Why Bitcoin Matters

Sorry, but repeated insistent assertion doesn't convince, compared to the many, many published sources which define and use it differently, and how I've observed it used over many decades, including in primarily academic/policy sources dating to before the era of internet forums.

Some examples of credible 'fiat money' definitions:

Oxford dictionaries: "inconvertible paper money made legal tender by a government decree"

WordNet, Princeton: "money that the government declares to be legal tender although it cannot be converted into standard specie"

Financial Times Lexicon - "Paper money or coins of little or no intrinsic value in themselves and not convertible into gold or silver, but made legal tender by fiat (order) of the government."

American Heritage Dictionary of the English Language, 4th Ed. - "Legal tender, especially paper currency, authorized by a government but not based on or convertible into gold or silver."

The legal decree has been an necessary (and usually primary) part of the term for a long time; here's "The Shorter Oxford English Dictionary on historical principals" in 1933:

https://archive.org/stream/shorteroxfordeng01litt#page/693/m...

"fiat money, U.S. money (such as an inconvertible paper currency) which is made legal by a fiat of the government."

It seems you and tptacek dislike the mild slur connotation for 'fiat money' that's grown in some communities since the mid-late 20th century - concurrent with fiat money becoming the dominant form worldwide. You would like to yank the semantic rug out from under these disfavored goldbugs (and now bitbugs), by retconning/refactoring the term into something more simple, with no allusions to what they dislike.

But with over a hundred years' of use where the legal-mandate was a crucial part of its meaning, and a derivation from a word meaning 'authoritative decree', you're going to lose this, both on the matter of past meaning, and its perpetual evolving meaning – especially that the very idea of non-decree currencies is again becoming more salient.

(You're also misinterpreting fiat if you think it means any decree, as opposed to one from an authority with the power to make things so. Look it up! But that's a digression.)

I would be 100% behind bitcoin if its value would stabilize. I would totally put a little into coins and keep an eye out for when I can use them if I had any faith they would hold their value.

In that case, no currency has intrinsic value. If we went back to the days where I'd trade you 2 bags of rice for a fish, those things have value and other use.

Why does everyone fall back to the default argument that the USD is "backed" by the US govt. It is in theory but what does it really mean? The USD is no longer backed by physical gold. If the world decided the USD was useless tomorrow, does "backed" mean you walk up to Capitol Hill and they will give you something in exchange for your dollars? Unlikely IMO. It's backed by debt that the Fed just creates out of thin air. All this talk about "intrinsic value" is nonsense.

>In that case, no currency has intrinsic value.

I just gave you my definition of intrinsic value and explained exactly why the dollar has intrinsic value according to that definition. If you want to argue that what I said was wrong, you can either prove my definition is contradictory or useless, or you can prove the dollar doesn't fit the definition that I gave. Simply stating 'no currency has intrinsic value' suggests to me you didn't read, or didn't comprehend, my comment.

>If we went back to the days where I'd trade you 2 bags of rice for a fish, those things have value and other use.

Yes, so according to the definition of 'intrinsic value' that I gave, they have intrinsic value.

>If the world decided the USD was useless tomorrow, does "backed" mean you walk up to Capitol Hill and they will give you something in exchange for your dollars? Unlikely IMO.

'Backed' means the IRS is going to accept dollars in exchange for not prosecuting you for non-payment of taxes. That is the crucial point. People value not being prosecuted for non-payment of taxes. The state of being free from being prosecuted has 'intrinsic value' to people. The IRS, at least as of right now, guarantees people that if they pay the IRS the dollars the IRS says they owe the IRS, they will be free from being prosecuted for non-payment of taxes. If the IRS stopped taking dollars in exchange for guaranteeing people freedom from prosecution for non-payment of taxes, then dollars would cease to be backed by the US government. It is certainly true that not all people (like people living in foreign countries) have to worry about being prosecuted by the IRS in the first place. But there are millions upon millions of people who do have to worry about being prosecuted by the IRS. There are enough to establish that the dollar is backed by freedom from being prosecuted for non-payment of taxes.

So are they giving you something in exchange for your dollars? That depends on how you look at it. Either they're giving you freedom from prosecution in exchange for your dollars, or they're not taking your freedom from prosecution away from you. Whichever way you look at it, the argument is the same. To the extent that you believe the US government will continue to accept dollars in exchange for not prosecuting people for non-payment of taxes, you believe the dollar is backed by the US government.

>It's backed by debt that the Fed just creates out of thin air.

What does it mean for something to be backed by debt? Am I guaranteed to be able to buy the debt someone owes someone else with my dollars, like when banks sell mortgages to other banks?

Fiat is now an English word, derived from the Latin, which does not mean the same thing as its Latin origin. But really, look it up. if you don't believe me. That's why we have dictionaries, to help people confused about words!

Dictionaries are not written by goldbugs, and while dictionary definitions vary from each other and from prevalent usage over time, when dozens of sources over 80 years all emphasize the same decree aspect, and you are in fact complaining about people widely using it that same way, then both linguistic prescription and linguistic description agree: that is in fact what it means to competent English speakers.

I fully agree that 'fiat money' also has a strong denotation of 'unbacked', because at its origin and through its history, that always been one of its qualities. But that is in addition to, and often reliant upon, the government fiat – not exclusive of the fiat.

Really, the best clue to the term's origin and traditional use was the oldest I quoted, from a non-American source 80 years ago. It describes 'fiat money' in almost exactly the dimensions that you accuse goldbugs of making-up in recent years, which suggests that instead you are making things up.

And yes, Bitcoin isn't backed by a commodity of other value, and yes, it shares that property with fiat money. If you'd simply said that – it is similar to fiat money in this particular way – you'd be on firm ground. The deception you've attempted is the idea that lack-of-collateral-backing is the defining quality of 'fiat money'.

If people using 'fiat money' in its longstanding sense sound ridiculous to you, it's your stubbornly-eccentric definition that should change.