I’ve always found it fascinating to see how our current monetary system has been built up over the centuries. Fiat currency—ultimately this money—derives its value from the trust placed in the issuer, the government, rather than being backed by something physical. It has become the global norm, but it hasn’t always been that way.

What interests me is that fiat currency is not a recent invention. The Chinese began using it as early as the XIe siècle in Sichuan, issuing paper money that could be exchanged for silk or precious metals. But Kublai Khan pushed the concept further in the XIIIe siècle by establishing a true fiat currency system. Historians say that excessive spending and the resulting hyperinflation helped contribute to the collapse of the Empire mongol—a fascinating lesson about the risks of this approach.

In Europe, the experiments were mixed. Spain, Suède, and Pays-Bas tried it in the XVIIe siècle, but Suède abandoned it quickly to return to the étalon argent. Even the colonies américaines and Canada français tried the experiment, with uneven results. It was especially in the XXe siècle that things really turned. In 1933, the États-Unis stopped the convertibility of paper into gold, and in 1972, Nixon completely abandoned the étalon-or, which finalized the global transition to fiat currency.

Compared with the étalon-or, the current system gives governments and central banks much more power. With gold, each banknote was limited by the physical reserves available. With fiat currency, authorities can create money, adjust interest rates, put in place assouplissements quantitatifs—briefly, they have the tools to respond to economic crises. That’s a major advantage in the event of a financial emergency. Advocates of gold say it was more stable, but honestly, gold prices have never been particularly constant either.

The advantages of this system are obvious: no limit imposed by a scarce commodity, lower production costs, economic flexibility, and it’s accepted everywhere for international trade. No need to store and protect costly physical reserves. But there are downsides. A fiat currency has no intrinsic value—it’s just paper or numbers on a screen. That means governments can theoretically create money without limit, which risks leading to hyperinflation. And historically, fiat money systems have often ended badly, with financial collapses at stake.

Now, when you compare that with cryptomonnaies, it’s interesting because neither is backed by something physical. But that’s where the similarity ends. Fiat currency is centralized—controlled by gouvernements and banks centrales—while cryptomonnaies are decentralized, managed by blockchain networks. Bitcoin has a limited and programmed supply, whereas a bank can create fiat money at will according to its needs. Cryptomonnaies have no borders and transactions are irreversible, which makes them less restrictive for global commerce. But the crypto market is much smaller and more volatile than traditional markets, which is why they aren’t yet universally accepted.

As you look to the future, the two systems will probably coexist. Cryptomonnaies still have a long way to go, but the history of fiat currency also shows its weaknesses. That’s why many people are exploring cryptomonnaies as an alternative—not necessarily to completely replace the fiat system, but to offer a parallel option. Bitcoin and the other cryptomonnaies were precisely designed to create an alternative economic network based on a peer-to-peer system. Whether you adopt one or the other, or a mix of both, the important thing is to have choices and build a better financial system for the future.