Elon Musk, CEO of Tesla and SpaceX, has long been a vocal opponent of fiat currencies, labeling them a “scam” on Twitter more recently.
In response to a tweeter’s inquiry regarding the prevalence of fraud, Musk said, “Fiat currency” to convey his belief that currency backed by the government has lost its value.
Musk’s doubts about the stability of fiat currency are not new. The fundamental struggle is between fiat and crypto, he tweeted in 2021. “Overall, I’m on board with the latter. While speaking at a Bitcoin-centric conference the same year, Musk referred to himself as “a believer of Bitcoin and the concept of cryptocurrency in general.”
According to a story in the Financial Times, Musk’s own social media site X (previously Twitter) wants to facilitate money transfers between members in fiat currency initially, with the possibility of extending into crypto transactions later.
Bitcoin is a digital currency with a decentralized network and a fixed quantity of 21 million coins that is generated by a computer algorithm rather than a centralized bank or government. Proponents say this protects citizens against inflation and arbitrary government action.
In contrast, central banks may create an infinite supply of fiat currency, which loses value over time as more of it is printed. Zimbabwe’s hyperinflation of 79 billion percent in 2008 was the result of years of unchecked increases in the country’s fiat currency supply. Like the Turkish currency, whose annual inflation rate was announced at 61.5% yesterday.
Proponents of cryptocurrencies point to the fact that governments may take currency assets in times of crises as another danger that Bitcoin does not pose.
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