Because you believe money is real, you don’t understand Bitcoin
The US dollar is merely a mirage that is widely and vehemently believed.
Bitcoin is an illusion
So one hears, Bitcoin is a mirage, a collective hallucination. In cyberspace, it’s just statistics, a phantasm as flimsy as a soap bubble. Bitcoin is only backed by the trust of the fools who buy it, as well as the greater fools who buy it from the weaker fools. Also, did you know? That’s all right. All of this is correct.
What may be more difficult to realize is that US currencies are also a deception. They, too, are primarily made up of numbers in cyberspace.
They’re sometimes kept in paper or coins, but while the paper and coins are tangible, the dollars they represent aren’t. The trust of the fools who accept it as payment and of other fools who agree to accept it as payment from them is the only thing backing US dollars. The fundamental difference is that, at least for the time being, the illusion of money is more widely and vehemently believed.
Your money is toilet paper
In fact, nearly all of our US dollars (about 90%) are totally abstract — they don’t exist in any physical form.
“Only approximately 10% of the US money supply — around $1 trillion of the roughly $10 trillion total — exists in the form of paper banknotes and coins,”
According to James Surowiecki in 2012. (Out of $13.7 trillion, the figure presently appears to be around $1.5 trillion.) Nothing prevents our financial system from printing additional money anytime it feels like it. In October 2017, $13.5 trillion of the $13.7 trillion M2 money supply was created after 1959 — or, to put it another way, M2 has grown by nearly 50 times.
The United States dollar is a “fiat” currency. Fiat is Latin for “let there be,” as in “let there be light”; consequently, “let there be lire,” “let there be bolivars,” “let there be dollars,” and “let there be rubles.” The temptation for leaders of nation-states to create money has been almost overpowering in the past. Inflation is one obvious outcome of this hedonism: the purchasing power…