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Bitcoin is fiat money, too

economist.com

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Re: Bitcoin is fiat money, too

#241

Post by 8973417983461 »

sonink wrote: post #190

Fundamentally, Bitcoin is software eating the Fed-Bank-Retail ecosystem. The Fed governance is replaced by code. The banking utility is replaced by miners. I think the march of bitcoin is actually a better example of how AI is taking over the world. People in AI are fascinated by AGI - but the bitcoin ecosystem is actually a real world example of how AI will take over the world. Specifically, the march of AI won't ha…

> But there are countries in Africa who can already do better by simply leapfrogging to bitcoin and ditching their national currencies.

I doubt this would do any good for them.

* Their currency would be totally exposed to 3rd parties.

* They would loose the control over the rates, which are an important tool to attract investments, if are stable and controlled well.

* AFAIK some Chinese private companies control large part of the mining network. Basically the central bank would be in private, and foreign hands.

* The slow transactions would make it totally infeasable for use in everyday life, especially as people there have limited access to necessary technologies (stable network connections all round the countries, stable electric power everywhere), so daily transactions of the ordinary people would either fall back to barters, or use some fiat paper money, eg. USDs.

I totally don't get how could you reach tis conclusion, your whole post is a SV bubble wishful thinking with some trendy bullshit, eg. software eating the FED, fed is replaced by code. Bitcoin does better than centralbanks. If some currency looses 30% of its value a single day, that is not a sign of health, and this happended the very week with bitcoin. Actually Bitcoin does its job worse than an african dictatorship's currency, if its job is being a fiat currency, which is useful for the people in daily life.

I doubt its job is that, so it may do its job well, but for this task it is unsuitable.

Re: Bitcoin is fiat money, too

#242

Post by glasz »

sonink wrote: post #190

Fundamentally, Bitcoin is software eating the Fed-Bank-Retail ecosystem. The Fed governance is replaced by code. The banking utility is replaced by miners. I think the march of bitcoin is actually a better example of how AI is taking over the world. People in AI are fascinated by AGI - but the bitcoin ecosystem is actually a real world example of how AI will take over the world. Specifically, the march of AI won't ha…

please don't focus only on technical details. digital currencies, btc in particular, are breaking the bank's monopoly of creating money. that's the real revolution. states and banks get into the topic of such technologies not because its better but because they see what may happen and they want to control the outcome.

there's high potential for people gaining freedom from the west's monetary system. but i'm very pessimistic about us getting this right and not loose "control" to state and corporate powers exactly like we did with the internet.

Re: Bitcoin is fiat money, too

#243

Post by a_imho »

ryan_j_naughton wrote: post #208
option_greek wrote: post #203

Earlier quoted context omitted.

I don't get why people are obsessed with inflation. It is not the only thing that is required to stimulate an economy. On the other hand for majority of developing nations, it is a sink hole that eats their earnings alive. You can still use a deflationary currency just like an inflationary one. Just use satoshis to track bitcoin increments. I'm sure if Zimbabwe was using bitcoin, they wouldn't have ended up in the sh…

Significant inflation is obviously a bad thing. Zimbabwe or Venezuela prime examples. But being deflationary where the currency increases in value obviously causes a disincentive for spending that currency. You are encouraged to buy and hold it because it will be worth more in the future relative to the cost of goods, services, and other fist currencies. Even just minor deflation is disastrous for economies because i…

Even just minor deflation is disastrous for economies because if there is 3% deflation, you could get 100% of what was generally typical GDP growth for developed countries without spending any money to produce anything. This encourages everyone to be risk averse towards spending money on anything at all.

What are some real world examples of this?

Re: Bitcoin is fiat money, too

#244

Post by Kiro »

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.

So can I. I just give you a piece of paper that says I owe you $1000, which you can use to buy things. $1000 was created out of nothing.

Re: Bitcoin is fiat money, too

#245

Post by erikb »

sumedh wrote: post #73

> The currency survived a crisis of credibility after a bug was discovered in 2016 This is my primary worry with cryptocurrency, what if there is a bug in the code which do unexpected things and destroy the value completely.

Your worry is not unfounded, but it also implies trust in the current system. Just because it's done by humans not by software doesn't mean there are no bugs or mistakes made.

Re: Bitcoin is fiat money, too

#246

Post by retrogradeorbit »

Bitcoin is not fiat.

Fiat means "by decree" or "by authority". Fiat money is money that is decreed into existence by some authority, that is, the government. This is done through legal tender laws.

Bitcoin is not created by the enactment of some law by some authority. Fiat does not mean "by consensus", or "by mathematics". Saying code is decree, and therefor fiat, is sloppy thinking.

