Friendly reminder that the fiat money in your bank account doesn’t exist.

It seems like everyday, there’s a media talking head laughing at cryptocurrencies by saying it’s “magic internet money” that doesn’t really exist in the real world. They are telling us that BTC, ETH and such are basically worthless because it doesn’t have a physical existence and are not backed by a government.

Well, those people conveniently forget that fiat money doesn’t exist, either. Well, most of it.

You see, banks are allowed to leverage their holdings in what is called the fractional reserve banking system. If you deposit 100$, for example, they only keep a fraction of that money in cash (let’s say 20$), and they use the remaining 80$ to generate yield, generally by lending. What that means is, if every customers of the bank tries to cash out in a short amount of time, the money won’t be there, because it’s been lent and doesn’t exist anymore.

When you deposit cash in a bank, what you get in return is basically a glorified IOU. Should the bank get into trouble, your cash could very well disappear.

Now, of course, the governement can intervene to prevent such bank runs. But it’s always in the favor of the rich. That’s what happened in 2008-2009 : the fat cats got bailed out, while the ordinary citizens went into bankruptcy. And it only works in stable countries ; when you live in a failed state, the government won’t help you in such a crisis.

Compare that with crypto. If you are in control of your keys, and assuming their are not compromised, nobody can access your funds without your permission. Not the wallet devs, not the government, not the DEX. Nobody. You are in full control, and you will still be in control even if the governement of your country collapse.

In that sense, I think that cryptocurrencies are actually more real then fiat money. Decentralised networks are much more resilient then centralised authorities, and therefore are more likely to survive in the long-term.

I think we still got a few years ahead of us before the mainstream media catches up with this revolution. Until then, I will accumulate as much as I can.