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How come the wording? Cryptocurrencies are inherently no less fiat currencies than government mandated ones.

by _0ffh 9y ago

SideburnsOfDoom 9y ago
That's a good question, and I too would like to know why people consider Cryptocurrencies to be "not fiat" ? Currencies either have value from 1) Being made of a commodity (e.g. gold coin) or exchangeable for the commodity. 2) Because someone says so. This is "Fiat". Usually this is a government, not not necessarily so. See "company scrip" for another example. Lack of an issuing government does not magically create a backing commodity.
- lilactown 9y ago
  Because I can't actually buy anything with them, outside of a few niche markets.
  - SideburnsOfDoom 9y ago
    I'm not following? Being unable to use a banknote (e.g. a 2008 Zimbabwe 1 Trillion Dollars Banknote) doesn't make it any less Fiat - no commodity has appeared; it makes it low-quality fiat money.
  - someguy9888 9y ago
    Haha. Aside from the things I can buy with it, I can't buy anything with it!
    - lilactown 9y ago
      Just because I can exchange Chuck-E-Cheese coins or WoW gold for certain specific goods and/or services doesn't make them fiat.
      - SideburnsOfDoom 9y ago
        > Just because I can exchange Chuck-E-Cheese coins ... for certain specific goods and/or services doesn't make them fiat. So what does it make them then? As far as I know, the categories are "fiat" or "commodity-backed". If it's not Fiat, which commodity backs Chuck-E-Cheese coins? Or is it merely backed by the say-so of the Chuck-E-Cheese company? You understand that "say-so" in Latin is "fiat"? Isn't this just a form of "Company Scrip", a (low quality) Fiat instrument? https://en.wikipedia.org/wiki/Company_scrip https://en.wikipedia.org/wiki/Company_scrip https://thebluecollareconomist.com/2016/10/30/fiat-currency-scrip-by-another-name/ https://thebluecollareconomist.com/2016/10/30/fiat-currency-...
- twblalock 9y ago
  Fiat in the case of currency involves more than "someone says so". It generally means that a government makes a law or a regulation that says the money is legal tender, and also that the value of the currency is derived solely from that law and is not "backed" by any physical goods. No government or other monetary authority has said that cryptocurrencies are legal tender in their country, or has required that anything to be paid in cryptocurrencies. In fact, many governments say it is a commodity.
  - SideburnsOfDoom 9y ago
    I have already read the wikipedia page, and it says "often by government regulation." So not necessarily so then. See here for an example of non-governmental fiat monies: https://en.wikipedia.org/wiki/Company_scrip https://en.wikipedia.org/wiki/Company_scrip of course "because someone says so" is an oversimplification of fiat; they need to do so believably which is why the United States of America has the resources to do it but I would not be able to. Company Script is generally illegal these days, which is instructive - you need to distinguish between "it's impossible to have fiat money without government regulation" (false) and "it's illegal to have your own fiat money because of government regulation" (generally true). Nation-states even sometimes fail at fiat money, so regulation is understandable. Bitcoin looks like something that has value only because people agree that it does. Saying that "bitcoin is a commodity" means what exactly? This trivially copied pattern of bits is a scarce resource? Proof of work is valuable in itself?
    - thinkmassive 9y ago
      > Proof of work is valuable in itself? This is actually an interesting way to analyze it. The trust created by PoW apparently does create value to many people.
      - SideburnsOfDoom 9y ago
        I don't think that it does in itself, actually; but there seems to be the perception that it does. How much would you pay for an hour of video of me digging a hole with a spade and then filling it in. That's proof of work, and also worthless. How much would you pay for someone to provably burn ton of coal? It's only valuable if it does something useful for the energy expended. The blockchain's proof of work has been characterised as "Computers yelling Numberwang at each other" and what use does it have outside of itself? It burns huge amounts of of energy to produce waste heat and a trivial hash.
thinkmassive 9y ago
Most of us define “fiat” similar to this: 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 https://www.merriam-webster.com/dictionary/fiat https://www.merriam-webster.com/dictionary/fiat Most cryptocurrencies have value because of a mutual belief that they have value, but the overwhelming majority have not been mandated for use by some authority yet.
- SideburnsOfDoom 9y ago
  > Most cryptocurrencies have value because of a mutual belief that they have value So, "they have value because we agree that they have value. Because we say so". That's exactly "Fiat".
  - thinkmassive 9y ago
    Agreement is not equivalent to authority. Fiat means dictated by authority, which is backed by the power to enforce the rule.
    - SideburnsOfDoom 9y ago
      I don't think that those two things, "agreement" and "authority" are actually very different at all. And "Fiat" as opposed to Commodity-backed is not something that is subject to fine slicing like that, lest you beg the question, "what commodity magically came into being to back it here?"

