Money wasn’t created by government. Money comes from cooperation. I am not going to go through a history of money, Nick Szabo does an excellent job of this in his post Shelling Out — The Origin of Money.
Fiat (paper) money was used in Europe as a means to protect assets while merchants traveled. The idea was simple: I have two ounces of gold, I want to travel across Europe selling my goods but there are burglars, I’m going to leave 1.75 ounces with a trusted group (lets call them a bank), in return I get an IOU slip that says I own 1.75 ounces of gold and the bank gets to use that 1.75 ounces for investments. The burglars can’t steal all my money, the bank has collateral and the right to invest it however they see fit. It’s a win-win.
Today’s economy works nothing like that. Banks aren’t in control of our money. They’re ponzi-schemes hoping not everyone with money in the bank will decide they want it at once. And when that does happen the government can print more currency, wizardly execute some balance sheet magic, and wa-la, everyone gets their money.
However, that money is now debased. No good, not even money, can be created out of thin air. Today’s fiat currency has no backing. There is no proof that a government actually has assets to cover the IOU slip they are handing out.
That’s where bitcoin comes in. The cryptographic, blockchain-enabled, beauty of bitcoin pails to compare to the beauty that is the economics of a controlled supply of money. There will be, and only ever will be, 21 million bitcoin in circulation. Much like gold, only a finite amount can be mined and only a finite amount can be added to the money supply at a time. This backing system is what is missing from the legal-tendered fiat monies that all national governments run on.
The gold standard was a great system because government’s couldn’t print money without the gold to back it. It kept the supply steady and inflation minimal. Money was printed when (a) they recalled out money to circulate crisper bills and (b) when more money was mined and added to the vaults. Doing away with the gold standard has escalated the spending habits and eliminated all backing of paper monies.
Whenever I talk with someone who doesn’t know anything about bitcoin the conversation always escalates to “But bitcoin isn’t backed by anything and the US Dollar is!” Which then has me asking, “Well do you trust the US government to back your dollar” and I’m greeted with “Of course, they’re the US government!”
Basically they are saying that a piece of paper from a coalition 18+ trillion dollars in debt is better than any other form of currency.
Here’s another scenario: You have a friend who is a mooch. She constantly says she’ll pay you back. Every time you go out, you end up covering her tab. At what point do you say “Hey, I’ve covered you enough times, I’m not giving you more money”? $10 indebted, $50 indebted to you, $100? Yet people are willing to trust the government when they’re $18,000,000,000,000 indebted to others.
I’m not saying bitcoin is the best solution to current monetary problems. But to write it off as something with no backing is absolutely absurd and you are living under the government’s propaganda bubble.
Governments have no right to control our money supply. It is a good like everything else.