All FAQs

Please select your question category

Search FAQs

My personal answers and responses to specific questions or general comments.

People shouldn't have to leave their homes. It is no fault of their own that by the mere act of their birth some government claims them as property. Why should anyone have to leave the land they were born upon (or be restricted from travelling the rest of the world for that matter)? Just look to recent American history and you'll clearly understand that the colonists didn't agree with the established government and they continued to reside within their homes. 

A perfect example of this is stated in the Declaration of Independence of the original 13 Colonies -  they withdrew their consent to be governed and government no longer had just power over them. They resisted and defended themselves against those who would attempt to violently oppress them and kept their claims to the land (the legitimacy of those land claims can be debated in another discussion). These actions are recognized as being just and moral and are highly celebrated every year on July 4th as that country's national birthday.

As we can now see, people don't have to leave and a government has no right to rule anyone without their explicit consent. Furthermore, don't you think it hypocritical to support a country that was founded on withdrawing consent while staying and telling someone else that if they stay then they must consent?  What do you think?

If you consider yourself an American then you must either admit that someone has the right to withdraw consent and stay where they are because that's the premise upon which your US government was founded; in which case, the constitution has no legitimate rule over them.  OR, if you advocate that there is no right to withdraw consent and stay then you must admit that the US government was founded illegitimately and that region ought to remain under British rule; in which case, the constitution still has no legitimate rule over those withdrawing individuals.

Bottom-line, people should be able to have a say in the matter.

Really? Can you even define terrorism or terrorist? Can you?  If so, what have I done which applies?

I only advocate people being free and taking personal responsibility for their self-ownership.  If they are unable to do so, then my position is that they deserve to be ruled by others.

Yes, kind of.  I live my life according to the Non-Aggression Principle (NAP) and as such believe that initiating violence against another human being (murder, rape, theft, kidnapping, unprovoked aggression, etc.) is immoral and just plain wrong. Even though anyone has the ability to do such things, I do not want to do anything of the sort.  I prefer to live by the golden rule many people seem to have lost sight of.  Beyond that, I don't really need another human being (or group of human beings) to tell me what I can and cannot do in life.  Are you REALLY implying that YOU need someone else to tell you otherwise?

I've realized that you and I have the SAME rights and privileges in this world and that we are not children which need coddling. It is my hope that one day mankind is evolved enough to be able to interact with one another voluntarily and with reason.  Do you believe yourself to be a reasonable human being?

Wrong. I do involuntarily pay my "fair share" of those services I utilize with the rest of whatever community I am a part of at the time. I help maintain and build roads by purchasing gasoline and paying the apportioned excise taxes for that purpose.  I support general services like schools and fire protection by paying sales tax on my consumption of goods and services within said regions I inhabit. This would be no different if I were to pay to consume goods and services in most places around the world.  I also do a bit of community service on a charitable basis on top of that, so yes I do pay my fair share and then some.

I will gladly pitch in for these things voluntarily, if and when our society evolves to that point.

Now let's look around at those folks in the world who are becoming autonomous through self-sustainable actions.  If they no longer have a need to utilize such general services (because they farm, homeschool, volunteer fire fighter, etc) do you really think that it is fair to demand money from them to pay for services that they will never use or even want?  I believe that no one has the moral right or authority over you or I or anyone else to rightfully claim the fruits of anyone's labor, in whole or in part. In short, that would be condoning slavery.  Do YOU really condone slavery?

What?! Seriously?  Really and truly what do they have to do with anything in this matter? If ANY military was truly a volunteer service, I don't think ANY OF THEM would be in as many conflicts as they are in today. I don't see how mindlessly following unjust orders is serving and protecting anyone's interests.

Historically speaking in regards to the US, the standing military and navy were supposed to ensure the safety of commerce and shipping lanes and nothing more.  Why do you think the active militia (National Guard) and reserve militia (Every US Citizen), organized or not, even exists?  Why do you think the 2nd Amendment exists?  For DEFENSE of the Land.  The taxes from capital gains of corporations and companies doing business within the US are what is supposed to pay for the military.  There is an unsubstantiated, but famous quote I've always liked - "You cannot invade mainland United States. There would be a rifle behind each blade of grass."

