Ex-RBI chairman said "Bitcoin is creating money out of thin air". It is biggest scam of all. 
then he's referring to banknotes as well. creating money out of a blank sheet.
banknotes are just printed on paper and is backed by the word of the government. the government says that banknotes/fiat are valuable and the people believe it. when the government devalues money, or declares that a certain banknote series will no longer be accepted as payment, people will believe it. if you keep a large amount of that banknote series that was devalued by the government, that would mean you're instantly broke!
Very right. I would rather say that Central Banks and big financial institutes PULL MONEY FROM THIN LAYER. No paper currency has ever retained its value over time. Central banks prints more and more currency notes to reduce their debt, while increasing inflation. BTC is a new financial system that will bring transparency and is the main reason why more and more people are attracted towards it.