knowledge and the content that we, the people put into it!

I hope this graph will help you explain it all to your family and friends so that they will warm up to the idea of using cryptos as everyday currencies in the near future.

Graph source