Hi There,

For most of history, paper money represented real stored value. A £10 or $10 note could be exchanged for a specific amount of gold held by the issuing authority.

But that changed.

In 1971, the US — and effectively the rest of the world — abandoned the gold standard. Governments no longer needed reserves of gold to create new money. They could simply issue currency based on policy, rather than physical backing.

This is why we call today’s money fiat currency.

“Fiat” means:
by decree or by authority

In simple terms:
Money has value because governments say it does, and because people believe it will be accepted by others.

Since leaving the gold standard:

• Money supply can expand rapidly

• Inflation becomes a constant background force

• The value of your savings can silently erode over time

• Trust in central banks becomes essential

This shift — from asset-backed money to trust-backed money — is one of the major reasons cryptocurrency emerged.

Crypto represents another model:
value backed by code, scarcity, and transparency, not government decree.

This isn’t about whether fiat is good or bad — it’s about understanding the system you currently live inside.

If you’d like to continue, 👉 CLICK HERE for Lesson-4

Warm regards,
Johnson