Speaking of paper currency, the earliest forms were directly pegged to gold.
This gave rise to the concept of banks. Early banks issued notes that allowed holders to exchange them at any time for an equivalent amount of gold. However, most of these notes were issued by private banks, leading to a highly fragmented financial structure and frequent panic-induced bank runs.
To address this issue, the United States established the Federal Reserve, often referred to today as the "Fed," to print U.S. dollars. Its primary purpose was to prevent panic-induced bank runs and monetary crises. Initially, the Fed was required to back at least 50% of circulating notes with gold reserves.
After World War II, the U.S. emerged as a global financial superpower and created the Bretton Woods System.
Under this system, currencies around the world were fixed to the U.S. dollar, and the dollar itself was pegged to gold. Hence, at the time, the term “greenback” (or U.S. dollar) was essentially synonymous with gold.
However, in the mid-20th century, the Fed printed more dollars than it had gold reserves.
Countries around the world started exchanging their U.S. dollars for American gold, depleting the U.S. gold reserves. This made the U.S. realize that maintaining the gold standard for the dollar was unsustainable. As a result, the dollar's direct link to gold was abolished, and the U.S. withdrew from the Bretton Woods System, turning the dollar into a purely fiat currency.
This brings us to the topic of currency value.
The value of the U.S. dollar is maintained because the U.S. ensures its stable purchasing power in the market through practical measures. For instance:
Trade: American businesses only accept payments in U.S. dollars. As a global superpower, everyone wants to buy from American companies.
Taxation: Taxes in the U.S. must be paid in U.S. dollars, further reinforcing its demand. (This also indirectly supports the concept of the petrodollar.)
In 2008, during the global financial crisis, central banks worldwide printed money on a massive scale and engaged in large-scale asset purchases to rescue failing financial institutions.
This strategy, known as quantitative easing, became widely used.
And in that very year, a person or group under the pseudonym "Satoshi Nakamoto" emerged, introducing Bitcoin and blockchain technology to the world.
At this point, we should have a clear understanding of the differences between traditional currency and cryptocurrency. It also explains why I believe the foundation of cryptocurrencies, such as Bitcoin, must involve the U.S., and only the U.S., as its key player