It's basically the difference between a fiat currency and one backed by something. For example, something vaguely analogous would be: [Setting: The Olden Days

It's basically the difference between a fiat currency and one backed by something. For example, something vaguely analogous would be: [Setting: The Olden Days] GP: "I'm concerned because nobody has ever tried to take USD to the government and directly get silver/gold for it." You: "Why is the "directly" part here significant? If I can USD (My Pocket) -> USD (My Brokerage) -> Gold (My Brokerage) -> Gold (My Pocket), then whats the difference other than a few extra steps?" The difference is that we never tested to see if the USD is actually backed by real gold.