Breaking down the 7 myths of Bitcoin #4
Bitcoin is not backed by anything
Contrary to popular belief, Bitcoin is backed by something.
It is backed by the only thing that backs any form of money: the credibility of its monetary properties.
Goods that emerge as money have unique properties that differentiate them from other goods on the market.
Bitcoin is outperforming its analog predecessors based on its monetary properties. Bitcoin is thinly spread, and is more easily divisible and more easily transferred than its current competitors.
The emerging monetary properties in Bitcoin are secured and reinforced by a combination of cryptography, a network of decentralized nodes that enforce a common set of consensus rules, and a robust mining network that guarantees the integrity and immutability of the Bitcoin transaction book.
The value of the dollar did not emerge in the free market, but as a fractional representation of gold (and silver initially).
Essentially, the dollar was a solution to the inherent limitations of gold convertibility and transferability.
It was also initially a system based on trust: accepting dollars and trusting that they could be converted back into gold at a fixed amount in the future. Since 1971 the dollar has not been backed by gold reserves but issued as debt paid by its citizens through taxes.
Bitcoin is backed by algorithms and cryptography, it is backed by its growing demand.
Bitcoin has growing support.
Breaking down the other myths:
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