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I mean that fiat is always issues by a central authority. To be a trusted/stable central authority you need power, which is usually represented by military stre

by toolz 4y ago

I mean that fiat is always issues by a central authority. To be a trusted/stable central authority you need power, which is usually represented by military strength (either your own or the strength of your allies). You do not get stable fiat without a trusted central authority and you do not get a trusted central authority without military power.

lottin 4y ago
Do you mean that private property is enforced by violence? How else do you expect to enforce it? By the way, bitcoin is also "fiat", in the sense that it isn't backed by anything (this is what "fiat" means).
- toolz 4y ago
  > By the way, bitcoin is also "fiat", in the sense that it isn't backed by anything (this is what "fiat" means). That's not what fiat means in any sense. It has latin origins for "let it be done" which is to say that it is a decree by an authoritative actor. But both bitcoin and fiat are backed by something - bitcoin is backed by a lot of energy consumption and fiat is backed by government authority. > Do you mean that private property is enforced by violence? How else do you expect to enforce it? I don't expect it to be enforced any other way, I didn't mean to give the impression that bitcoin was somehow free from the necessity of enforcing private property. However, bitcoin is different in that you only need to protect people and the network, with fiat you have much more to protect, such as political positions of power and physical buildings like fort knox.
  - lottin 4y ago
    No, a fiat currency is one that isn't backed by anything (as opposed to commodity money, which is itself a commodity, or fiduciary money which is redeemable for a commodity). For example: The OLG models with money attribute to fiat money two basic characteristics: (a) it is intrinsically useless – that is, it cannot be directly used in production or consumption 3 – and (b) it is inconvertible 4 – that is, the issuer does not give a commitment to redeem it into commodities. Handa, J. (2008). Monetary economics. Routledge. (p. 719) Bitcoin is a fiat currency, just like the US dollar. And you're also wrong that with bitcoin "you only have to protect people and the network". What? Bitcoin itself can't be consumed (because it's fiat, remember), therefore it's worthless unless it can be exchanged for goods and services that can be consumed, which means these goods and services also need to be protected.
    - toolz 4y ago
      I understand your position, but saying something is "backed by nothing" is much different than saying something is "intrinsically useless and lacks commitment for conversion". Both bitcoin and USD (as an example of traditional fiat) are absolutely backed by something - they are backed by quite a large economy, for one. I'm not sure if you intentionally left this out, but following your quote literally just one sentence further you get: > Further, it is assumed that fiat money is costless to produce, to store and to transfer, and does not pay interest to the holder Which is quite obviously not a definition that fits bitcoin.
      - lottin 4y ago
        The term backing has a very precise meaning. It means the issuer of the currency promises to redeem the currency for a certain amount of a commodity. When people say "Tethers are backed by dollars" they mean that, i.e., that Tether Inc. promises to redeem Tethers for one dollar each. While it's true that the value of a US dollar is related (in a non-trivial way) to the output of the US economy, this doesn't mean that the dollar is backed by the US economy. The issuer of US dollars is under no obligation to redeem the dollars, and therefore it's right to say the US dollar isn't backed by anything. > I'm not sure if you intentionally left this out, but following your quote literally just one sentence further you get It says that these economic models assume fiat money costs nothing to produce, which is not accurate, because it does cost money. However, the production cost is not relevant for the purposes of these models, and therefore they can make this simplification and assume that it costs nothing.
        toolz 4y ago
        > The term backing has a very precise meaning. It definitely doesn't, at least not the way you're suggesting - you can find article after article talking about oil backed USD. Further, you can find plenty of definitions for the gold standard that don't use the word "backed" because it's not a precise term. > It says that these economic models assume fiat money costs nothing to produce You can either use this models parameters as a definition for fiat or as simply parameters for the model, you don't get to pick and choose only the parts that support your argument while ignoring the parts that explicitly don't.
- mattwilsonn888 4y ago
  > How else do you expect to enforce it? The protection of private property without violence may be considered the innovation behind Bitcoin. Big deal.
  - lottin 4y ago
    Bitcoin doesn't protect private property.
    - mattwilsonn888 4y ago
      Perhaps not literally. It certainly doesn't summon automated turrets in meat space. Good luck confiscating properly digitized reserves.
      - lottin 4y ago
        Sure, except that enforcing property rights hinges on the ability to confiscate the stolen or misappropriated assets. The harder the assets are to confiscate, the harder it is to enforce ownership of those assets.
- Geee 4y ago
  Debt is backed by something. Currency is debt to its issuer, and it used to be backed by gold. Fiat currency is debt, but it's not backed by anything. Gold and bitcoin aren't debt, they're assets. You could issue bank notes backed by gold or bitcoin.
  - lottin 4y ago
    Fiat currency is not debt.

