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Bitcoin is fiat money, too

economist.com

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Re: Bitcoin is fiat money, too

#121

Post by jcranmer »

aorloff wrote: post #105
betterunix2 wrote: post #99

Earlier quoted context omitted.

Someone has always been able to "create money out of nothing." At some point there was no money; some time later there was. Someone or some group of people had to create the first money. People have actually "initialized" money many times throughout history e.g. when starting a country. As long as you can separate "money" from its representation, there is nothing particularly problematic about some people being able…

Actually, only since August 15, 1971 here in the USA. Not "always."

Actually, since 1777. For as long as the government is able to print paper currency instead of using metal coinage, it is able to make up as much money as it wants. Since not everyone is going to demand conversion to bullion, it generally doesn't matter--this is the principle behind fractional-reserve banking as well. If the government is caught out on printing too much money, then either the paper currency is accepted at less than face value (as happened to the original Continental Currency), or the government decides to suspend conversion (as most recently happened in 1971, but also in 1933).

Re: Bitcoin is fiat money, too

#122

Post by alexasmyths »

aorloff wrote: post #105
betterunix2 wrote: post #99

Earlier quoted context omitted.

Someone has always been able to "create money out of nothing." At some point there was no money; some time later there was. Someone or some group of people had to create the first money. People have actually "initialized" money many times throughout history e.g. when starting a country. As long as you can separate "money" from its representation, there is nothing particularly problematic about some people being able…

Actually, only since August 15, 1971 here in the USA. Not "always."

No.

Before 1971 dollars were backed by Gold, now they are backed by US Tbills (and some real-estate since 2008).

It's not that different.

Gold and US TBills are both valuable assets.

Re: Bitcoin is fiat money, too

#123

Post by alexasmyths »

SubiculumCode wrote: post #86

Bitcoin is a commodity for efficient bartering that has a governance structure to ensure that the commodity doesn't flood the market and crash prices. It will become a currency when it can be directly used to satisfy a tax debt, to avoid the punitive threat of the law.

"It will become a currency when"

It will 'become a currency' when people use it to actually buy and sell stuff commonly.

Re: Bitcoin is fiat money, too

#124

Post by tomsthumb »

Retric wrote: post #93
Taek wrote: post #89

Earlier quoted context omitted.

This is a big misunderstanding of bitcoin, and if you believe it I can understand why you might think bitcoin is not special. The truth is that the everyday user gets full control over the law of their currency simply by running a full node. Your node will reject any transactions that do not comply with the rules of your node. The soveirgnty of bitcoin comes from knowing that the devs can't force an update upon you o…

Without massive investments in ASIC's you have effectively zero influence. Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority.

> Until you have 51% of the hash power you can't make any changes as you simply get ignored unless you follow the exact same rules as the majority

This is exactly their point. This applies to everyone and all organizational entities.

Re: Bitcoin is fiat money, too

#125

Post by alexasmyths »

snitko wrote: post #23
kobeya wrote: post #11

Earlier quoted context omitted.

The price doesn’t define the success of bitcoin.

Well what does? More people using it and interested in it? Doesn't define success. More merchants accepting it? Doesn't define success. More governments paying attention to it? Doesn't define success. What on earth would define success? It's like nothing is ever enough for you people.

"Well what does? "

People using it as a currency.

i.e. having some practical value.

Re: Bitcoin is fiat money, too

#126

Post by patryn20 »

TazeTSchnitzel wrote: post #109

Bitcoin and other cryptocurrencies seem to be embraced by libertarians who are very idealistic and have quite a shallow understanding of economics, software, and the world at large. But I repeat myself.

I think the distinct holders can be classified as such: 1) Libertarian idealists who don't recognize they've already lost control. 2) Money launderers and their developing world mining networks. 3) Speculators (including VC backed firms) 4) Hype followers 5) The few, poor, misguided fools who think it's money.

Re: Bitcoin is fiat money, too

#127

Post by Alex3917 »

TazeTSchnitzel wrote: post #109

Bitcoin and other cryptocurrencies seem to be embraced by libertarians who are very idealistic and have quite a shallow understanding of economics, software, and the world at large. But I repeat myself.

> embraced by libertarians who are very idealistic and have quite a shallow understanding of economics, software, and the world at large

Sure, but they tend to know a lot about currency.

Re: Bitcoin is fiat money, too

#128

Post by burnte »

cs702 wrote: post #116

Yes, of course. So what? Just because Bitcoin is fiat money doesn't mean it will fail (or succeed), and it doesn't mean that it's "good" or "bad" either. By many measures, fiat money has been a success so far. For example, the aggregate market cap of fiat money today exceeds Bitcoin's by quite a few orders of magnitude.[1] Calling Bitcoin "fiat" ≠ arguing against it. [1] http://money.visualcapitalist.com/all-of-the-w…

I agree that calling it fiat is not arguing against it, but it's important because there are a large number of people who are deep in the bitcoin world, and get infected with a little bit of the Libertarian/gold-standard mentality that thinks fiat is a bad word. In the end, everything that isn't a direct barter exchange of usable goods is a fiat currency, because that's the POINT of an exchange medium; something that everyone agrees is worth something in order to facilitate trade, it makes life easier. Pointing out that bitcoin is just as much a fiat currency as the dollar or the euro or gold helps dispel the misconceptions about currency and helps people learn more about bitcoin and currency as a whole.

Re: Bitcoin is fiat money, too

#129

Post by ballenf »

Taek wrote: post #89
amb23 wrote: post #57

Earlier quoted context omitted.

"Code is governance" -- the article does support the idea of cryptocurrency as fiat money because the laws, in this case, are the code. The developers and miners, no matter their good intentions, do hold power over the currency that everyday investors do not have. No matter how egalitarian the distributed ledger set up looks on paper, we'd be remiss to think the power structures behind cryptocurrencies are so radical…

This is a big misunderstanding of bitcoin, and if you believe it I can understand why you might think bitcoin is not special. The truth is that the everyday user gets full control over the law of their currency simply by running a full node. Your node will reject any transactions that do not comply with the rules of your node. The soveirgnty of bitcoin comes from knowing that the devs can't force an update upon you o…

Wouldn't you be creating your own fork? A fork of one where peers would then reject every message from you?

No man is an island, unless he wants to completely devalue his bitcoin.

Re: Bitcoin is fiat money, too

#130

Post by ballenf »

Finnucane wrote: post #20
dnautics wrote: post #18

Interestingly the economist misses the traditional definition of Fiat: a currency whose value is determined by the Fiat of a state. Whether or not Bitcoin exhibits similar trends as currency that isn't backed by the state is immaterial to the ethical appeal (to some) of a medium of exchange where participation is voluntary and consensual.

Is Bitcoin actually a medium of exchange? It seems to be functioning more as an investment to be hoarded rather than spent.

So, it's gold? I don't know if I've ever seen someone buy a Starbucks with a Kruggerand.

Gold is hoarded and traded much like bitcoin, from what I've seen.

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