I am pretty sure everyone knows what gold is.
But the term fiat currency is defined by businessdictionary.com as ‘the common type of currency issued by official order, and whose value is based on the issuing authority’s guarantee to pay the stated (face) amount on demand, and not on any intrinsic worth or extrinsic backing. All national currencies in circulation, issued and managed by the respective central banks, are fiat currencies.
The Ultimate Money team put together the following video to show you in just two minutes why gold is money and fiat currencies are not:
Gold – meets the basic definition of money since it has intrinsic value.
Fiat currency – Has no intrinsic value other than the paper it’s printed on.
Gold – Rare, valuable and difficult to produce.
Fiat currency – printed or created digitally at no or very low cost.
Gold – Consistent measure of value for 5000 years and has never failed.
Fiat currency – Loses purchasing power over time and thousands of fiat currencies have gone to zero.
Gold – Universally accepted as money.
Fiat currency – Accepted according to agreements that can be breached or voided.
Gold - Tangible asset with full settlement and no counter-party risk or 3rd party liability.
Fiat currency - Debt instrument that remains the outstanding liability of a bank or government.
Gold – Annual rate of supply increase is approximately 2%.
Fiat currency – Supply often increases faster than growth of population or economy.
Gold - Incredibly durable – almost all of the gold ever mined still exists today.
Fiat currency – Throughout history the average lifespan of a fiat currency is 47 years.
Gold - Governments and central banks have little control over its price.
Fiat currency – Centrally controlled and manipulated by banks and governments.
Gold – Distributes wealth and financial power to its holders outside of government reach.
Fiat currency – Financial power is dominated by banks and government who determine its value.
Gold – Hedge against inflation and the collapse of government or financial institutions.
Fiat currency – Can become worthless due to hyperinflation or collapse of governments.