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Bitcoin is fiat money, too

economist.com

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Re: Bitcoin is fiat money, too

#301

Post by ojr »

SubiculumCode wrote: post #87
ojr wrote: post #24

Fiat money with better programming apis and permissions

Bitcoin has no flexibility as a currency. It cannot be manipulated to stimulate or slow an economy. The growth rate of bitcoin is so slow that it ensures that the population growth will probably always outstrip bitcoin growth, severely lowering the number of bitcoins available per capita, leading to permanent rentiers of the money supply. Also, as lost bitcoin are not replaced, the supply dwindles further. At some po…

this is false, Bitcoin has 8 decimal places and could be moved to 16 decimal places if needed, it is hard to predict how the math will work out in the future

Re: Bitcoin is fiat money, too

#302

Post by ric2b »

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…

> 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.

A currency being inflationary shouldn't really affect spending because lots of different investments already exist, so you can make money holding them instead of the dollar. The dollar being inflationary (or shouldn't, for rational actors) incentivizes trading it for something else, but not necessarily increase spending in unnecessary, depreciating, products.

Re: Bitcoin is fiat money, too

#303

Post by rblatz »

mrb wrote: post #294
rblatz wrote: post #195

Earlier quoted context omitted.

Like buying drugs, money laundering, and hoarding. So far only one of those is legal.

Bitcoin has a lot of legit use cases: https://news.ycombinator.com/item?id=15228983

I find the claim of being able to cheaply and quickly transfer large amounts of money to be comical. The argument breaks down to, traditional transfer methods take too long, so let’s add two layers of traditional transfer methods on top of a bitcoin transfer. Then we just ignore the bid/ask spread and the transfer time on either side.

Re: Bitcoin is fiat money, too

#304

Post by skywhopper »

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.

A state doesn't really have control over the value of its currency. It may control how much of it exists in circulation. Likewise, the Bitcoin software tightly controls how much Bitcoin is in circulation. Both limits are done by fiat. Whether the institution doing the fiat is what you personally would recognize as a "state" seems to be a pretty arbitrary distinction. "States" are not the end-all be-all of institutions with power over individuals.

Re: Bitcoin is fiat money, too

#305

Post by dredmorbius »

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.

Gold has rarely been used in retail transactions. Generally that's been limited to silver, copper, bronze, or even iron coins, or other materials.

Not exclusively, but for the large part.

If you look at historical English prices, prior to the 19th century, the penny was 1/240 a pound, and the farthing ("four-thing" -- one fourth a penny) was 1/960 a pound. Call it 1/1000th.

A labourer's wage might be 20 pound/yr. It's more useful to think of the farthing as roughly equivalent, at least in work-time, to a dollar, and 20 pound as $20,000.

A pound, then, was a lot of money. And even it was (in English currency) silver. Gold were guineas: 1 pound 10 shilling.

Re: Bitcoin is fiat money, too

#306

Post by skywhopper »

mirimir wrote: post #180
amb23 wrote: post #57

Earlier quoted context omitted.

"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…

Your assertion depends on what you mean by "government". There are groups of people who are in control. The ability to fork peacefully is not unique to Bitcoin--see the governments of the UK, Canada, and Australia. And given high enough stakes, there's no reason to believe that the interested parties in the Bitcoin blockchain would not resort to violence to protect their interests from forkers who would impact their profits.

Re: Bitcoin is fiat money, too

#307

Post by moomin »

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.

I think the point of the article is that most "fiat" money doesn't really match that definition.

Re: Bitcoin is fiat money, too

#308

Post by wallace_f »

alexasmyths wrote: post #279
wallace_f wrote: post #229

Earlier quoted context omitted.

No, he is right. What the OP meant by creating money out of nothing was fiat currency, which we do have now. If you decide to use a commodity also as money, that's fundamentally different, and econ textbooks can confirm this for you. T-Bills are backed by fiat currency, not by a commodity. The Fed, and also the banks through fractional reserve banking, genuinely do create "money out of nothing." Check out A Monetary…

"T-Bills are backed by fiat currency, not by a commodity." What? No. TBills just bonds. They are 'backed' by the US Governments credibility to pay back the loan. USD is generally backed by an asset - fractional reserving not withstanding.

Think about it again. You said T-Bills back currency today like gold used to, but that's not true. T-Bills are just notes to pay back more dollars. So it is dollars backed by dollars if you really are honest about your statement that USD is backed by an asset.

Re: Bitcoin is fiat money, too

#309

Post by wuliwong »

labster wrote: post #183
mirimir wrote: post #180

Earlier quoted context omitted.

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…

So you're telling me that government money, where everyone gets a say in policy through republican institutions, is worse than a system where the most wealthy users get more control of the currency. Um, okay. I guess the oligarchy is more explicit in the cryptocurrency.

In the specific case of the united states, the money is controlled by the Federal Reserve which is a private bank.

Re: Bitcoin is fiat money, too

#310

Post by AFNobody »

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…

> 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.

That already has happened which is why people forked. You can live in denial of that fact if you wish but a minority "lost" the "vote" and forked Bitcoin.

http://fortune.com/2017/08/07/bitcoin-cash-bch-hard-fork-blo...

The BTH/SegWit2X fiasco shows Bitcoin isn't "more" decentralized than an oligopoly, an oligarchy, or a plutocracy.

> 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 possible disaster. ("A solar flare is a form of state governance that will destroy the value of your coins...")

The fact pro-bitcoin people swear up and down that isn't the case doesn't change the fact that they are effectively the Bitcoin state and that 2-3 of them + a number of smaller people can effectively "vote" to pass "laws" that are enforced against your BTC regardless of your wishes.

Simply because they don't outright steal your BTC doesn't change the fact you have to comply to retain the value of your BTC.

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