I see the good people of North America being able and more than capable to fend off any aggressor which may think to invade their respective homeland.  What is the moral alternative?  If someone attempts to conquer my home and my community, you damned well should be assured that I too will be a part of such defense to ensure life and liberty.  I would be a damned good ally to have on your side!

Let us be clear, though I am considered Caucasian (with a slight First-Nation ancestry), I will not apologize for being born as such into this world.  I was born in North America within a region called Acadiana and if you knew anything about life growing up in that region, you would retract such statements of being rich and privileged. I grew up having neither and everything I possess as my private property or have accomplished has been by my own hand (with the encouragement and support of friends and family along the way of course).

Let's just agree that the world is rife with inequality for whatever reason.  I do my best to combat such travesties because I truly believe that we all can live in a better world.

This section addresses those inquiries about autonomy, self-ownership and individual sovereignty.

One thing that soon becomes clear to any one interested in anarchism is that there is not one single form of anarchism. Rather, there are different schools of anarchist thought, different types of anarchism which have many disagreements with each other on numerous issues. These types are usually distinguished by tactics and/or goals, with the latter (the vision of a free society) being the major division.

The main differences are between "individualist" and "social" anarchists, although the economic arrangements each desire are not mutually exclusive. Of the two, social anarchists (communist-anarchists, anarcho-syndicalists and so on) have always been the vast majority, with individualist anarchism being restricted mostly to the United States. [1]

The following image indicates the differences between philosophies within these two main trends of the anarchist movement:


What privileges does a citizen have that a free, independent and sovereign natural human being doesn't? The right to vote in elections? Big deal.  Run for public office? They would be nation-less so I doubt they would care nor would they feel the need to "elect" another person to claim dominion over them under the guise of "representation". Be an employee of that government? They could voluntarily contract with them independently should they decide any mutual benefit is realized by doing so. Travel in and out of the country with a passport more freely?  Remember, they were born there PRIOR to ANY government claiming them as its citizen - that place is ALREADY their home. Would you deem it a legitimate action if someone (or group of people) attempted to stop you from going to your home for no other reason than you are not considered to be a citizen within their system?

What about traveling to another country or region with a commonly recognized passport? There is a precedence already set by countries accepting a "World Passport" for travel purposes.  Now, while I think this world passport initiative needs work and its progression should go in a different direction (or have another type of passport altogether), it is a start in the right direction.

Learn more at

I truly do not know but why not? I am confident that like myself (and I am sure you as well) there are people in this world who care about human life and not because they are some citizen of some nation of imaginary lines. Folks are not relegated to only contacting a particular embassy as there are many other options for assistance in this world.

Sure, bad things happen in this world but that doesn't mean one should have to live in fear with the false notion of security that there will always be someone there to bail them out in times of trouble. Common sense goes a long way when traveling. 

Not really. Why should anyone care or be afraid about what others "might" do? Spy on them? Kidnap them? Raid their home with a tactical SWAT team? Outright kill them?  What is stopping anyone from doing that now and why would anyone want to initiate that kind of unprovoked violence upon someone in the first place? 

Personally, I consider all people in this world to be my friend (regardless of age, race, gender, orientation, religion, etc.), unless they prove otherwise.  I am not initiating violence against any other soul so I do not expect anyone else to do so to me.  Should violence be initiated upon my person the only just and moral action which could be done anyway is to reciprocate in-kind or with enough force so as to stop said aggression.

It may seem difficult to wrap your brain around the reality of not belonging to any nation at first, but it does make sense if you really break it down. Sure, I understand every inch of the world currently is filled with nations and that those pioneering sovereign individuals will most likely be met with some form of resistance along the way.  It is my hope that people's sovereignty be respected and met with open arms, open minds, and open hearts.

No, those people are not traitors. A traitor to who or what exactly?

Someone who renounces a third party's oppressive claim of ownership over them is not considered a treasonous act against a friend, country, or principle nor does it mean someone wants to be an enemy of any state.  Renouncing citizenship is nothing more than a natural man belonging to no nation by their own free-will choice as is that individual's right to choose to NOT belong to any such entity.  

