In the world of finance, the money in our pockets is nothing more than a construct of trust and agreement. A game of make-believe orchestrated by governments. This is fiat currency. Where the value of our money is based on the whims of those in power. But with education, we can take advantage of the games they are playing. So let's discuss the history of fiat money, its problems, and the potential digital alternatives gaining ground in the financial market.
A brief overview of fiat currencies
Fiat currencies are government-issued currencies that derive their value from trust and agreement rather than physical assets like gold or silver. The term “fiat” originates from Latin, meaning “let it be done” or “it shall be.” This emphasizes the authoritative role governments play in declaring the value of the currency. The transition from commodity-backed money to fiat currencies marked a significant shift in the global financial landscape.
A historical perspective of the gold standard
The gold standard provided a tangible link between a country’s currency and the precious metal, gold. This connection meant that the value of money was directly tied to a fixed amount of gold, offering stability to the currency. However, challenges emerged post-World War I, as international debts…
