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Fiat is indeed based on trust. The trust that the government remain functioning. Fiat is a government backed claim on economic production. That’s not trivial,

by enaaem 4y ago

Fiat is indeed based on trust. The trust that the government remain functioning. Fiat is a government backed claim on economic production. That’s not trivial, because the government is the sole arbiter and enforcer of property rights. Fiat determines what resources you can legally assign to you, according to the rules of the sole arbiter of property rights. The notion of property rights is only relevant with a central authority who is able to enforce it. Which could be a nation state, tribal chief or a lord. In the jungle you only own whatever you are able to defend. Even your own life.

datadata 4y ago
> The notion of property rights is only relevant with a central authority who is able to enforce it. The innovation of bitcoin is precisely making this statement no longer true. The "property" might only be digital data, rather than physical things, so you can argue that it is no longer true in only a limited context, but it is not longer absolutely true.
- enaaem 4y ago
  Absolute truth is not relevant because 99.99% of what you need to sustain yourself is physical. It’s practically 100%. Maintaining BTC itself requires physical inputs and physical property rights. You need fiat to buy energy. Your house with mining rigs needs enforcement of property rights.
  - datadata 4y ago
    The physical inputs to bitcoin are decentralized and robust against disruption. You don't need to be a miner yourself to store or transact. > You need fiat to buy energy. This is a circular argument and not true. You can buy energy today with gold or bitcoin.
marcosdumay 4y ago
Gold was based on trust. Trust that the next merchant you deal with will want it. The same was true for salt, and many more local kinds of money that existed. It's also the same trust you need for fiat money. This, and trust that your government won't create a huge lot of it in an instant (slow rates of money creation are fine). Turns out that governments have a lot of leverage to enforce the first, more relevant kind of trust, so the total trust required decreases. The idea of cryptocoins was to remove the trust on nobody creating a lot of money very fast. But in doing so, they also lost the leverage to enforce that people will accept it.
- enaaem 4y ago
  With Cryptos you need to trust that you can convert it to fiat. Crypto trust is still a reliant on fiat trust. Any business accepting crypto, even drug dealers, need to convert their cryptos to fiat, because they need to pay the bills, pay their mortgage in system reliant on government enforced property rights.

by enaaem 4y ago

datadata 4y ago

> The notion of property rights is only relevant with a central authority who is able to enforce it. The innovation of bitcoin is precisely making this statement no longer true. The "property" might only be digital data, rather than physical things, so you can argue that it is no longer true in only a limited context, but it is not longer absolutely true.

enaaem 4y ago
Absolute truth is not relevant because 99.99% of what you need to sustain yourself is physical. It’s practically 100%. Maintaining BTC itself requires physical inputs and physical property rights. You need fiat to buy energy. Your house with mining rigs needs enforcement of property rights.
- datadata 4y ago
  The physical inputs to bitcoin are decentralized and robust against disruption. You don't need to be a miner yourself to store or transact. > You need fiat to buy energy. This is a circular argument and not true. You can buy energy today with gold or bitcoin.

marcosdumay 4y ago

Gold was based on trust. Trust that the next merchant you deal with will want it. The same was true for salt, and many more local kinds of money that existed. It's also the same trust you need for fiat money. This, and trust that your government won't create a huge lot of it in an instant (slow rates of money creation are fine). Turns out that governments have a lot of leverage to enforce the first, more relevant kind of trust, so the total trust required decreases. The idea of cryptocoins was to remove the trust on nobody creating a lot of money very fast. But in doing so, they also lost the leverage to enforce that people will accept it.

enaaem 4y ago
With Cryptos you need to trust that you can convert it to fiat. Crypto trust is still a reliant on fiat trust. Any business accepting crypto, even drug dealers, need to convert their cryptos to fiat, because they need to pay the bills, pay their mortgage in system reliant on government enforced property rights.