Fiat money1/27/2024 To view this video please enable JavaScript, and consider upgrading to a web browser that supports HTML5 video What about gold and currencies? There are currently more than 5,000 cryptocurrencies in a market worth over $1 trillion (€820 billion).īitcoin transactions are digitally verified through the use of blockchain technology, which isn't bound to one server but a global network of computers, making them less vulnerable to fraud. This is also the process that allows the mining of new coins, although there is a ceiling on the creation of new Bitcoins - 21 million - a figure due to be reached by 2040.īitcoin rose from $0.0008 to $0.08 in its first five days after launch and has since skyrocketed as high as nearly $60,000 before crashing 40% last month. It quickly gained traction due to fears of political instability and governments taking on too much debt. Bitcoin, the most famous example, emerged in 2009 during the financial crisis amid concern about the stability of the global financial system. In addition to the notes and coins in circulation, most of the fiat money supply is created digitally, either by central banks which is then credited to major banks or created by banks themselves in the form of loans to governments, businesses and consumers.Ĭryptocurrencies, on the other hand, are private and operate independently of governments. Similarly, the strength of the eurozone economy has boosted the value of the euro, which is the second most commonly held reserve currency. Most commodities, from oil to gold, are traded in dollars, giving the US currency so-called reserve status (most countries' central banks hold significant quantities of dollars). The dollar, for example, maintains its value through the US being a global economic powerhouse. The term fiat derives from the Latin word, meaning "let it be done." The US dollar and the euro are examples of fiat or traditional currencies - banknotes and coins printed by governments, whose value is dependent on economic policy and the strength of a country's economy.
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