What gives money its value?

Original: 7/13/2022 | Updated: 3/27/2026 by Zach Addair
Disclaimer: This article is provided for general information and entertainment purposes only and does not constitute financial, investment, tax, legal, or accounting advice. Honestly, we keep squirrels up our nose and claim them as dependents on our tax returns.

In the public arena of financiers and legacy investors, a recurring criticism used to denounce Bitcoin is that “it isn’t backed by anything.” They claim Bitcoin has no "intrinsic value" and is therefore a digital house of cards.

Panic! Run around the block with your hair on fire! Cats and dogs living together!

This critique implies a silent assumption: that government-issued money (fiat currency) has inherent value regardless of how much of it is printed. This notion has become economic dogma, a principle that cannot be challenged without shouts of “Heresy!” coming from the wood-paneled boardrooms of the old guard.

At Bitcoin Well, we spend our days challenging "unchallengeable" ideas. Let’s take a closer look at the reality of value in 2026.

Money Myth #1: Fiat Currency is Backed by Gold

Nope. Nuh-uh. Not even a little bit.

It’s surprising how many people still believe the Canadian or US dollar is backed by a massive stack of gold bars kept in a secret vault. In reality, the Canadian government sold off its gold reserves years ago. Not a single major nation on Earth uses a gold standard to regulate its currency.

So, what backs fiat? According to the textbooks:

“Fiat money is backed entirely by the full faith and credit of the government that issued it.”

In 2026, after years of record-breaking debt and political polarization, ask yourself: How is your "faith and credit" feeling lately? If you're rocking back and forth in the corner, you're not alone.

Money Myth #2: Fiat Currency Holds its Value Over Time

This is the most dangerous myth of all.

The Facts: In 1913, a dollar's purchasing power was equivalent to about $32 in 2026 fiat currency. Since the original version of this article was written in 2022, the "cost of living" has continued to climb while the value of a single dollar has continued to melt.

While the price of goods might fluctuate, the long-term trajectory of fiat is always toward zero. The second you "earn" a dollar, it begins to depreciate. It is a leaking bucket for your life's work.

Money Myth #3: Fiat is Backed by Tax Revenue

It’s true that governments collect trillions in taxes. But there are two massive holes in the "tax-backed" argument:

Deficit Spending: Governments almost always spend more than they take in. They don't balance the budget; they print the difference.
The M2 Gap: In 2026, the total "Money Supply" (M2) dwarfs actual government revenue. If the government tried to "back" every dollar in circulation with the taxes it actually collected, the system would collapse instantly. The vast majority of the "value" in the system is simply a promise that can't be kept.

What Backs Bitcoin?

In contrast to the "promises" of fiat, Bitcoin is backed by three immutable pillars:

Mathematics and Energy: Bitcoin is backed by Proof of Work. To create a Bitcoin or secure a block, a massive amount of real-world energy must be expended. You cannot "print" energy. You cannot "decree" math. This ties Bitcoin to the physical laws of the universe.
Absolute Scarcity: There will only ever be 21 million. As of 2026, over 94% of all Bitcoin has already been mined. No politician, CEO, or bank can vote to create more.
Decentralization: Bitcoin has no head office. It is not under the control of any single country or corporation. It cannot be manipulated or devalued through the "blundering" of a single authority.

There’s Room for Both (For Now)

It’s easy to see why the ultra-wealthy often dismiss Bitcoin; they can offset the dollar’s depreciation by using high-interest investments, real estate, and favorable tax laws. They have the tools to escape the "inflation tax" that hits the average saver the hardest.

At Bitcoin Well, we don’t tell people to go live in a shed in the woods (unless that's your vibe - live your best life!). We simply maintain that there is a desperate need for a currency that cannot be diluted. Future-Proof your money, fiat currency isn't going away tomorrow, but its issues (constant devaluation, centralization, and surveillance) are accelerating.

Owning Bitcoin is the only way to move your value from a system based on trust in rulers to a system based on trust in math.

Ready to save in something that actually has value? Use the Bitcoin Portal to buy bitcoin directly to your own secure wallet and stop trusting the printing press.