Why don't you understand Bitcoin? Is it because you think the US dollar is the only real one?

A classic article from 2017 explains why people cannot understand Bitcoin: the US dollar is also a collective illusion, and blockchain technology challenges the fundamental assumptions of traditional financial systems. This article is based on a piece by Maria Bustillos, organized, translated, and written by ForesightNews. (Background: Rich Dad predicts target prices for four major assets: gold $27,000, silver $100, Bitcoin $250,000, Ethereum $60,000; market crashes should be met with continued buying.) (Additional context: Eric Trump, Trump’s son: I myself am “All in” on Bitcoin! The wealthiest families, funds, and Fortune 500 companies all want BTC.) People often say that Bitcoin is an illusion, a collective illusion. It exists only as a digital entity in cyberspace, like a mirage—a soap bubble that is fleeting and insubstantial. Bitcoin has nothing backing it except the faith of those foolish enough to buy it, and the faith of those big fools who buy Bitcoin from these fools. These are indeed facts. But perhaps even harder to understand is that the US dollar is also an illusion. It is mainly composed of digital entries in cyberspace, although sometimes it exists in the form of paper bills or coins. Despite the physical form of bills and coins, the dollar they represent is not real. The dollar has nothing backing it except the faith of those foolish enough to accept it as a means of payment, and the faith of others willing to accept it again. The main difference is that, at least for now, the illusion of the dollar is more widely and strongly recognized. In fact, about 90% of US dollars are completely abstract—they do not exist in any tangible form. James Surowiecki reported in 2012 that “only about 10% of the US money supply, roughly 1 trillion dollars, exists in the form of cash and coins.” (Currently, this is about 1.5 trillion dollars out of a total supply of 13.7 trillion dollars.) Nothing prevents our banking system from creating more dollars on a whim. As of October 2017, of the 13.7 trillion dollars in M2 money supply, 13.5 trillion dollars were created after 1959—that is, M2 has nearly expanded fiftyfold. The dollar is a so-called “fiat” currency. “Fiat” in Latin means “let it be,” similar to “fiat lux” (let there be light), and “fiat denarii” (let the denarii, bolivars, dollars, and rubles appear). Throughout history, the temptation for national leaders to create money has been almost irresistible. An obvious consequence of this reckless behavior is inflation: the purchasing power of one dollar in 1959 is now slightly below 12 cents. The creation of Bitcoin’s blockchain was partly in response to this historical weakness. After mining the 21 millionth Bitcoin around 2140, no more Bitcoins will be produced. Con artists and thieves will always try to exploit loopholes to manipulate the structures set up to control or account for any currency system (or any store of value). (See: Panama Papers, Bernard Madoff’s $65 billion Ponzi scheme, the London whale incident, Long-Term Capital Management and the bankruptcy of the International Commercial Credit Bank, the Isabella Stewart Gardner Museum theft, the 2008 financial crisis, and thefts of Mt. Gox, The DAO, and USDT). All stores of value are targets, and wealth can and will be created and lost through any exchange system, whether legitimate or illegitimate. However, despite sometimes being surprising, enough people act in good faith to prevent the complete collapse of the monetary system. There are fundamental differences between cryptocurrencies and the US dollar. For example, transactions on the Bitcoin network are recorded on an incorruptible ledger that relies not on the authority of banks or governments but on the power of a public computer network, which theoretically anyone can join freely. Additionally, Bitcoin’s supply is ultimately fixed. Of course, the anonymity of cryptocurrencies may not be as foolproof as that of unmarked cash. Money itself is an illusion, a collective illusion. You work hard to earn, increase, and preserve it, but the only thing truly real about it is its symbolic power. In a way, this is indeed awe-inspiring. Our shared understanding of the value of that green paper, Krugerrands, Ethereum, or British coins is what matters most, and this shared understanding is not fixed; it is in perpetual flux. The value of all currencies and means of circulation is unstable and abstract, even in efforts to stabilize their value through fixed exchange rates or interest rate adjustments. Money is merely a constantly evolving network of agreements that reflects the interests of those within the network, and it has always been a fragile thread in the human trust web. Consider the “refugee capital”—people forced to make enormous sacrifices to cross borders—of course, it is money, but what does it have in common with your “invisible” wages, a string of numbers hitting your bank account in the void? Perhaps between the day you receive your wages and the day you go to market, the prices of avocados or coffee will rise or fall. In natural disasters, people must suddenly be willing to pay exorbitant prices for a few gallons of clean water. So, what exactly is the “value” of one dollar? All common arguments against cryptocurrencies like Bitcoin and the blockchain technology supporting them fail to consider this fact: the temporary and fragile nature of fiat currency. If you believe money is real, solid, or “backed” by anything other than human trust in institutions, then you cannot understand cryptocurrencies. The US dollar is backed by “all the faith and credit of the United States.” But what does that really mean? It means that if you take a dollar to the US Treasury and ask for redemption, they will give you a dollar—or, if you prefer, four quarters. Unfortunately, currency crises in unstable governments like Greece, Venezuela, and Spain have triggered a series of cryptocurrency surges. When the Cypriot government attempted to forcibly reduce citizens’ bank deposits by 7% to resolve the 2013 banking crisis, Bitcoin’s price surged; likely because many euro-holders in debt-ridden Southern European countries speculated that Bitcoin might be a more reliable “safe haven” than Cypriot banks. Spanish depositors were probably also wondering: will it be our turn next? In short, our existing financial institutions are inherently flawed and always prone to corruption; this has been the case even before the mysterious inventor of Bitcoin conceived it. Satoshi Nakamoto explicitly stated in the “genesis block” of Bitcoin: “The Times 2009-01-03: Chancellor on brink of second bailout for banks.” Bitcoin has always been a politically motivated project aimed at creating an incorruptible digital medium of exchange, establishing an alternative that surpasses the current banking system. All cryptocurrencies, including Bitcoin, are based on the theory that records generated by decentralized computer networks can be made tamper-proof, thereby theoretically…