How Bitcoin Breaks the Death Loop of Fiat

Source: Bitcoin Fortress

Compiled by: Shaw Golden Finance

History does not simply repeat itself—it reproduces in similar forms. In terms of currency, this pattern of reproduction has been remarkably consistent for thousands of years. From the Roman denarius to the German paper mark, from the French "assignat" to the modern US dollar, fiat currencies—money issued by the government with no intrinsic value—follow a predictable life cycle: birth, expansion, devaluation, collapse.

The specifics may change—sometimes the currency is initially gold or silver, sometimes it's paper money backed by precious metals, and other times it's purely digital currency—but the pattern has never changed.

Bitcoin has provided a way out for the first time in history.

The four stages of fiat currency decline

1. Steady Start

Almost every fiat currency was initially a "hard currency", supported by scarce items. The Roman denarius was initially made of almost pure silver. For much of its early history, the dollar was backed by gold and silver. This limitation prevented governments from overspending—if you wanted to print more money, you needed to mine or acquire more gold.

2. The Temptation of the Printer

As the government grew in size, its expenditures increased accordingly—war, public works, welfare, and bureaucracy. Thus, the temptation to print money "just this once" became irresistible. Rome began to reduce the purity of its coinage and mixed in cheap metals. The United States suspended gold convertibility during the Civil War, again in 1933, and permanently halted gold convertibility during President Nixon's administration in 1971.

Once the currency is no longer bound by scarcity, politicians will find that they can easily offset deficits without raising taxes. Printing money is politically painless — at least at first.

3. Inflation Stage

Due to the lack of an upper limit on the money supply, the growth rate of the money supply exceeds the growth rate of the goods and services it measures. Prices rise. The public begins to notice that their purchasing power is gradually declining. Sometimes inflation is gradual, as in the United States after 1971, where the purchasing power of the dollar has fallen by more than 85%. Other times, inflation can accelerate to double-digit or even triple-digit rates annually, as seen in today's Argentina or Zimbabwe in the early 21st century.

When trust begins to crumble, the velocity of currency circulation will accelerate—people will consume more quickly because they fear that waiting will devalue their money in the future. This accelerates the vicious cycle.

4. Crash and Restart

Ultimately, confidence is completely lost. Currency disappears—not necessarily because of hyperinflation, but often because it is replaced. France's assignats devalued by 99% in less than a decade and were ultimately abolished. In 1923, hyperinflation made pushing a cart full of cash a national joke, and Germany's paper marks were replaced by the rent mark.

This kind of "reboot" often returns to some form of commodity-backed system, or shifts towards a new type of fiat currency that promises to be stricter. However, history shows that such cycles inevitably begin again.

Why do fiat currencies always fail?

The root cause lies in human nature and political motivations. Scarce hard currency can constrain governments, but fiat currency eliminates these restrictions. Once the ability to create money is no longer bound by a fixed supply, short-term political interests will always prevail over long-term stability.

The collapse of fiat currency is not a question of if, but rather a question of when. Throughout history, there have been over 700 different fiat currencies, and without exception, they have either already collapsed or are on the path to collapse.

Bitcoin: Breakthrough of the Cycle

Bitcoin is fundamentally different from fiat currency for the following reasons:

Fixed Supply - The total supply of Bitcoin will always be 21 million, a rule guaranteed by decentralized consensus and cryptographic proof, rather than political promises.

Decentralization - no single entity controls the network, which prevents governments or central banks from unilaterally devaluing the currency.

Transparency - Bitcoin's ledger is open and auditable to anyone in the world, eliminating the opacity of central bank balance sheets.

Global accessibility - anyone with an internet connection can participate, store value, and transact, bypassing capital controls and political borders.

Portability and divisibility - Unlike gold, Bitcoin can be easily transferred globally, and each Bitcoin can be divided into 100 million satoshis, making it suitable for both small transactions and large settlements.

How Bitcoin Ends the Death Spiral of Fiat Currency

By removing the power to arbitrarily issue currency, Bitcoin reintroduces fiscal discipline into consideration. Governments or any entities can only utilize their income, honest borrowing, or voluntarily acquired funds. Monetary policy becomes predictable, eliminating the "invisible tax" of inflation that has eroded savings for decades.

This fundamentally changes the mechanism that leads to the collapse cycle of fiat currency:

Endless wars that cannot be supported by printing money—they must be funded through taxes or voluntarily purchased bonds.

No asset bubble caused by cheap credit - interest rates reflect real risks, not central bank manipulation.

There is no intergenerational theft - savings can maintain purchasing power for decades.

Inevitable transformation

History tells us that every fiat currency has a lifespan. The issue is not whether the current global fiat currency system will come to an end, but rather what it will be replaced with. The collapse of previous monetary systems has forced people to accept new fiat currency regimes. This time, for the first time in human history, there is another option: a clean, decentralized, globally usable currency.

When the fiat currency cycle shifts again - and it will inevitably happen - those who have turned to Bitcoin will no longer be in a frenzy looking for a safe haven. They have already been living in the next monetary era.

Final Thoughts

The collapse of the fiat currency system is an inherent characteristic, not a defect. Bitcoin is the first monetary technology in history that allows this cycle to be an option. You can choose to exit—not when the collapse arrives, but in the present. History will not cease to repeat itself, but you can choose to write a different narrative.

This is not financial or legal advice, for entertainment purposes only, and you should do your own research. I hope you find this article useful in helping you plan your personal finance journey and build a Bitcoin fortress by 2025.