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Over thousands of years, people have employed many different kinds
of money—from beads to metal coins and from shells to coffee beans.
Some forms of money are more effective than others. “To be a really good
currency,” wrote economist and Financial Times columnist Martin Wolf,
“it needs to be durable, portable, divisible, uniform, limited in supply,
and acceptable.”
Today, most people use fiat money, or what we would recognize as
coins and paper bills. Fiat money is made legal tender, or currency, by
government regulation. This money actually has no intrinsic value on its
own. People give and
receive money for real
goods and services
because it is a socially
accepted symbol of
value. Citizens must also
use it to pay their taxes.
However, it can
be unnerving to realize
that fiat money is
based mostly on trust.
Citizens have to believe
There is no way to track the origins and history of a paper bill, that the government
making it much easier to counterfeit than cryptocurrency coins,
each of which can be fully tracked on the blockchain. won’t simply make
more when it needs to.
When the government prints too much money, inflation rises. The value
of the currency declines because it doesn’t buy as much as it used to.
Hyperinflation occurs when the currency loses its value. When a society
loses faith in its currency, the results can be catastrophic. Citizens can’t
afford food, savings are destroyed, and law and order breaks down.
“The root problem with conventional currency is all the trust that’s
required to make it work,” said researchers Stanton Heister and Kristi

9 9 BITCOIN ANd BLOCKCHAIN