What is Bitcoin backed by? Asking what Bitcoin is backed by is akin to asking what the kilometer is backed by. As much as there is utility for having standardised units by which we measure distance, the same goes for units that measure value.
Humans have allowed despotic governments to impose dictatorships over money. The closest thing we had to money was gold.
Gold’s utility as a monetary instrument derives from its scarcity. The confidence that we can’t easily inflate the stock of gold is why gold was useful for communicating value. In the same way that it’s hard to plan a road trip if the unit of distance fluctuated, the economy cannot make sound business decisions if money was unpredictable.
Bitcoin is the first metric unit for communicating value – amongst other features, Bitcoin is backed by its confidence in monetary policy.
This will not happen overnight. It'll take several generations. When the unproven benefits of changing financial systems outweigh its enormous costs, the pieces fall into place. My eyes are on Venezuela
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