I would encourage you to read the Declaration of Independence of the original 13 Colonies.  How do you think an individual's own decree and appointment of sovereignty betrays you or someone else or is any way different or invalid?  One could say that a sovereign individual is more free than any citizen in this world because of their own declaration of independence - at least those folks allow themselves to own and use gold as money.

The argument is always the same, no matter what good you replace X with :

“I do understand that not all goods need to be provided by government and I even recognize the blessings of the market and competition when it comes to producing the best and cheapest possible goods. But in the case of X it’s different. X is an essential service with a high demand for it. Without X life on earth as we know would be unimaginable or at least severely impaired. X is needed by everybody all the time, we simply can’t take any chances with X.

If X were to be provided on the voluntary market it would be complete chaos. It is simply unimaginable for competing providers of services to offer different kinds of X in different areas.

Thus we need the government to hold a gun to people’s head, extort money that they will use for the provision of X, and outlaw all competition with it.”

This argument is, again, a classical example of the majority’s incapability to think outside of the box. One cannot blame them for it. We all grew up under a system where X was provided by the government. It is a frightening thought to unleash the “callous forces of the market” upon it. We were brought up, educated in public schools, and shaped by media and papers all around us in accordance with the status quo.

It is important to point out the following to people who advance this argument: Voluntaryism has never recommended the abolition of X. Voluntaryism recommends that X be provided by people who have a vested interest in providing X better and more cheaply than it is currently being provided. Voluntaryism realizes that there is no way this can possibly happen if those people are given the right to point a gun to everyone’s head and/or threaten them with kidnapping if they don’t turn over the money they need in order to provide X.

It is by virtue of precisely this modus operandi that in the very process the affected individuals’ value preference is being acted against, otherwise no aggressive violence would be needed to perform the act. So the action by and in itself proves to be one that reduces the welfare of society.

Put yourself in the shoes of a government official who acts under such circumstances. What incentive, knowledge and ability does he have to truly improve and tweak his services to the taxpayer’s satisfaction? What incentive does he have to spend as little as possible of the money that was forcefully taken from others? Even if he wanted to, he simply can’t know how. There are no prices for the goods to be provided, the money has already been obtained. There are no competitors he has to go up against. But even if there were, what does he care? His wealth only depends on his employer’s ability to perform acts of theft on a periodical basis. He will try to allocate as many funds as possible to his operation. His resume will look more impressive the more people he hires and directs, no matter what they actually do. His engagement is but a temporary one. In 4 years he may be out of office. He will try to maximize his loot in as short a time frame as possible. The Trouble With Bureaucracy is in the very nature of EVERY government.

This has to be pointed out again and again: Voluntaryism doesn’t aspire a system without the good X. It aspires a system where the provider of X is not allowed to point a gun to your head, threaten you with kidnapping, and then use your money to provide X in a rather uncreative and sub-par manner.

The ugly truth about those who support government or any expansion thereof is the fact that this is precisely the activity they (willingly or not) support or want to expand: That a group of people be given the right to extort money from you at gunpoint to run its operation. What in the world is so scary about a political philosophy that rejects such a modus operandi?

Thus the argument that X is so important and essential and that that’s why we need the state to assume control of its provision is probably one of the most tragic and naive fallacies produced by ages of conditioning and indoctrination. It is so tragic, because one cursory but unbiased look at simple facts of life and history could help explode this sheer, utter and completely nonsensical notion, and help millions of peoples out of their misery within no time at all.

Ironically, Voluntaryism would lead to a much better and cheaper provision of X. To realize this, we don’t even need historical proof, we need logical consistency. But even then, the historical proof is all around you on top of that! In the United States today, there exists no service in anyone’s life that is more expensive than government. There simply exists no company to which all working men and women turn over half their income every year. And the quality of the service provided is questionable to say the least. Heck, somebody please tell me: What is the federal government today doing for you that is worth half your income every year?? Which entrepreneur on the free market would get away with that?

But it doesn’t just end there. All those sectors where the federal and state governments get involved in in a regulatory function, cost much more than those where they stay out. The best examples are health care, firearms, banking, and energy.

