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> Bitcoin is a fiat currency Please expand. Which state is forcing people to pay their taxes in Bitcoin, and/or authorizing it as legal tender?

bluetwo 9y ago
The key quality of a fiat currency is that it is spun out of air without intrinsic value.
- magpi3 9y ago
  Honest question: why does gold have intrinsic value? My understanding is that it's scarcity is the prime driver of its value, at least in monetary terms, and bitcoin shares that quality. Of course gold does have physical qualities that are useful, but so do many other metals that are not used as stores of value.
  - dleslie 9y ago
    Gold is used to make physical things, like jewelry and electronics.
    - magpi3 9y ago
      I am aware of that of course, but gold jewelry itself generally has very little intrinsic value (it's only valuable because people agree it is, just like bitcoin), and most elements (such as silicon) in electric components are much cheaper than gold. The prime driver of gold's value is clearly its historical role as a commodity and its scarcity, neither of which are related to any kind of intrinsic qualities. My point is that the two things gold has going for it (scarcity and the fact that people believe it is a good place to store value) can now be said about bitcoin as well from what I can see. Full disclosure: I do not own any cryptocoins. Too volatile for my tastes.
  - newman8r 9y ago
    many other metals are used as stores of value, but gold is probably the most iconic. From a historical standpoint, It's easy to identify, it's easy to break up into smaller units or consolidate into larger ones, easy to form into coins. It has a global distribution, it's relatively inert so you don't need to worry about degradation. scarcity is only one factor to consider - demand and fungibility are also important factors among others.
    - magpi3 9y ago
      > It's easy to identify, it's easy to break up into smaller units or consolidate into larger ones, easy to form into coins. It has a global distribution,it's relatively inert so you don't need to worry about degradation Everything in that sentence also applies to bitcoin. Probably the one difference I can see is that if someone loses their private key, the bitcoins associated with that key become useless. Gold does not have that problem. EDIT: Okay, another huge con with bitcoins is that people don't understand them. Most people at least think they understand why gold is valuable. The confusion a "cryptocurrency" creates is a notable negative.
- programmarchy 9y ago
  I guess I think about it differently. Fiat means "by decree", or by force. Fiat currencies have historically been associated with a military. Bitcoin doesn't share that property.
- hn_throwaway_99 9y ago
  > The key quality of a fiat currency is that it is spun out of air without intrinsic value. ... as imposed (that is, "by fiat") by some governmental organization. Bitcoin's "true" value may be dubious, but it's most definitely not a fiat currency.
  - bluetwo 9y ago
    The type of organization that created it doesn't matter.
    - hn_throwaway_99 9y ago
      It absolutely matters, because fiat currency, by definition, has the full power of the state (i.e. legal authority, taxing authority, police/military authority) backing it. The same is not true of Bitcoin.
- kamaal 9y ago
  Currency is a medium to exchange value(Work or outcome of work). Value can be created/destroyed from/to something(Generally work), currency is just a 'medium' to trade the value. Currency itself has to be created out of thin air.
dleslie 9y ago
It's legally recognized, in some places, as a currency and is not backed by anything physical. What more do you need?

bluetwo 9y ago

The key quality of a fiat currency is that it is spun out of air without intrinsic value.

magpi3 9y ago
Honest question: why does gold have intrinsic value? My understanding is that it's scarcity is the prime driver of its value, at least in monetary terms, and bitcoin shares that quality. Of course gold does have physical qualities that are useful, but so do many other metals that are not used as stores of value.
- dleslie 9y ago
  Gold is used to make physical things, like jewelry and electronics.
  - magpi3 9y ago
    I am aware of that of course, but gold jewelry itself generally has very little intrinsic value (it's only valuable because people agree it is, just like bitcoin), and most elements (such as silicon) in electric components are much cheaper than gold. The prime driver of gold's value is clearly its historical role as a commodity and its scarcity, neither of which are related to any kind of intrinsic qualities. My point is that the two things gold has going for it (scarcity and the fact that people believe it is a good place to store value) can now be said about bitcoin as well from what I can see. Full disclosure: I do not own any cryptocoins. Too volatile for my tastes.
- newman8r 9y ago
  many other metals are used as stores of value, but gold is probably the most iconic. From a historical standpoint, It's easy to identify, it's easy to break up into smaller units or consolidate into larger ones, easy to form into coins. It has a global distribution, it's relatively inert so you don't need to worry about degradation. scarcity is only one factor to consider - demand and fungibility are also important factors among others.
  - magpi3 9y ago
    > It's easy to identify, it's easy to break up into smaller units or consolidate into larger ones, easy to form into coins. It has a global distribution,it's relatively inert so you don't need to worry about degradation Everything in that sentence also applies to bitcoin. Probably the one difference I can see is that if someone loses their private key, the bitcoins associated with that key become useless. Gold does not have that problem. EDIT: Okay, another huge con with bitcoins is that people don't understand them. Most people at least think they understand why gold is valuable. The confusion a "cryptocurrency" creates is a notable negative.
programmarchy 9y ago
I guess I think about it differently. Fiat means "by decree", or by force. Fiat currencies have historically been associated with a military. Bitcoin doesn't share that property.
hn_throwaway_99 9y ago
> The key quality of a fiat currency is that it is spun out of air without intrinsic value. ... as imposed (that is, "by fiat") by some governmental organization. Bitcoin's "true" value may be dubious, but it's most definitely not a fiat currency.
- bluetwo 9y ago
  The type of organization that created it doesn't matter.
  - hn_throwaway_99 9y ago
    It absolutely matters, because fiat currency, by definition, has the full power of the state (i.e. legal authority, taxing authority, police/military authority) backing it. The same is not true of Bitcoin.
kamaal 9y ago
Currency is a medium to exchange value(Work or outcome of work). Value can be created/destroyed from/to something(Generally work), currency is just a 'medium' to trade the value. Currency itself has to be created out of thin air.

dleslie 9y ago

It's legally recognized, in some places, as a currency and is not backed by anything physical. What more do you need?