Back to:

What is the “Gold Standard”?

As World War 2 was coming to an end, in 1944, a new monetary system was established between the United States, Canada, Western European countries, Australia, and Japan after Bretton Woods Agreement. 

They drafted a new financial system that would stabilize the world once the war ended. The US Dollar was chosen to be the world’s reserve currency rather than using gold as a means of exchange between countries that was the case for centuries.

The countries around the globe would tie their currencies at a fixed rate to the US dollar that would be backed by gold at the fixed price of $35 per ounce. This created a system in the world where currencies around the world were effectively backed by the gold through the US dollar. For every printed dollar, they had to peg an equal value of gold and it was the way of securing the value of the dollar.

This was actually a great idea but unfortunately, it didn’t last for too long and was just an introduction to what is about to happen in 25 years.

In August 1971, President Richard Nixon called for an emergency press conference where he announced foreign countries would no longer be able to convert their US dollar holdings into gold.  

With this one announcement, President Nixon created our current monetary system. A system where no currency is backed by gold or anything of value. This is what is known as fiat currency. 

Fiat currency is a currency that is backed by nothing except government promises. The word fiat is a Latin word and it basically means a currency that’s circulating by force. 

Without anything tangible baking the currencies we use today, governments around the world have been able to issue unlimited amounts of new currency without any restrain. 1971 was the year when money started to lose its worth and today, it’s nothing more than digits in a global banking database.  

What do you think did happen after that?

Since that time, inflation started to skyrocket. The ounce of gold that was $35 at that time is worth $1700 today. 

As you can see on this example from the Federal Reserve, the value of gold is growing while the value of the dollar is consistently dropping.

Why the value of the US dollar is dropping?

Because, every single day, they are printing more and more dollar bills, much more than the value of mined gold. Just in 2020 alone, FED printed more than $6 trillion fresh money that devaluated the value of the existing money. 

A century ago, the value of one dollar bill was, actually $1.

Today, the value of that one-dollar bill is worth just around 3 cents.

Do you think this trend can last forever? 

Do you think that people will stay blind and ignore this growing problem?

Are you still going to believe and trust the third party to take care of your money and the future of your family or are you going to take responsibility for your future and secure yourself?

Once you realize that the U.S. dollar is “backed by” “the full faith and credit of the United States, you are going to start thinking of your future. 


Next Lesson

Free complete cryptocurrency course

Banking system

The problem of banking system

What is money in simple words?

What is supply and demand?

What is the "Gold Standard"?

Introduction to Cryptocurrencies

Is there a solution?

What are the advantages of cryptocurrencies?

Can cryptocurrencies replace fiat money?

What is the market size of the cryptocurrency?


What is blockchain and how it works? (Simplified)

Introduction to Blockchain

What are the advantages of Blockchain technology?

What is mining and how it works?

How to start investing in Crypto

The biggest mistakes in crypto to avoid

What is a cryptocurrency wallet?

How to open a cryptocurrency wallet? (Guide)

How to use cryptocurrency wallet? (Step by step)

How to buy any cryptocurrency?


Congratulations on becoming a Crypto investor