Take, on the other hand, the internet. There probably exists no better modern day example of voluntaryism in action. The internet is filled with an abundance of cheap, if not completely free goods and services. All this with little to no government intervention at all. Disputes are settled, frauds exposed, low quality punished with low ratings, all without any government involvement. Just imagine we could expand this dynamic environment to the provision of the services we so direly need today, health care in particular is one of my biggest worries.

(Sure enough, instead of staying out, the US government is now devising plans to tighten government rules and directives that aim at regulating the internet. It is likely that one simple act of cyber terrorism or similar big event on the internet, will turn public opinion towards an acceptance of massive government involvement in this sector.)

An interesting inclination of the opponents of voluntaryism is to then ask precisely how good X will be provided by an organization that is not allowed to extort its money at gunpoint. While all these are exciting questions to work through and analyze, it is important to point out that they are completely irrelevant to the validity of the concept of voluntaryism.

When one asks such a question he has already implicitly accepted the non-aggression principle. How exactly good X will be supplied is a question that I can make suggestions on and speculate on. But who am I to know the definite answer? I am not in a position to come up with one. This is precisely the point of a free market: That it gives entrepreneurs incentives to work things out, to solve problems, to come up with solutions that work in the interest of their consumers.

Asking someone how good X will be supplied is like asking someone 40 years ago precisely how the internet was going to work at some point in the future. Heck, I doubt that most people even considered the possibility of such a thing as the internet.

To give you an analogy: Under slavery, the abolitionists too did not focus all their time and energy on proving to the powers that be how every single slave would be able to find a job after slavery would be abolished. The argument that slavery should have been kept in place because some slaves ended up unemployed after its abolition, could hardly be taken serious nowadays. The point was plain and simple: The initiation of violence or threat thereof by one man against another is immoral, no matter if he’s black, brown, white, yellow, or what have you.

If one was truly interested how good X would be supplied by people who are not allowed to extort money at gunpoint, he would think about it himself and try and come up with suggestions on his own or work with others to find a potential solution.


Read more at -

Believe it or not, this is the most common question which derives from mental apathy and probably the one voluntaryists are most tired of be asked. Asking, who will build the roads without government, is like asking, who will pick the cotton when we free the slaves.

People believed that slavery couldn’t be abolished in America. Without the slaves picking the cotton, they thought there would be no way for cotton to get picked. If cotton didn’t get picked, clothing wouldn’t get made, businesses would go under, children would freeze to death, slaves couldn’t take care of themselves (racism at its worst,) and many other ridiculous things.

Today, we understand how ridiculous all that is. Since we eliminated slavery we’ve developed some of the greatest technology innovations in history to pick the cotton. That technology development would have been impossible to predict before we freed the slaves. When the slaves were freed, the incentives were in place for someone to invent it.

Morally speaking, when asked who will pick the cotton when we free the slaves, the real answer is:

It doesn’t matter. If something is unethical then we shouldn’t be doing it. The ends do not justify the means. I don’t care if some people will have to walk around naked if the alternative is creating a subclass of human beings that we can exploit. Slavery is not justifiable.

You might be asking, what does this have to do with government?

It really has everything to do with government but this is an oversimplification to get to the point.

Government is non-voluntary. For example, A person can’t choose not to be a citizen of America. They need permission to leave even when they were born there. They did not agree to that and so they are stuck there, following the rules until government approves of their departure (They even have to pay to eliminate their citizenship. That’s not voluntary.). The rules they have to follow include non-voluntary taxes, social rules (smoking, etc), and business regulations. If they choose not to follow their rules, they are locked up in a cage. If an individual were to do this to another person it would be extortion, or theft, or kidnapping or any of a million crimes. A government does all these things without labeling them crimes. That makes makes it immoral.

It doesn’t matter who builds the roads. If the requirement to have roads is extorting 300 million people then humanity would be better off if everyone would walk. Fortunately, people don’t have to walk. There are plenty of incentives in the free market for people to build roads.



This section addresses those inquiries regarding self-sustainability and regenerative living practices.

Renewable energy is important because of the benefits it provides. The key benefits are:

Environmental Benefits

Renewable energy technologies are clean sources of energy that have a much lower environmental impact than conventional energy technologies.

