BlockchainBeginner#Macro#Finance
Fiat Currency
F
Definition
A government-issued currency that is not backed by a physical commodity, such as gold or silver.
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Concept Diagram
Key Takeaways
1
Fiat money is government-issued currency not backed by physical commodities
2
Central banks can print unlimited amounts causing inflation that erodes purchasing power
3
Bitcoin's 21M cap makes it the anti-fiat opt-out for wealth preservation
4
Hard assets like BTC and ETH serve for long-term wealth preservation while fiat is for consumption
Practical Example
The US M2 money supply grew from $15.4T to $21.4T between 2020-2022 - a 39% increase that diluted every dollar holder's purchasing power by over a third.
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Related Terms
Strategy
DXY (US Dollar Index)An index measuring the value of the US Dollar against a basket of world currencies. In crypto, it inversely correlates with BTC.
Strategy
CPI (Consumer Price Index)A key macro metric for inflation that drives the Federal Reserve's interest rate decisions, directly impacting risk assets like BTC.
Macro
Quantitative Easing (QE)A monetary policy where a central bank purchases government securities to increase money supply and encourage lending/investment.
Blockchain
StablecoinA cryptocurrency designed to have a stable price, typically by being pegged to a reserve asset such as the US Dollar.
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