Bitcoin may have much in common with fiat, but that does not mean that it is fiat. It is, by definition, not fiat.

What gives Bitcoin value is not government decree, but its utility [1]. And that is somewhat paradoxical, because the more people hoard it the less utility it has. And the more its used to buy and sell goods, the more utility it has, and the more value it has.

[1] https://fee.org/articles/what-gave-bitcoin-its-value/

Re: Bitcoin is fiat money, too

#247

Post by nostrademons »

a_imho wrote: post #243
ryan_j_naughton wrote: post #208

Earlier quoted context omitted.

Significant inflation is obviously a bad thing. Zimbabwe or Venezuela prime examples. But being deflationary where the currency increases in value obviously causes a disincentive for spending that currency. You are encouraged to buy and hold it because it will be worth more in the future relative to the cost of goods, services, and other fist currencies. Even just minor deflation is disastrous for economies because i…

Even just minor deflation is disastrous for economies because if there is 3% deflation, you could get 100% of what was generally typical GDP growth for developed countries without spending any money to produce anything. This encourages everyone to be risk averse towards spending money on anything at all. What are some real world examples of this?

Japan's the classic one - they've been stuck in a deflationary trap since 1990:

https://en.wikipedia.org/wiki/Lost_Decade_(Japan)

The Great Depression in the U.S. as well.

There's a possible counterexample with the Long Depression in the U.S:

https://en.wikipedia.org/wiki/Long_Depression

Here, prices fell slowly: 1-2%/year, caused by sharply rising productivity. The period was also called the Gilded Age, and it was a mixed bag economically. On one hand, the structure of American society dramatically changed through massive technological advance, consumer goods became abundant, and businesses who adopted those techniques became fabulously wealthy. OTOH, many small farmers went bankrupt and were forced to sell off their land to service debts they couldn't pay with money that was now more valuable than when they took out the debt. Ditto lower-class laborers, who were squeezed into tenements with dozens of families living together as their wages remained stagnant for a generation but their employers became fabulously wealthy and bought up much of the prime real estate.

The Long Depression is largely forgotten today (unless you're an economic history geek), but it was a prime impetus for the monetarist school of thought. The whole idea that the government needs to continually print money to catch up with rising productivity and availability of goods is largely based on the experience of the U.S. in the Long Depression, when they didn't print money.

Also, there's a good amount of evidence that our current period of history resembles the Long Depression a lot more than either the Great Depression or 1970s stagflation, and will play out in similar ways. I'd personally put us around the mid-1890s in terms of historical parallels.

Re: Bitcoin is fiat money, too

#248

Post by codewithcheese »

retrogradeorbit wrote: post #246

Bitcoin is not fiat. Fiat means "by decree" or "by authority". Fiat money is money that is decreed into existence by some authority, that is, the government. This is done through legal tender laws. Bitcoin is not created by the enactment of some law by some authority. Fiat does not mean "by consensus", or "by mathematics". Saying code is decree, and therefor fiat, is sloppy thinking. Bitcoin may have much in common w…

I agree in regards to not fiat. How about the apparent utility it has as a store of wealth? If I was ultra rich I would store maybe 1% of my wealth in Bitcoin as a way to diversify my portfolio. Similar to gold, except for more wildly unpredicatable future financial scenarios.

Re: Bitcoin is fiat money, too

#249

Post by girishso »

sonink wrote: post #190

Fundamentally, Bitcoin is software eating the Fed-Bank-Retail ecosystem. The Fed governance is replaced by code. The banking utility is replaced by miners. I think the march of bitcoin is actually a better example of how AI is taking over the world. People in AI are fascinated by AGI - but the bitcoin ecosystem is actually a real world example of how AI will take over the world. Specifically, the march of AI won't ha…

> making it more amenable to machines and 'hostile' to most humans.

Why AI takeover is always considered against humans? Why can't it co-exist with humans?

Re: Bitcoin is fiat money, too

#250

Post by chillydawg »

girishso wrote: post #249
sonink wrote: post #190

Fundamentally, Bitcoin is software eating the Fed-Bank-Retail ecosystem. The Fed governance is replaced by code. The banking utility is replaced by miners. I think the march of bitcoin is actually a better example of how AI is taking over the world. People in AI are fascinated by AGI - but the bitcoin ecosystem is actually a real world example of how AI will take over the world. Specifically, the march of AI won't ha…

> making it more amenable to machines and 'hostile' to most humans. Why AI takeover is always considered against humans? Why can't it co-exist with humans?

It's just that it's unlikely an AI will have the same goals as you or me. Their goals might be to make, say, paperclips: https://wiki.lesswrong.com/wiki/Paperclip_maximizer
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