1/ People are commonly using the term “backed by” wrong in a bitcoin context. I’m probably guilty of a bit of this myself.
2/ E.g.:
“Bitcoin is backed by...”
...energy
...math
...scarcity
...decentralisation
“Fiat is backed by...”
...trust
...authority
...violence
...military
...taxes
“Bitcoin is backed by...”
...energy
...math
...scarcity
...decentralisation
“Fiat is backed by...”
...trust
...authority
...violence
...military
...taxes
3/ When it comes to money, “backed by” was simply used as a term to indicate that the money receipts (currency) could be redeemed 1:1 for a monetary commodity.
4/ This confusion is to be expected when we’ve been led to forget everything about what money is. As bitcoiners, we’ve had to learn everything from scratch again, like feral children in a forest.
5/ But if we’re going to get things right this time, we should use terms properly. It’s important to be specific that the foundation of a good money is a scarce commodity, and not the product of some abstract (and often ambiguous) values.
