We continue our series on the most common myths surrounding cryptocurrencies. Last time, we debunked the preconception that only criminals trade on the blockchain. Today, we’re going to look at whether cryptocurrencies are really just “digital numbers” that anyone can delete and have no backing. Unlike the pieces of paper we use to pay. But you’ll see if you still hold that opinion after reading the article.
Article content:
- The magic of money – Why is crypto just as well backed as fiat?
- These are not random numbers – Why blockchain doesn't lie, but banks can
- Fiat-backed cryptocurrencies are a new trend
- Did you want a dollar backed by gold? And cryptocurrency isn't enough for you?
- Cryptocurrencies may be better backed than money in a bank
The magic of money – Why is crypto just as well backed as fiat?
When someone says that “Bitcoin is not backed by anything,” they usually mean that it is not backed by a central bank or government. But today’s money – the koruna, euro, dollar – is not backed by anything tangible either. In the past, it could be exchanged for gold, but not today. It is only backed by people’s belief that the state and banks will ensure its value. When you think about it, the principle is the same as with crypto – only instead of the government, there is a network, technology, and a community that believes in the system, not officials.
Bitcoin has its backing elsewhere – in energy, mathematics, and human labor. Each new bitcoin is mined using computing power, which consumes a lot of electricity and time. This is not virtual. Each bitcoin is the result of real effort. This makes it the digital equivalent of gold. It is not physical, but it is rare, difficult to obtain, and cannot simply be “printed.” Its value is not based on a political promise, but on the fact that its quantity is limited and that the network that keeps it alive consumes real energy. This is essentially a modern-day “gold standard,” only instead of metal, there is computing power.
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These are not random numbers – Why blockchain doesn’t lie, but banks can
This brings us to another argument. With Bitcoin and similar currencies, you can’t simply “add zeros” as governments do when printing money. When a central bank puts billions of new crowns into circulation, it devalues all the others. This is not possible with cryptocurrencies. The supply is predetermined and unchangeable. This is precisely why people trust cryptocurrencies – because the rules are clear and no one can change them on a whim. When you think about it, this is a form of collateral. A network that guarantees transparency and stable rules has value.
Fiat-backed cryptocurrencies are a new trend
Another large group of cryptocurrencies has completely classic backing – financial or physical. These are the so-called stablecoins. They were created mainly to refute the eternal argument that crypto is “air.” Stablecoins are tied to the value of another currency or asset. Usually the dollar, euro, or gold. For example, USDT (Tether) and USDC (USD Coin) are supposed to be 100% backed by cash, short-term bonds, or other liquid reserves. One token is supposed to correspond to one dollar. Thanks to this, their price does not fluctuate as much and they can be used in everyday transactions.
Of course, there is sometimes debate about whether these reserves are really fully backed and whether they are regularly audited. But the principle is clear—stablecoins prove that even in the crypto world, there can be a currency with real collateral. The difference is that here, it can often be verified. Blockchain is public and transparent. If you have enough knowledge, you can track what is happening with these tokens. With a regular bank, you simply have to trust that the numbers shown by the state are true.
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Did you want a dollar backed by gold? And cryptocurrency isn’t enough for you?
Then there is another group of cryptocurrencies that isn’t talked about as much – those that are backed by real things. Not just money, but physical assets. For example, the PAXG token is backed by gold. Each PAXG represents a specific amount of gold stored in vaults in London. When you own it, you are entitled to the corresponding piece of gold. Other projects that tie the value of tokens to oil, real estate, or stocks work in a similar way. Here, there is no such thing as “virtual air.” These tokens are backed by tangible things, and their value is derived from real assets.
As if that weren’t enough, there is another form of backing—technological. Many cryptocurrencies have value precisely because they have real-world uses. For example, Ethereum is not just a currency. It is a platform that allows you to run smart contracts, applications, or decentralized financial services. The more people use it, the more its value grows. It’s like internet fuel. It works as long as people use the network. And that’s also collateral – the utility value and activity of the entire community.
The same goes for Solana, Cardano, and Avalanche. These projects have an internal economy, and their tokens are necessary for the systems to run. When this works, the value of the token is not based on faith, but on practice. On the fact that people really use it and that the technology makes sense.
Cryptocurrencies may be better backed than money in a bank
The whole prejudice that “crypto is not backed by anything” is more of a remnant of the old way of thinking. In the past, we imagined gold in a vault as collateral. Today, trust and value can be expressed in other ways—for example, through energy, code, or a decentralized system. These are modern forms of collateral that have economic significance, even if they are not physically visible.
Sure, there are also fraudulent projects and tokens in crypto that serve no purpose. But that also happens in the world of traditional finance. There are also dubious funds and fake companies. That doesn’t mean the whole system is a scam. When you look at the solid projects, you can see that the principle of backing works there. It’s just different from what we’re used to.
Ultimately, it can be said that cryptocurrencies have more types of backing than most people think. Some are based on energy and computing power, others on real assets, and still others on technology that people use every day. If someone claims that they are not backed by anything, it is the same as saying that the internet has no value because you cannot touch it. Cryptocurrencies are not an illusion. They are a new way of understanding value, trust, and scarcity in the digital world. And anyone who still believes that they are just meaningless numbers has simply missed the boat.
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