Most currencies are Fiat Money, not backed by a commodity (like Gold and Silver) but backed by the government that printed it.
is a currency
without intrinsic value
established as money
, often by government regulation. It has an assigned value only because the government uses its power to enforce the value of a fiat currency or because the exchanging parties agree to its value.
If the government behind the Fiat currency becomes insolvent, or acquires extensive debt, their currency may be devalued (relative to other Fiat currencies), their ability to borrow money will be affected (lenders will demand higher interest rates because of the risk), and prices will climb as the currency loses value. At present, Venezuela, Argentina, Zimbabwe, and other countries are suffering due to the inflation they are experiencing.
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Many people invest in Gold and Silver as a “Hedge” against devaluation. This can be done with collectable coins and jewelry, or bullion.
Bitcoin to the Rescue
When fiat currency is failing, the citizenry need a mechanism to trade and move money out of the country without fees and taxes; Bitcoin is an obvious choice. As a “peer to peer” unit of value, Bitcoin has minimal fees and a global reach. It is an ideal mechanism to prop up people when their monetary system is in a shambles, and the value of the local fiat currency drops.
In Venezuela, Zimbabwe, China, and other countries, Bitcoin is the method of choice for doing business without government oversight, transfer fees, and excessive taxation. Even in countries with stable currency, Bitcoin is a welcome addition to the mix of fiat currency, gold, and silver, for acquiring wealth and conducting business transactions.
Here’s hoping your value is strong!
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