October 19, 2018•214 words
There's a digital currency that's not backed by anything. No gold. No silver. No reserves of any kind.
It exists only on a digital ledger.
Although, a small portion of it is stored on printed papers with unique serial numbers denoting their value. If lost or destroyed, the value stored on those papers is gone forever.
Despite being backed by nothing, this digital currency has grown exponentially in use and adoption (by the blind masses, according to its critics). These critics say that the users and holders of this currency have not done their due diligence research into what this currency actually is. They speak of a bubble and massive devaluation coming, down the line.
What is this digital currency?
The US dollar.
(If that upsets you, replace USD with GBP, EUR, SGD, MYR, etc.).
Bitcoin is like the US dollar: It's digital, it's invisible, it's intangible, it's not backed by anything.
Bitcoin is unlike the US dollar: It's stored on a public ledger that anyone can examine. It's limited in supply (to 21 million bitcoins, ever). Whereas infinite dollars can be created (inevitably reducing the value of each dollar to approaching zero), a hard limit of bitcoins can be mined, increasing the value of each bitcoin as they become scarcer.