| | The US dollar's monetary base has been increasing by 33% per year for the last 5 years. Its backed by... the might of the US government in enforcing fiat usage and attacking anyone other than the Fed who prints dollars? I'd say its also backed by its utility... its a way to track accounting, so long as the monetary base is reasonably stable.
I do like gold and silver, particularly for long term stores of wealth. But I think fiat has them beat for day to day transactions due to fiat's easy transportability and gold & silver's higher vulnerability to theft (including government theft). Its just so unfortunate that given we are using the fiat, the government gets so much power from being able to print and spend it.
I'd say Bitcoin is backed by its utility. That's not nothing. I like Bitcoin because it can be sent across the world at the speed of the internet, and because bitcoins can be protected by some pretty good cryptography. Due to these kinds of features, I think Bitcoin will increase in value through the future. There of course is the chance that maybe a better distributed currency technology will be created, and maybe people will prefer it over Bitcoin. But I think these kinds of currencies are here for the long haul.
I'm excited to see what will happen with Bitcoin in more black/gray market and developing countries. M-Pesa the cell phone currency recently integrated Bitcoin for some of Africa.
Cheers,
Dean
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