Energy for our children's children's children

Renewable energy will not run out. Ever. Other sources of energy are finite and will some day be depleted.

Jobs and the Economy

Most renewable energy investments are spent on materials and workmanship to build and maintain the facilities, rather than on costly energy imports. Renewable energy investments are usually (and frequently) spent within the same region, and often in the same town. This means your energy dollars stay home to create jobs and fuel local economies, rather than going overseas.

Energy Security

After the oil supply disruptions of the early 1970s, many nations have increased their dependence on foreign oil supplies instead of decreasing it. This increased dependence impacts more than just energy policy, this also contributes to many conflicts between nations.

Many countries currently rely heavily on coal, oil, and natural gas for their energy. Fossil fuels are non-renewable, that is, they draw on finite resources that will eventually dwindle, becoming too expensive or too environmentally damaging to retrieve. In contrast, the many types of renewable energy resources-such as wind and solar energy-are constantly replenished and will never run out.

Most renewable energy comes either directly or indirectly from the sun. Sunlight, or solar energy, can be used directly for heating and lighting homes and other buildings, for generating electricity, and for hot water heating, solar cooling, and a variety of commercial and industrial uses.

The sun's heat also drives the winds, whose energy, is captured with wind turbines. Then, the winds and the sun's heat cause water to evaporate. When this water vapor turns into rain or snow and flows downhill into rivers or streams, its energy can be captured using hydroelectric power.

Along with the rain and snow, sunlight causes plants to grow. The organic matter that makes up those plants is known as biomass. Biomass can be used to produce electricity, transportation fuels, or chemicals. The use of biomass for any of these purposes is called bioenergy.

Hydrogen also can be found in many organic compounds, as well as water. It's the most abundant element on the Earth. But it doesn't occur naturally as a gas. It's always combined with other elements, such as with oxygen to make water. Once separated from another element, hydrogen can be burned as a fuel or converted into electricity.

Not all renewable energy resources come from the sun. Geothermal energy taps the Earth's internal heat for a variety of uses, including electric power production, and the heating and cooling of buildings. And the energy of the ocean's tides come from the gravitational pull of the moon and the sun upon the Earth.

In fact, ocean energy comes from a number of sources. In addition to tidal energy, there's the energy of the ocean's waves, which are driven by both the tides and the winds. The sun also warms the surface of the ocean more than the ocean depths, creating a temperature difference that can be used as an energy source. All these forms of ocean energy can be used to produce electricity.

This section examines those topics and concepts pertaining to financial viability.

An Overview of the Austrian School

What we know today as the Austrian school of economics was not made in a day. This school has gone through years of evolution in which the wisdom of one generation was passed on to the next. Though the school has progressed, and incorporated knowledge from outside sources, the core principles remain the same.

Carl Menger, an Austrian economist, who wrote "Principles of Economics" in 1871, is considered by many to be the founder of the Austrian School. The title of Menger's book suggests nothing extraordinary, but its contents became one of the pillars of marginalist revolution. Menger explained in his book that the economic values of goods and services are subjective in nature. That is: what is valuable for you may not be valuable for your neighbor. Menger further explained that with an increase in the number of goods, their subjective value for an individual diminishes. This valuable insight lies behind the concept of what is called diminishing marginal utility.

Later on, Ludwig von Mises, another great thinker of the Austrian School, applied the theory of marginal utility to money in his book "Theory of Money and Credit" (1912). The theory of diminishing marginal utility of money may in fact help us in finding an answer to one of the most basic questions of economics: how much money is too much? Here also, the answer would be subjective. One more extra dollar in the hands of a billionaire would hardly make any difference although the same dollar would be invaluable in the hands of a pauper.

Other than Carl Menger and Ludwig von Mises, the Austrian school also includes other big names like Eugen von Bohm-Bawerk, Friedrich Hayek and many others. Today's Austrian school is not merely confined to Vienna but its influence spreads across the world.

Over the years, the basic principles of the Austrian school have given rise to valuable insights into numerous economic issues like the laws of supply and demand, the cause of inflation, theory of money creation, and operation of foreign exchange rates. On each of the issues, the views of Austrian school tend to differ from other schools of economics.


