Bitcoin is fiat money, too

Bitflyer (Japan) has partnerships with bic camera (electronics store like best buy) to offer Bitcoin payments. Though I believe you cannot use it for over $1000 purchases

> They made transactions easier, and in the process created new deposits and bills that increased the supply of money.

This is the fundamental misunderstanding that the whole article is based on, in my opinion. Let me clarify.

Gold and silver were money in this time period. Deposits receipts and bills of exchange are neither gold nor silver. They are derivatives, because they derive their value from allegedly being redeemable in gold/silver. Now, someone issuing either of these derivatives may very well be tempted to issue fraudulent notes (where “fraudulent” is defined as “no means or intent to repay in gold/silver), which is where the wonderful idea of “default” comes in.

When a company is unable to honor its liabilities, it’s in default, and its assets are distributed amongst its creditors. So a private company (e.g. certificate of deposit-issuer, bill of exchange-issuer), and therefore its assets, is forcefully liquidated when it can’t live up to its promises. This is the solution to the problem. As long as we allow the process of default, and forced liquidation, the. if a company makes promises it can’t hold, it dies and disappears from the market.

So, treating issuers of money-derivatives as regular private companies gives its creditors the ability to force it into liquidation, in case it’s unable to honor its promises. Except when government grants special privilege to private companies called “banks”, and make them exempt from living up to their promises. It’s an understandable reaction from government: short term gain (no turmoil from default), but a long term pain (private companies with government-granted freedom to issue fraudulent derivatives).

Capitalism doesn’t work without recognizing the essential function of the death of a private company. This is the killer feature of capitalism: let unproductive/downright fraudulent companies die, and hand over their assets to its stakeholders.

As long as we recognize deposit receipts, bills of exchange, etc. as simply a promise, and are willing to keep issuers honest, by being able to force default on the company if it can’t live up to its promises, derivatives and money are clearly separated. And no one can “increase the supply of money” by producing derivatives that are allegedly redeemable in this monetary unit, any more than someone can “increase the supply of oil” by issuing and selling oil futures contracts.

Let me rephrase this for you:

It's great that some Chinese private entrepreneurs (connected with the intelligence services or not) are doing the fiat. That by itself is reason enough.

Definition of fiat

1 :a command or act of will that creates something without or as if without further effort According to the Bible, the world was created by fiat. 2 :an authoritative determination :dictate a fiat of conscience 3 :an authoritative or arbitrary order :decree government by fiat

The problem is getting the money out. Two issues : fundamentally you suddenly have a large amount of unexplained wealth, if you imagine that state authorities will shrug, smile and nod good luck to you think again. It is possible to use the money as a supplement to a middle class lifestyle and to find ways to get it laundered, but the first tactic is disappointing for people who wanted hot and cold running champaign on their yacht, and the second is very expensive and risky. The second big issue is that no amount of tumbling is really going to launder bitcoin, yes, you mixed it up with other people's tokens, but $4m came into the tumbler and $3m left in your direction, no court will fall for this... Just as if you put $4m in a bank account and then walked away with $3m from a different account at the same bank, the money followed you.