Bitcoin: Can It Become An Alternate Currency?

“Commodity-backed” money in the early eighteenth century consisted of items representing underlying commodity like gold. Though the pieces of paper did not have intrinsic value, they could be exchanged for a fixed quantity of the underlying commodity . The commodity-backed money system made transfer of large amounts of money possible. Under the commodity-backed or gold standard, governments and banks could print as many notes as they had gold. The system restricted the activities of the government as they could only spend as much they had. However, at the beginning of World War I, the British, German, and French Governments took off the gold standard and printed as much money as they needed in the new fiat money system . The United States of America adopted fiat money in 1971.