In the crypto community we are used to hearing that Bitcoin is not backed by anything, meaning its value is taken out of thin air. At the same time, it is generally accepted that the US dollar is a currency that successfully acts as a means of saving at the time of depreciation of other national currencies, including the ruble.
Most people believe that money has intrinsic value. However, since President Nixon severed the dollar's link to gold, banknotes have become paper, and their value now depends solely on trust in the U.S. government.
Unlike assets like oil or farmland, fiat currencies are based on collective faith in a system run by central banks and politicians. This makes fiat currencies, government-issued money without physical backing, unreliable.
The modern US dollar is backed by faith. Central banks control its supply by adjusting interest rates and printing money to manage the economy. When the US Federal Reserve creates trillions of dollars (as it did during the 2008 crisis or the Covid-19 pandemic), it erodes the value of existing money, driving up inflation.
Decisions made behind closed doors impact jobs, house prices and grocery bills – the lives of people and their families.
This opacity invites abuse: governments devalue savings through inflation and bail out failed banks with newly printed money. Markets respond with booms and busts driven by policy changes rather than organic demand.
Bitcoin , created in 2009 in response to the arbitrariness of centralized financial systems, is built in the opposite way. BTC operates on a decentralized network, where the rules are written in code, not in government documents. Its supply is limited to 21 million coins, which is fixed by algorithms. Every transaction is recorded on a public ledger (blockchain), available for anyone to view.
Critics call Bitcoin's price unstable, but its network structure is transparent. You can check its supply, transactions, and forecast its inflation rate (new coins enter circulation at a fixed, decelerating rate) as often as you like.
There are no additional coins, nor can there be any. No committee can vote to change its rules without a consensus of users around the world. This predictability makes it an alternative for those wary of opaque monetary systems.
The real problem is that most people don’t understand how the fiat currency system works. Fiat currencies require blind faith in untrustworthy institutions. The Bitcoin network is auditable and transparent. So which currency requires more trust?