What is fiat money?

Fiat money has its value guaranteed by the government that issues it. Not by gold or silver. In 2025, it dominates the global economies 🌍. Countries trade based on trust.

Origins and Historical Evolution

Born in China, 11th century. Paper money in Szechuan. Then Kublai Khan created something similar to the current system in the 13th. They spent too much. Hyperinflation. The Mongol Empire fell.

Europe tried it in the 17th century. Mixed results. Sweden dropped it quickly. America adopted it with ups and downs.

Everything changed in 1972. Nixon. The United States abandoned the gold standard. The fiat system spread everywhere 🔄.

Differences with the gold standard

The gold standard had clear limits. It seems to me that fiat currency offers more freedom. Governments create money as they need it. They implement flexible policies. They respond to crises. They establish fractional reserves.

Its defenders say it adapts better. Critics point out something obvious: it has no real value 📊. Nothing behind it.

Advantages and disadvantages

Advantages

• There is no shortage
• Cheap production
• Easier international trade
• You don't need huge vaults

Disadvantages

• Without intrinsic value. Nice paper.
• Governments printing without control. Hyperinflation.
• It has caused economic disasters. Many.

Fiat Money vs. Cryptocurrencies

In 2025, this debate remains heated 🔥. None have physical backing. But they are different worlds:

1. Control: Centralized government vs. decentralized blockchain.

2. Issuance: They print what they want vs. Bitcoin with a strict limit.

3. Features: Cryptos are digital. Without borders. No turning back on transactions. More privacy.

Cryptocurrencies are volatile, yes. Although it seems that they stabilize a little more each year 📈.

The monetary future

What will happen? It's not clear. Cryptocurrencies are gaining ground. Central Banks don't want to fall behind with their CBDCs 🚀.

Bitcoin was born as a P2P alternative. Distributed. Maybe not to replace the entire system, but it offers a parallel network. It could be fairer. More resilient.

We will probably see a mix. Systems that coexist. They complement each other. Each with its function. Money evolves. It always has.