Fiat is Effective: fiat for the crypto crowd [pdf]

• The case against fiat is an ethical case, much more than an effectiveness case. Crytpo advocates often misunderstand this.

* The primary reason fiat succeeds is it offers price stability. But stability is often purchased at the expense of workers and the unemployed.

* The management of fiat provides state actors with incredibly powerful, ultimately discretionary, tools which significantly affect who wins and who loses and how equal or unequal a society is.

(Edit 1: Based on the presentation's concluding "summary" slides. Edit 2: Removed the point about war as less germane.)

> fiat currencies issued by strong stable states capable of taxing their citizens, with banking systems effective at encouraging widespread borrowing, with large, diversified domestic economies (and so the capacity to do with fewer imports if necessary) that borrow in their own currency, and do not have sizable debts in foreign currency aren't weak.

This speaks to me as if the author has a modicum of trust in the current banking industry, saying: "I trust that we can still solve the problems we've created." Call me a skeptic, but I don't. That is the fundamental problem that cryptocurrencies were created to solve; trustless money.

I agree with the author on the part of currency needing to be stable, and cryptocurrencies in their current state are not stable. However, as more and more value is attributed to cryptocurrencies, and more and more people adopt it, those fluctuations will even out. I feel comparing crypto's stability with most fiat money is like comparing the gait of a toddler with that of a grown man. It takes time, effort, and entropy to gain the momentum needed to be stable, crypto is still in its early-adoption-phase.

> Fiat currencies are no more “created from thin air” than...

Fractional Reserve Banking would like a word.

The problem is : if you want a stable currency you need a money supply that grow as much as `inflation + growth + the slowdown of the money flow`, if you don't have that your economy collapses. All of this is changing over time, then you need to adjust the supply of money dynamically. And unless someone finds a way to do this automatically, you'll need a pilot in charge of this. This is currently the job of the director of the central bank, it can also be the president of the country, the parliament, or anyone but you need someone (or some cleverly designed distributed mechanism that doesn't exist yet). If you don't address this, cryptocurrencies aren't better than gold money, which historically proved inefficient in an industrialized society.

I was intrigued by this Tether thing and ended up on the site: https://tether.to/

It says:

> Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.

> Our reserve holdings are published daily and subject to frequent professional audits. All tethers in circulation always match our reserves.

A nitpick I have on the site design is that nowadays sites don't put sitemap in the footer. So I have to difficult time finding the balance page: https://wallet.tether.to/transparency

Can someone help me make sense of this? I thought the numbers are there for the claimed 1-to-1 USD reserve but that doesn't seem to be the case. The value there is from the assets issued on blockchain and not the USD balance on company's book.

Secondly, I might be wrong but can't seem to find who is conducting the audit. Is it one of the big 4 or some home office? If it is a small time office I will be even more skeptical of this whole thing.