Main Ideas and Key Differences

Some of the main ideas of the Austrian school and their differences with other schools of economics are examined below:


The Austrian school uses logic of a priori thinking - something that a person can think on his/her own without relying on the outside world - to find out economic laws of universal application, whereas other mainstream schools of economics, like the neoclassical school, the new Keynesians and others, make use of data and mathematical models to prove their point objectively. In this respect, the Austrian school can be more specifically contrasted with the German historical school that rejects universal application of any economic theorem.

What determines the price?

The Austrian school holds that prices are determined by subjective factors like an individual's preference to buy or not to buy a particular good, whereas the classical school of economics holds that objective costs of production determine the price and the neo classical school holds that prices are determined by the equilibrium of demand and supply. Austrian school rejects both the classical and neo classical views by saying that costs of production are also determined by subjective factors based on value of alternative uses of scarce resources, and the equilibrium of demand and supply is also determined by subjective individual preferences.

What determines interest rates?

The Austrian school rejects the classical view of capital which says that interest rates are determined by supply and demand of capital. Austrian school holds that interest rates are determined by subjective decision of individuals to spend money now or in future. In other words, interest rates are determined by the time preference of borrowers and lenders.

Why does inflation affect different people differently?

The Austrian school believes that any increase in money supply that is not supported by an increase in the production of goods and services leads to an increase in prices, but the prices of all goods do not increase simultaneously. Prices of some goods may increases faster than others, leading to greater disparity in the relative prices of goods. For example, Peter the plumber may discover that he is earning the same dollars for his work, yet he has to pay more to Paul the baker, when buying the same loaf of bread. The changes in relative prices would make Paul rich at the cost of Peter. But why does it happen like that? If the prices of all goods and services were to increase simultaneously then it would have had hardly mattered. But the prices of those goods through which the money is injected into the system adjust before other prices; say if the government is injecting money by purchasing corn then the prices of corn would increase before other goods leaving behind a trail of price distortion.

What causes business cycles?

The Austrian school holds that business cycles are caused by distortion in interest rates due to the government's attempt to control money. Misallocation of capital takes place if the interest rates are kept artificially low or high by the intervention of the government. Ultimately, the economy goes through recession in order to restore the natural progress.

How do we create markets?

The Austrian school views the market mechanism as a process and not an outcome of design. People create markets by their intention to better their lives, not by any conscious decision. So, if you leave a bunch of amateurs on a deserted island, sooner or later their interactions would lead to the creation of a market mechanism.


The Bottom Line

The economic theory of the Austrian school is grounded in verbal logic which provides a relief from the technical mumbo jumbo of mainstream economics. There are considerable differences with other schools, but by providing unique insights into some of the most complex economic issues, the Austrian school has earned a permanent place in the complex world of economic theory.


Read more: The Austrian School Of Economics | Investopedia


In order to really understand this issue, we have to define two terms, namely value and buying power. Value comes in two varieties, absolute (intrinsic) and relative. Here is a simple example of this distinction. A pound of sugar relative to the measurement of weight is one pound. A pound is an absolute unit of value relative to weight; it is exact and it does not change. A pound is a pound and will always be a pound.


Relative value of money

However, a pound of sugar relative to a measurement of cost varies. You may be able to go into three different stores and buy a pound of sugar for three different prices in each. Furthermore, as you likely remember, a pound of sugar fifteen years ago did not cost nearly as much as it does today. This is because a dollar represents relative value, not absolute. This relative value is commonly referred to as buying power.


Absolute and intrinsic value of money

Absolute, or intrinsic, value is set through the market forces of supply and demand. Within the world of money and finance good examples of absolute value are gold and silver. If I were to hand you a shiny bar of gold, wouldn’t you instinctively know that you are holding something of value? Of course you would. That precious metal stores intrinsic value in itself and you know this intuitively. Exactly how much value this bar of gold holds at any given time is established by the market place. In other words, it’s worth whatever someone will pay you for it.


