What is fiat currency? 🌍💰

Fiat currency has its value guaranteed by the issuing government. There is no gold or silver backing it. Everything depends on trust. In October 2025, almost all countries use this system. For everything. 🏦

Historical Origins 📜

Fiat money originated in ancient China, Sichuan province, in the 11th century. At first, you could exchange banknotes for real things. Silk. Gold. Silver.

Then Kublai Khan arrived. 13th century. First complete fiat system. Curiously, it seems that this monetary experiment had something to do with the fall of the Mongol Empire. Too many expenses. Brutal hyperinflation. 📉

Europe jumped on the bandwagon in the 17th century. Spain tried it. Sweden did too, although it ran back to the silver standard. The results were... varied.

From the gold standard to what it is now 🔄

The big change came in 1972. Nixon decided. The gold standard was over. Just like that. A monetary revolution that changed everything. Fiat coins everywhere. 🌐

Examples of fiat money in 2025 💵

What do we use today?

• Normal bills (dollars, euros, pesos)
• Checks
• Metal coins that are worth more than they weigh
• Electronic money
• What you have in your bank account

None of this is valuable by itself. It is valuable because we trust.

Advantages of the fiduciary system 👍

• No physical limits: We do not depend on finding more gold.
• Cheap to make: Printing paper costs little.
• Easier global trade: We all play by similar rules.
• Total comfort: You don't need a safe at home. 💼

System Issues 👎

• It is worth nothing in reality: Governments create money out of thin air. Inflation is always lurking.
• Doubtful history: Many systems like this have failed when people stop believing.

Fiat currencies vs Cryptocurrencies 🔄🆚🪙

They are different, although neither has physical backing:

• Who is in charge?: Governments vs no one in particular. Blockchain does its magic. 🔗
• How much is there?: Bitcoin has a clear limit. Central banks print whenever they feel like it.
• How they work: Cryptos are digital, they know no borders, and once you pay... you have paid.
• Up and down: In 2025, the crypto market is still like a roller coaster compared to traditional money. Although not as much as before. 📊

The future of money 🔮

No one has guarantees. Cryptocurrencies mature but face complicated regulations. Fiat money seems solid, but history reminds us that it can also collapse.

Bitcoin was not born to destroy the entire system. Rather, it offers an alternative, something different based on P2P networks. It is not perfect. It may not even be better. But it could complement what we already have, making the system more inclusive. Or so they say. 🚀