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Bitcoin is fiat money, too

economist.com

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Re: Bitcoin is fiat money, too

#171

Post by Robotbeat »

tomsthumb wrote: post #124
Retric wrote: post #93

Earlier quoted context omitted.

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.

Well, "whoever is in power makes the rules" applies to everyone and all organizational entities, too. In this case, we're talking hash power, but same thing, isn't it?

Re: Bitcoin is fiat money, too

#172

Post by polyomino »

ballenf wrote: post #129
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…

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.

They wouldn’t reject messages from you so long as they are valid on their nodes.

Re: Bitcoin is fiat money, too

#173

Post by noddy1 »

noitsnot wrote: post #168
noddy1 wrote: post #164

Earlier quoted context omitted.

Split your holdings into 20 portions. Invest in a range of high quality currencies and for each holding have several portions each secured with a different method. Eg. have some on a hardware wallet, some with multisig paper wallets, some buried somewhere, some with family. Generally you won't lose any. If you do lose any you are pretty well hedged.

Pretty well hedged? Is that supposed to be easy for the average person? This just one of the many reasons Bitcoin isn't taken seriously for widespread adoption.

I think in the future instead of having a accountant/lawyer assisting with private/offshore banking, you will have a crypto security consultant showing you the best way to secure your own funds.

Re: Bitcoin is fiat money, too

#174

Post by nikcub »

mrb wrote: post #165
alexasmyths wrote: post #120

Earlier quoted context omitted.

"mean CREATE money out of nothing." No, this is not true. Central banks do 'create' money, but they trade it on the market for real assets. The Fed creates dollars and exchanges them for an equal amount of US Tbills (bought at market rates). $1 created = $1 in Tbills on their balance sheet. They're not just creating money and keeping it, or giving it away. The practice of 'fractional lending' by retail/commercial ban…

« The Fed creates dollars » Exactly what the parent said. The fact it is used to buy TBills is irrelevant: the Fed creates money out of thin air. Period.

Replace TBills with gold - is it still being created out of thin air?

The point is it’s backed by an asset

Re: Bitcoin is fiat money, too

#175

Post by jdietrich »

AgentME wrote: post #142
AFNobody wrote: post #141

Earlier quoted context omitted.

A 51% plutocracy is still a form of state governance that qualifies as fiat money and effectively can destroy the value of your coins if you resist. It is really no different than the government fining you for disobedience. There are philosophical theoretical arguments against this, not pragmatic ones.

A 51% attack means a lot of bad things can happen to bitcoin. Its value would probably crash if an individual got 51% of the power just because it is no longer truly decentralized, even if they don't abuse that power. Bitcoin was made with the idea that a 51% attack would be unlikely and unfeasible; as long as that holds, I'm not sure what value your comparison has. You might as well make a comparison to any other po…

The top four pools have ~55% of the total hashing power. They could orchestrate a 51% attack with a conference call. As we've seen with the BTH/SegWit2X fiasco, Bitcoin is anything but democratic or decentralised. A cartel is every bit as dangerous as a monopoly.

Re: Bitcoin is fiat money, too

#177

Post by jdietrich »

ballenf wrote: post #130
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.

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.

The device you're using to read this comment couldn't function without gold. It's an incredibly useful element. Investment and speculation might have inflated the value of gold, but industrial demand sets a price floor.

Re: Bitcoin is fiat money, too

#178

Post by KGIII »

noddy1 wrote: post #163
KGIII wrote: post #152

Earlier quoted context omitted.

They can renounce their citizenship to the United States and then use any one of a number of different countries to do their banking. Citizens of other countries aren't subjected to the same laws and banks aren't pressured to report on them due to US influence. An example would be Lebanon. Everyone except US citizens gets pretty good banking privacy protections. Due to US pressure, Lebanon carved out an exception to…

Can you spend most of your time in USA if you are not a citizen? Who wants to live in lebanon?

Visas are usually easy to get and there are counties other than the US and aren't Lebanon. Also, Lebanon isn't really all that terrible and you don't need to live there. You can be a citizen of Zimbabwe, if you want. The point is to not have the US government forcing disclosure, per the OP's question.

Re: Bitcoin is fiat money, too

#179

Post by alexmat »

alexasmyths wrote: post #120
SubiculumCode wrote: post #84

"Bankers talk about “governance”, ways to ensure private banks and central bankers make sound decisions—so they create just enough money make commerce easier, but not so much that the system collapses through inflation or panics." Many people don't know that central bankers literally, not figuratively, mean CREATE money out of nothing.

"mean CREATE money out of nothing." No, this is not true. Central banks do 'create' money, but they trade it on the market for real assets. The Fed creates dollars and exchanges them for an equal amount of US Tbills (bought at market rates). $1 created = $1 in Tbills on their balance sheet. They're not just creating money and keeping it, or giving it away. The practice of 'fractional lending' by retail/commercial ban…

"Distilled to its roots, the Fed has been manufacturing “savings” from thin air for the better part of a decade. When the financial crisis hit in 2008, American savings were depleted, so the Fed had to step in to produce savings (to finance huge government deficits). Now the Fed is attempting to remove that “savings” at a time when:

1) The private sector is experiencing falling savings. 2) The government is likely on the precipice of expanding its dis-saving in the form of greater deficits.

...

Not to state the obvious, but all else equal, if the Fed started shedding assets at $30 billion a month (or $360 billion a year), it would exhaust the entire stock of private savings. This doesn’t allow for larger government deficits. Given the current savings level, it is mathematically impossible for the Fed to shed assets at $50 billion/month. By 2019, as we are farther out from peak net savings rates set in 2015, it is likely the stock of private savings is smaller still, and hence the ability for the Fed to shed assets at a rate of $50 billion/month is utterly impossible. Net savings have fallen in the last 2 years from a peak of just over $700 billion to the current $355 billion. Will savings halve again in the next two years? If so, there is no mathematical way in the world the Fed can shed assets at the rate it outlined yesterday."

Source: http://blog.knowledgeleaderscapital.com/?p=13520

I tend to side with the uneducated who think the FED prints money out of thin air because it is closer to the truth of the matter of where real economic value exists moreso than the anachronistic mechanics of FED policy three card monte. When all is said and done, the FED took on toxic assets it will not be able to unload into a weak economy. The only hope it has is to sell the assets at face value in exchange for inflated dollars or hope the economy booms beyond everyone's expectations in the next two years. Sure hope the latter happens because otherwise the FED has done nothing but defer the pain of 2007 into the catastrophe of 2020.

Re: Bitcoin is fiat money, too

#180

Post by mirimir »

amb23 wrote: post #57
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.

"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…

Yes, that's the distinction. With Bitcoin, a codebase prevails if it attracts enough miners, merchants and users. Those parties in aggregate have "fiat power".

It's arguable that fiat power for each state similarly reflects preferences of banks, merchants and users. However, some of us doubt that money policy typically favors users.

With government fiat, forking isn't really possible, without a revolution, no matter how unhappy users are. But with Bitcoin etc, that is possible.

It's a common misconception that miners drive Bitcoin policy. In my opinion, miners are parasitic. When I first started using Bitcoin, there were virtually no professional miners. Users did all of the mining, locally. So difficulty was very low. Now, with so many professional miners, difficulty is very high. However, blocks get solved in 10 minutes on average, just as they did in the beginning.

Anyway, it's true that Bitcoin is a fiat currency. But governments aren't in control, and that's a good thing.

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