A truth that resonates soundly when it comes to the current monetary system.

Today, major currencies such as the Euro and the Dollar are considered fiduciary. This means they lack intrinsic value and depend entirely on the trust and confidence we place in the institutions that govern them.

A fiduciary currency is a form of money that is decreed as such by an institution, i.e. a state, like China with the Yuan, or a political-economic union, such as the European Union with the Euro. The entity in charge of its issuance is the central bank (For example, we can mention the People's Bank of China, the Federal Reserve of the United States, or the Central Bank of the Republic of Guinea). It is precisely these entities that are in charge of formulating the monetary policy and therefore how much money should be put into circulation or printed.

Since antiquity, gold has served as a monetary reference, but its rigidity has often led leaders, whether Roman emperors or modern governments, to adopt alternative currencies, often fiduciary.

The mechanism is simple and is inspired by practices that have existed since the origins of civilization. Leaders, eager to exert control over wealth, begin by centralizing gold, often by exploiting their power and promising protection and security. With this precious reserve in their hands, they introduce a new currency, equivalent in value to gold, but minted in their effigy. This currency then begins to circulate, and people quickly adapt to the convenience of its simple use.

However, these leaders then begin to devalue the new currency in a gradual way, de facto reducing its value by a few percent each year in comparison to the initial gold price. This silent devaluation is often justified as being in the interest of the people. In reality, those who save in this fiduciary currency see the worth of their savings erode, while the state finances its projects through inflation. Furthermore, this devaluation makes debt easier to repay.

At a critical moment, the leader makes the announcement: the currency is no longer backed by gold. The public, now accustomed to the fiduciary currency and often misinformed about financial matters, accepts this reality, allowing the state to freely manipulate the money supply and print enormous sums of money at almost no cost.

Monetary printing then leads to inflation and gradually impoverishes the population. Besides, the financial system is regulated and restricted to avoid its collapse, since any disruption could provoke a major economic crisis. Contrary to the masses, financial institutions and wealthy individuals benefit greatly from this system, which creates an inequality gap and favors authoritarianism. In this context, they are not incentivized to make radical changes, allowing the system to continue its course until a possible implosion.

When well executed, this strategy can last for decades. However, it is important to note that a very fast devaluation or loss of confidence can lead to hyperinflation (see next chapter). History shows that the dollar has lost 98% of its value in 100 years, the euro 30% in 20 years, and the pound sterling 99% since its creation.

In the end, the currency may no longer have any connection to gold, similarly to Roman coins at the end of the Empire, or even be reduced to a simple numerical value, disconnected from tangible reality.

Today, we are witnessing a historic turning point. The dollar, which has long dominated, appears to be in decline, while gold has lost its central role. We stand at the threshold of a new monetary cycle, reminding us that the lessons of history are often forgotten

Because of these premises, the Bitcoin revolution is gaining momentum. Contrary to previous currencies, it requires no trusted third party and aims to separate the State from money.

In fact, Bitcoin presents itself as a response to these systemic challenges by proposing a decentralized solution and a new parallel monetary system. Historically, if gold has been favored as a currency due to its resistance to counterfeiting, Bitcoin similarly cannot be falsified. Moreover, it is limited to 21 million units, thanks to its decentralized and cryptographic nature. Bitcoin is a currency that relies on transparency and neutrality, offering an attractive alternative to the current centralized monetary system.

Another reason why Bitcoin has acquired attention is the emergence of central bank digital currencies, or CBDCs, which seems inevitable. This new form of money would develop a more centrally planned economy, and could both hinder individuals' financial freedom and facilitate authoritarian abuses. We can conclude this chapter with the quote from the Nobel Prize winner F.A Hayek in 1984:

To learn more about economic fallacies and freedom, we invite you to discover our ECO 102 course, which traces the life and ideas of Frédéric Bastiat, a 19th-century French thinker who would surely have appreciated the emergence of Bitcoin: