From: Yahoo Finance
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Since the beginning of commerce, humans have assigned value to things of no readily-apparent intrinsic worth. Particularly in the case of mediums of exchange, aka currency, we assign value simply because those with whom we transact do so as well. Whether it is the cowry shells of ancient India or the thin green pieces of paper many of us still carry in our wallets today, worth depends more on psychology than physical attributes.
‘More faith in technology than in government’
This is also true of fiat currency, even though backed by governments and their taxing power, and central banks and their money-printing power. When the public loses confidence in those institutions — as they did in the Weimar Republic in post-WWI Germany, or Southeast Asia in the late 1990s — value evaporates. Indeed, these days, the lack of reliance on central bank backing may add value in the eyes of bitcoin’s more passionate investors, who have more faith in technology than in their government.
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