How come the wording? Cryptocurrencies are inherently no less fiat currencies than government mandated ones.

by _0ffh 9y ago

How come the wording? Cryptocurrencies are inherently no less fiat currencies than government mandated ones.

That's a good question, and I too would like to know why people consider Cryptocurrencies to be "not fiat" ? Currencies either have value from 1) Being made of a commodity (e.g. gold coin) or exchangeable for the commodity. 2) Because someone says so. This is "Fiat". Usually this is a government, not not necessarily so. See "company scrip" for another example. Lack of an issuing government does not magically create a backing commodity.

lilactown 9y ago
Because I can't actually buy anything with them, outside of a few niche markets.
- SideburnsOfDoom 9y ago
  I'm not following? Being unable to use a banknote (e.g. a 2008 Zimbabwe 1 Trillion Dollars Banknote) doesn't make it any less Fiat - no commodity has appeared; it makes it low-quality fiat money.
- someguy9888 9y ago
  Haha. Aside from the things I can buy with it, I can't buy anything with it!
  - lilactown 9y ago
    Just because I can exchange Chuck-E-Cheese coins or WoW gold for certain specific goods and/or services doesn't make them fiat.
    - SideburnsOfDoom 9y ago
      > Just because I can exchange Chuck-E-Cheese coins ... for certain specific goods and/or services doesn't make them fiat. So what does it make them then? As far as I know, the categories are "fiat" or "commodity-backed". If it's not Fiat, which commodity backs Chuck-E-Cheese coins? Or is it merely backed by the say-so of the Chuck-E-Cheese company? You understand that "say-so" in Latin is "fiat"? Isn't this just a form of "Company Scrip", a (low quality) Fiat instrument? https://en.wikipedia.org/wiki/Company_scrip https://en.wikipedia.org/wiki/Company_scrip https://thebluecollareconomist.com/2016/10/30/fiat-currency-scrip-by-another-name/ https://thebluecollareconomist.com/2016/10/30/fiat-currency-...
twblalock 9y ago
Fiat in the case of currency involves more than "someone says so". It generally means that a government makes a law or a regulation that says the money is legal tender, and also that the value of the currency is derived solely from that law and is not "backed" by any physical goods. No government or other monetary authority has said that cryptocurrencies are legal tender in their country, or has required that anything to be paid in cryptocurrencies. In fact, many governments say it is a commodity.
- SideburnsOfDoom 9y ago
  I have already read the wikipedia page, and it says "often by government regulation." So not necessarily so then. See here for an example of non-governmental fiat monies: https://en.wikipedia.org/wiki/Company_scrip https://en.wikipedia.org/wiki/Company_scrip of course "because someone says so" is an oversimplification of fiat; they need to do so believably which is why the United States of America has the resources to do it but I would not be able to. Company Script is generally illegal these days, which is instructive - you need to distinguish between "it's impossible to have fiat money without government regulation" (false) and "it's illegal to have your own fiat money because of government regulation" (generally true). Nation-states even sometimes fail at fiat money, so regulation is understandable. Bitcoin looks like something that has value only because people agree that it does. Saying that "bitcoin is a commodity" means what exactly? This trivially copied pattern of bits is a scarce resource? Proof of work is valuable in itself?
  - thinkmassive 9y ago
    > Proof of work is valuable in itself? This is actually an interesting way to analyze it. The trust created by PoW apparently does create value to many people.
    - SideburnsOfDoom 9y ago
      I don't think that it does in itself, actually; but there seems to be the perception that it does. How much would you pay for an hour of video of me digging a hole with a spade and then filling it in. That's proof of work, and also worthless. How much would you pay for someone to provably burn ton of coal? It's only valuable if it does something useful for the energy expended. The blockchain's proof of work has been characterised as "Computers yelling Numberwang at each other" and what use does it have outside of itself? It burns huge amounts of of energy to produce waste heat and a trivial hash.

thinkmassive 9y ago

Most of us define “fiat” similar to this: 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 https://www.merriam-webster.com/dictionary/fiat https://www.merriam-webster.com/dictionary/fiat Most cryptocurrencies have value because of a mutual belief that they have value, but the overwhelming majority have not been mandated for use by some authority yet.

SideburnsOfDoom 9y ago
> Most cryptocurrencies have value because of a mutual belief that they have value So, "they have value because we agree that they have value. Because we say so". That's exactly "Fiat".
- thinkmassive 9y ago
  Agreement is not equivalent to authority. Fiat means dictated by authority, which is backed by the power to enforce the rule.
  - SideburnsOfDoom 9y ago
    I don't think that those two things, "agreement" and "authority" are actually very different at all. And "Fiat" as opposed to Commodity-backed is not something that is subject to fine slicing like that, lest you beg the question, "what commodity magically came into being to back it here?"