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"I really liked the way it doesn't make the debate as "fiat" vs. non-fiat (as though fiat were a dirty term) but as centralized, opaque fiat vs. decentralized t

by uvdiv 14y ago

"I really liked the way it doesn't make the debate as "fiat" vs. non-fiat (as though fiat were a dirty term) but as centralized, opaque fiat vs. decentralized transparent fiat." But he is plainly wrong about this -- he made up his own definition of 'fiat' which has nothing to do with the commonly accepted meaning: "...money that derives its value from government regulation or law: the initial value of fiat money is established by government decree." http://en.wikipedia.org/wiki/Fiat_money http://en.wikipedia.org/wiki/Fiat_money Bitcoin is simply not a fiat money: it isn't mandated by law that bitcoins have value, instead it is people (markets) who decide that. It's the exact opposite of fiat money. Maybe he's confused because fiat money is usually ("goldbugs") contrasted on a different axis -- whether or not the money has intrinsic value (market value besides its use as currency), or is exchangeable for something that does. E.g. the gold-backed dollar, or more general commodity money (mostly historic). Commodity money and fiat money are opposites in this regard -- gold/commodity-backed money has intrinsic market value independent of its status as a currency, whereas fiat money is "worthless paper". Bitcoin is like fiat money in that it has no intrinsic value apart from as a currency. But it is not fiat money; and neither is it commodity money. http://en.wikipedia.org/wiki/Commodity_money http://en.wikipedia.org/wiki/Commodity_money

asdfaoeu 14y ago
He doesn't actually say the currency is a fiat currency he just gives his opinion . "I would argue, Bitcoin is a fiat currency." Also there are three definitions on that page. > The term fiat money has been defined variously as: > - any money declared by a government to be legal tender. > - state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard. > - money without intrinsic value. Under the last definition bitcoin would be easily considered fiat. Also he could and does debate whether you could consider the system that regulates the bitcoin currency a government which would qualify it under the other definitions. > Bitcoin is simply not a fiat money: it isn't mandated by law that bitcoins have value, instead it is people (markets) who decide that. It's the exact opposite of fiat money. It isn't mandated by law the value of any other law what the value of any fiat currency is. The initial value is as you said in your definition but the initial value of bitcoin is defined (the cost to produce a valid block). Due to its nature Bitcoin is really a special case when trying to categorize it anywhere. I also think the author uses a good definition to draw out the differences.
- uvdiv 14y ago
  "Also there are three definitions on that page... Under the last definition bitcoin would be easily considered fiat." Then I regret citing it, it is wrong. That third definition actually misrepresents its source (Mankiw's Principles of Economics) -- what Mankiw actually says is: "fiat money: money without intrinsic value that is used as money because of government decree" (emphasis mine) "Money without intrinsic value is called fiat money. A fiat is simply an order or decree, and fiat money is established as money by government degree..." http://books.google.com/books?id=3ojsWuqmorEC&pg=PA644&lpg=PA644&dq=%22For+example,+compare+the+paper+dollars+in+your+wallet%22&source=bl&ots=g6r-wIHsKy&sig=0xv57KXPGdU-asxodipmNBD7FLw&hl=en&sa=X&ei=qZ7UT8X4AZP02wXbrKGlDw&sqi=2&ved=0CE8Q6AEwAg http://books.google.com/books?id=3ojsWuqmorEC&pg=PA644&#... "It isn't mandated by law the value of any other law what the value of any fiat currency is." I meant that fiat money only has value (as opposed to... no value) because it is mandated by law -- you are required to accept it as payment of debt, to pay taxes using it, etc. Sure, what the value is in real terms is a market decision.

by uvdiv 14y ago

asdfaoeu 14y ago

He doesn't actually say the currency is a fiat currency he just gives his opinion . "I would argue, Bitcoin is a fiat currency." Also there are three definitions on that page. > The term fiat money has been defined variously as: > - any money declared by a government to be legal tender. > - state-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard. > - money without intrinsic value. Under the last definition bitcoin would be easily considered fiat. Also he could and does debate whether you could consider the system that regulates the bitcoin currency a government which would qualify it under the other definitions. > Bitcoin is simply not a fiat money: it isn't mandated by law that bitcoins have value, instead it is people (markets) who decide that. It's the exact opposite of fiat money. It isn't mandated by law the value of any other law what the value of any fiat currency is. The initial value is as you said in your definition but the initial value of bitcoin is defined (the cost to produce a valid block). Due to its nature Bitcoin is really a special case when trying to categorize it anywhere. I also think the author uses a good definition to draw out the differences.

uvdiv 14y ago
"Also there are three definitions on that page... Under the last definition bitcoin would be easily considered fiat." Then I regret citing it, it is wrong. That third definition actually misrepresents its source (Mankiw's Principles of Economics) -- what Mankiw actually says is: "fiat money: money without intrinsic value that is used as money because of government decree" (emphasis mine) "Money without intrinsic value is called fiat money. A fiat is simply an order or decree, and fiat money is established as money by government degree..." http://books.google.com/books?id=3ojsWuqmorEC&pg=PA644&lpg=PA644&dq=%22For+example,+compare+the+paper+dollars+in+your+wallet%22&source=bl&ots=g6r-wIHsKy&sig=0xv57KXPGdU-asxodipmNBD7FLw&hl=en&sa=X&ei=qZ7UT8X4AZP02wXbrKGlDw&sqi=2&ved=0CE8Q6AEwAg http://books.google.com/books?id=3ojsWuqmorEC&pg=PA644&#... "It isn't mandated by law the value of any other law what the value of any fiat currency is." I meant that fiat money only has value (as opposed to... no value) because it is mandated by law -- you are required to accept it as payment of debt, to pay taxes using it, etc. Sure, what the value is in real terms is a market decision.