Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Bitcoin is fiat money, too

economist.com

Post reply on HN
Print view View original

131–140 of 355 posts

Re: Bitcoin is fiat money, too

#131

Post by ballenf »

moxious wrote: post #61
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.

Will it still be voluntary and consensual if the day comes where stores post signs: "Payment accepted in bitcoin only"?

In the US anyway, that would be illegal. Dollars must be accepted for all debts, public and private.

Re: Bitcoin is fiat money, too

#132

Post by betterunix2 »

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."

Sounds like you are referring to the gold standard. A few things:

1. The dollar itself was created two centuries before the US left the gold standard. "Created" being the operative word. Created by Congress because America needed its own national currency.

2. Anyone who dug some gold up in their backyard was creating money when we were on the gold standard.

3. In 1862 paper money became legal tender in the USA without any guaranteed convertibility to any metal; that remained the situation until 1879. I.e. the government simply created money.

4. On January 31, 1934, the US dollar was devalued from $20.67 per gold ounce to $34. In other words money was created by an act of Congress.

Or to sum all that up for you: at a minimum Congress has always had the power to create money. All the metallic standards ever conceived of have been arbitrarily decided and governments have always had the ability to change the standard at will to create more money.

Re: Bitcoin is fiat money, too

#133

Post by ballenf »

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…

You're restating the article's conclusion, in my reading.

Soundbite summary was: it's all been done before and always failed if it lacked proper controls in place.

Re: Bitcoin is fiat money, too

#134

Post by ballenf »

velodrome wrote: post #49

How does Bitcoin work offline? Let's say the world goes to hell (assume internet has been taken offline) and we need to trade using a form of trusted currency. Just curious...

About as much as your IRA, money in your checking account, etc.

AKA, orders of magnitude less than a can of beans.

Re: Bitcoin is fiat money, too

#135

Post by ebogart »

Alex3917 wrote: post #127
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.

Anyone who thinks gold is money doesn't know very much about currency

Re: Bitcoin is fiat money, too

#136

Post by jcranmer »

lostmsu wrote: post #96
blibble wrote: post #16

Earlier quoted context omitted.

must? there's more to the world than the United States I live in the UK, there's no sales tax and the sole trader selling coffee at my local railway station is almost certainly below the VAT registration threshold, so there's no tax on the purchase at all regardless, paying a tax embedded in the price of a good is not the same thing as consulting the government on the purchase

I am impressed how you mentioned UK, and parent mentioned a cup of cofee, but both of you failed to recognize, that I was talking about billions of people, who actually live under totalitarian governments. Where illegal stuff mentioned in some other comments might be buying certain books under threat of death penalty in some extreme, but still dangerously common cases. First world people still can only see first worl…

The currency being used has no bearing on whether or not the government will find out if you're buying illegal goods. What matters is the ability of the government to discern the nature of the transaction, which has more to do with its ability to co-opt others (e.g., banks) into identifying and reporting such transactions, and (to a rather limited degree) the ability to prove existence of transactions via the payment method (which Bitcoin is actually bad at since it is basically a public ledger of who paid whom, if you can map names to keys).

Re: Bitcoin is fiat money, too

#137

Post by 2muchcoffeeman »

lojack wrote: post #43
Finnucane wrote: post #20

Earlier quoted context omitted.

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

Sure, some people treat it as an investment that can be hoarded, but that doesn't change the fact that it can be exchanged. Your narrow definition of medium of exchange sort of excludes any deflationary currency that someone may hold on to as an investment. It could even be expanded to include inflationary currency in a country where hyperinflation is occurring. People will hold on to USD or some other currency as an…

It could even be expanded to include inflationary currency in a country where hyperinflation is occurring. People will hold on to USD or some other currency as an investment because it'll be worth significantly more tomorrow than whatever currency the supermarket down the street accepts.

This doesn't really feel the same. You might use USD to store value because you know that it's value isn't going to fluctuate like crazy from month to month or year to year. So if you can afford to feed yourself today, you can still feed yourself tomorrow. You're still spending your money.

No one I know with Bitcoin spends it, with the exception of a novelty purchase of beer. And why would you, in 4 years the value of bitcoin increased over 10 fold. You'd be stupid to ever spend it while this trend continues.

Re: Bitcoin is fiat money, too

#138

Post by lojack »

Finnucane wrote: post #100
lojack wrote: post #43

Earlier quoted context omitted.

Sure, some people treat it as an investment that can be hoarded, but that doesn't change the fact that it can be exchanged. Your narrow definition of medium of exchange sort of excludes any deflationary currency that someone may hold on to as an investment. It could even be expanded to include inflationary currency in a country where hyperinflation is occurring. People will hold on to USD or some other currency as an…

By that logic any tradable thing can be a 'medium of exchange'. Sure, people will hold a stable currency when their own is sinking, but deliberately designing a currency for deflation is stupid.

I understand your point, but I'm not sure I agree that being deflationary or being primarily used as an investment precludes it from being used as a medium of exchange.

I do think there are some aspects of bitcoin that limit its use as a medium of exchange (transaction times, current lack of stability), but I don't think its the deflationary part.

Re: Bitcoin is fiat money, too

#139

Post by jwilliams »

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 you're risking an ad hominem argument.

I'm sure that has enough truth in it. But you can characterize bankers in a similarly negative way -- particularly in light of recent economic engineering. But we all buy in to the concept of money (excuse the pun).

Re: Bitcoin is fiat money, too

#140

Post by sdfgelgh43oito3 »

betterunix2 wrote: post #114
lostmsu wrote: post #96

Earlier quoted context omitted.

I am impressed how you mentioned UK, and parent mentioned a cup of cofee, but both of you failed to recognize, that I was talking about billions of people, who actually live under totalitarian governments. Where illegal stuff mentioned in some other comments might be buying certain books under threat of death penalty in some extreme, but still dangerously common cases. First world people still can only see first worl…

What stops a totalitarian government from blocking Bitcoin at the national level?

Nothing; but they wont. Do you think the VPN ban applies to banks? Selective network enforcement for social control, not economic damage to yourself.
Post reply on HN