I'm not sure the goal of crypto systems should be to recreate the fiat systems that have gone before.
If NuBits recreates what the Federal Reserve has done since its founding in 1913, it will be a smashing success. An entire country (plus many others, via pegged currencies) have had relative stability under the US dollar. Of course, there are valid criticisms to fractional reserve, but the Fed's dollar has lasted over 100 years now. That's a pretty good run for anything crypto.
For most of that 100 year history a FRN was a promise to pay Gold or Silver.... demand for it is created by LENDING it into existence backed by collateral. The collateral was originally Gold, now it is Mortgage Backed Securities... as the value of the collateral falls to 0 the value of the dollar will fall as well. It is further backed by taxation which creates demand for it.
Good point. Dollars were backed by gold until Nixon did his thing in 1971, so I guess the Fed's actual magical hand-waving has only been going on for a little over 40 years.
Dollars are now backed by nothing, not mortgages. The US government has no explicit obligation to sell MBS for dollars to curtail inflation. Backing by taxation also means nothing: See Zimbabwe's hyperinflation, or Germany's from 1921 to 1924.
In the end, USD value is called faith. In that sense, NuBits isn't that much different.
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