We’re constantly told that money has value, that we should trust the system, that everything works as intended. But there’s a question most people never really think to ask: what is money actually backed by anymore? Not in theory, not according to economic textbooks, but in practice, what real thing connects to those numbers in your bank account?
When you strip away all the complexity and jargon, most modern money—whether it’s fiat currencies or the majority of cryptocurrencies is essentially just numbers pointing at nothing. It’s like having a perfectly functioning inventory system for a warehouse that’s completely empty.
The Inventory Problem
Think about it this way: imagine you have warehouse management software that shows 2 million cans of drinks and 500,000 units in reserve. The tracking is flawless, the auditing is perfect, everything reconciles beautifully. But when you actually walk into the warehouse, there’s nothing there. No products, no boxes, not even a forklift. Just an empty building and a screen full of numbers.
Those numbers are meaningless without the actual goods they’re supposed to represent. And that’s essentially what modern money has become.
Fiat currencies aren’t wealth in themselves… they’re records of claims that used to be anchored to something tangible but aren’t anymore. They’re digits in databases, paper with ink, ledger entries. The technology of tracking them works perfectly, but there’s nothing substantive behind them.
What Does “Backed by the Economy” Even Mean?
After fiat money lost its gold backing, we started hearing a new phrase: “it’s backed by the economy.” It sounds reassuring and sophisticated, almost scientific. But when you actually think about it, what does that mean?
Where exactly is this “economy” that’s supposedly backing your money? Is it stored in factories? In productivity metrics? In GDP calculations? In collective trust? Can you redeem your dollars for “the economy”? Can you measure it objectively? Can you audit it or liquidate it?
The honest answer is no. “Backed by the economy” isn’t really a definition, it’s more of a story we tell ourselves. It’s a vague abstraction that justifies creating currency without any real accountability or limits. If something can’t be clearly defined, independently measured, and actually redeemed, then it’s not really backing anything. It’s just belief.
Money From Nowhere
Modern fiat money gets created in a way that seems almost magical. A bank issues a loan, a balance appears in an account, debt becomes money, and money becomes obligation. Nothing tangible enters the system, no real asset gets deposited, no warehouse gets filled with anything. Yet somehow everyone accepts this as normal.
Cryptocurrencies, for all their revolutionary technology, often repeat this same trick. Yes, blockchains are transparent and decentralized. Yes, they’re cryptographically secure. But here’s the thing: having a secure record of something doesn’t make that thing valuable. A perfectly recorded claim to nothing is still a claim to nothing.
Technology Isn’t the Same as Value
This is where a lot of confusion happens. People mistake the technology for the substance. Money, whether it’s fiat or crypto, is fundamentally just a record-keeping system, a medium of transfer, and proof of ownership. That’s all it is.
Technology can track ownership accurately, prevent fraud, enable fast transfers, and enforce rules. These are valuable functions. But technology alone can’t create value out of thin air. A blockchain without any backing is just a really sophisticated inventory system pointing at an empty warehouse. Better software doesn’t fix the fundamental problem of having nothing real to track.
Not All Crypto Is Created Equal
It’s important to note that not all cryptocurrencies are the same. Saying “all crypto is worthless” is as simplistic as saying “crypto will replace all money.” Some cryptocurrencies actually represent real assets; measurable reserves, physical commodities, auditable collateral. In those cases, there really is something in the warehouse. The token isn’t pretending to be valuable in itself; it’s a verifiable claim on something real like gold, silver, energy, land, or productive assets.
When that connection exists, the system makes sense. The numbers actually correspond to reality, and you have something that functions honestly as money.
What Would Ethical Money Look Like?
The concept of ethical money is actually pretty simple, even if implementing it is difficult. It just needs to follow one rule: every unit must represent something real, measurable, and verifiable. Not promises about future growth, not abstract “economic strength,” but actual assets.
Ethical money can’t be created arbitrarily or grow faster than the real things backing it. It aligns the technology with truth; the ledger reflects what’s actually in the warehouse, the token reflects a real asset, and the record reflects genuine ownership. No tricks, no illusions, no empty shelves.
Why This Actually Matters
A system built on illusion has to keep expanding those illusions to survive. That’s why debt keeps growing, prices keep rising, savings lose value, and trust erodes. When money becomes disconnected from reality, eventually society follows that same trajectory.
Ethical, asset-backed money doesn’t promise some perfect utopia. What it promises is limits… and limits are exactly what make systems stable and sustainable over time.
Moving Forward
This isn’t an argument against fiat money because it’s old, or against crypto because it’s new. It’s an argument against empty representations of value, regardless of the technology used. Technology is a tool, money is fundamentally a contract between people, and reality isn’t negotiable.
When money becomes a truthful record of real assets again, not a belief system, not a political instrument, not a magic trick, then technology can actually serve humanity properly instead of just adding layers of complexity to an illusion.
Until that happens, we’re essentially trading inventory reports for goods that don’t exist anymore, all while pretending the warehouse is full.