Buying power is relative

Buying power, which is relative, can be transferred onto an object by means other than the free markets. For instance, the only reason that $20 in your wallet is good for anything is because the government says so, and we the citizens agree to it. Therefore, while the little piece of paper with a picture of a dead president on it isn’t worth anything close to $20 in terms of absolute value, it represents the buying power of $20 because of something called a government fiat, which is a government regulation or mandate. This twenty dollar bill in your wallet is actually called fiat currency because it derives all of its’ buying power from a government mandate, but it might as well be monopoly money. It has no value except for that which our government says it should have. It truly is just a piece of paper with some ink on it.


The difference between money and currency

Such is the basic difference between money and currency. While money stores intrinsic value within itself, fiat currency possesses buying power bestowed upon it by the government. But this was not always the case. At its’ inception the dollar was backed by gold and silver, which meant that every unit of currency in circulation was redeemable in gold and silver. In America, a person could walk into a bank, hand the teller his $100 bill, and have it cashed in gold or silver coins. Thus, at this stage currency was nothing more than a receipt redeemable in gold or silver for its face value. And even though the paper currency did not possess intrinsic value, under the gold standard it represented the buying power of gold and silver, which is set by the free markets. So, the absolute value of the precious metals transferred to the paper.

But what do you think happens if for some reason the currency is no longer “backed” by gold and silver? If the currency is supposed to represent the intrinsic value of gold and silver, then if you take the metals out of the equation, what value exactly does the paper represent? I’ll tell you what – the value of the power of a government mandate, whatever it is.

In America this finally happened in 1971, when President Richard Nixon announced that the U.S. currency was no longer redeemable in gold. The dollar had become completely a fiat currency for the fist time in history. The government gained an ability to print as much paper currency as was needed to cover its’ obligations since it was no longer necessary to collateralize it with anything other than the U.S. government’s promise to pay. Unfortunately, all this monetizing, or printing of currency, comes at a price. It inevitably leads to a terrible thing called inflation, which is just another form of taxation since it destroys the buying power of the currency.


Read more on the subject here -

Bitcoin was launched in 2009 as the world's first decentralized, private digital currency. Because it has no physical denominations, Bitcoin only exists inside of an interlinked computer network system. This is not entirely unique, as much of the U.S. dollar supply only exists in digital account balances instead of as actual green pieces of paper.

Bitcoins are generated, or "mined," through a sequence of complex mathematical formulas run through computers. The anonymous creator of Bitcoins set a cap on total Bitcoin volume. Once that number hits 21 million, no more Bitcoins can be generated. These digital coins can then be bought or sold with other currencies and used as an investment or money to buy goods from any sellers who accept them.


Why Does Any Currency Have Value?

Economics teaches society that values are subjective; items have economic value because people desire them for one reason or another. Currencies, or mediums of exchange, serve several different and crucial functions in an economy. For one, they make trade easier; money currencies trade for nearly any good or service.

For example, suppose a person has 5 units of lumber and wishes to purchase a dog. Without currency, his only option is to find a lumber-wanting dog owner. With currency, like U.S. dollars, he can sell the lumber to anyone who wants it and then use the money to purchase a dog.

Currency also provides a universal measurement for accounting purposes. For instance, without currency, it is difficult to compare companies that sell different goods. Currency is used as a store of value, which makes saving, investing and banking easier.

Some currencies, like gold, have value because they are useful as a commodity. Government fiat currencies, like the U.S. dollar, have value because governments grant them legal tender status and only accept taxes through them.


Why Do People Value Bitcoins?

Bitcoins do not have value as a physical commodity like gold and are not widely accepted as legal tender like dollars. Rather, Bitcoin appears to have value for the following reasons:

It is popular. In short, people accept and trade in Bitcoin because other people accept and trade in Bitcoin. It is recognized and accepted as a currency by many.

Bitcoin is decentralized and limited. This is a major factor for many Bitcoin users. Bitcoin is hard for governments to trace and tax. Also, unlike fiat money produced by central banks, there is a cap set on total Bitcoins, limiting how much the currency can devalue through inflation.

Bitcoin acts like an equity investment. The market value of Bitcoins has had wild swings in value and even a market cap.

Bitcoin is a social network. The Bitcoin "community" is active and acts like other online social networks.


Read more: Why do Bitcoins have value? | Investopedia