by toolz 4y ago

lottin 4y ago

Do you mean that private property is enforced by violence? How else do you expect to enforce it? By the way, bitcoin is also "fiat", in the sense that it isn't backed by anything (this is what "fiat" means).

toolz 4y ago
> By the way, bitcoin is also "fiat", in the sense that it isn't backed by anything (this is what "fiat" means). That's not what fiat means in any sense. It has latin origins for "let it be done" which is to say that it is a decree by an authoritative actor. But both bitcoin and fiat are backed by something - bitcoin is backed by a lot of energy consumption and fiat is backed by government authority. > Do you mean that private property is enforced by violence? How else do you expect to enforce it? I don't expect it to be enforced any other way, I didn't mean to give the impression that bitcoin was somehow free from the necessity of enforcing private property. However, bitcoin is different in that you only need to protect people and the network, with fiat you have much more to protect, such as political positions of power and physical buildings like fort knox.
- lottin 4y ago
  No, a fiat currency is one that isn't backed by anything (as opposed to commodity money, which is itself a commodity, or fiduciary money which is redeemable for a commodity). For example: The OLG models with money attribute to fiat money two basic characteristics: (a) it is intrinsically useless – that is, it cannot be directly used in production or consumption 3 – and (b) it is inconvertible 4 – that is, the issuer does not give a commitment to redeem it into commodities. Handa, J. (2008). Monetary economics. Routledge. (p. 719) Bitcoin is a fiat currency, just like the US dollar. And you're also wrong that with bitcoin "you only have to protect people and the network". What? Bitcoin itself can't be consumed (because it's fiat, remember), therefore it's worthless unless it can be exchanged for goods and services that can be consumed, which means these goods and services also need to be protected.
  - toolz 4y ago
    I understand your position, but saying something is "backed by nothing" is much different than saying something is "intrinsically useless and lacks commitment for conversion". Both bitcoin and USD (as an example of traditional fiat) are absolutely backed by something - they are backed by quite a large economy, for one. I'm not sure if you intentionally left this out, but following your quote literally just one sentence further you get: > Further, it is assumed that fiat money is costless to produce, to store and to transfer, and does not pay interest to the holder Which is quite obviously not a definition that fits bitcoin.
    - lottin 4y ago
      The term backing has a very precise meaning. It means the issuer of the currency promises to redeem the currency for a certain amount of a commodity. When people say "Tethers are backed by dollars" they mean that, i.e., that Tether Inc. promises to redeem Tethers for one dollar each. While it's true that the value of a US dollar is related (in a non-trivial way) to the output of the US economy, this doesn't mean that the dollar is backed by the US economy. The issuer of US dollars is under no obligation to redeem the dollars, and therefore it's right to say the US dollar isn't backed by anything. > I'm not sure if you intentionally left this out, but following your quote literally just one sentence further you get It says that these economic models assume fiat money costs nothing to produce, which is not accurate, because it does cost money. However, the production cost is not relevant for the purposes of these models, and therefore they can make this simplification and assume that it costs nothing.
      - toolz 4y ago
        > The term backing has a very precise meaning. It definitely doesn't, at least not the way you're suggesting - you can find article after article talking about oil backed USD. Further, you can find plenty of definitions for the gold standard that don't use the word "backed" because it's not a precise term. > It says that these economic models assume fiat money costs nothing to produce You can either use this models parameters as a definition for fiat or as simply parameters for the model, you don't get to pick and choose only the parts that support your argument while ignoring the parts that explicitly don't.
mattwilsonn888 4y ago
> How else do you expect to enforce it? The protection of private property without violence may be considered the innovation behind Bitcoin. Big deal.
- lottin 4y ago
  Bitcoin doesn't protect private property.
  - mattwilsonn888 4y ago
    Perhaps not literally. It certainly doesn't summon automated turrets in meat space. Good luck confiscating properly digitized reserves.
    - lottin 4y ago
      Sure, except that enforcing property rights hinges on the ability to confiscate the stolen or misappropriated assets. The harder the assets are to confiscate, the harder it is to enforce ownership of those assets.
Geee 4y ago
Debt is backed by something. Currency is debt to its issuer, and it used to be backed by gold. Fiat currency is debt, but it's not backed by anything. Gold and bitcoin aren't debt, they're assets. You could issue bank notes backed by gold or bitcoin.
- lottin 4y ago
  Fiat currency is not debt.