What is Fiat Money?

Fiat Money...we use it everyday. And yet, many do not truly understand what Fiat money is. Did you know that the United States Dollar (USD) was once backed by gold and silver? And did you also know that the USD is no longer backed by gold, but rather "faith in the government?"Lets take a quick look to get a better understanding of what Fiat Currency is.

The American Heritage Dictionary defines fiat money as "paper money decreed legal tender, not backed by gold or silver." Fiat money does not represent anything of intrinsic value and it is decreed legal tender. Legal tender means that there is a law requiring everyone to accept the currency in commerce. The two always go together because, since this money really is worthless, it soon would be rejected by the public in favor of a more reliable medium of exchange, such as gold or silver. Thus, when governments issue fiat money, they always declare it to be legal tender under pain of fine or imprisonment. Citizens are given no choice.

Money backed by gold and silver is honest money. Rules have to be followed and natural laws of economics. Once you remove the gold/silver aspect, the money now becomes more elastic and can be manipulated much easier without the public ever becomming aware. The Federal Reserve simply adds 1's and 0's on a computer screen and loans it to the US Government on interest. Money created "out of thin air" is now earning interest. We, the taxpayers, get stuck paying this debt via direct taxes and the indirect tax...inflation.

Blockchain technology was created to fight this dishonest and manipulated economy. Bitcoin was meant to bring the power back to the people. A world where we can be our own bank and send money directly from one individual to another without a third party. I think big banks are starting to realize the potential of BTC and other cryptos and soon they will have to either attack it or join it. You are seeing big bankers and articles trying to call the death of BTC and comparing it to the tulip craze.

What do you guys think? Will we continue to use FIAT currency, even though all Fiat in history has failed? Will blockchain technology solve our economical problems? Please feel free to chime in...

Take care and stay safe out there