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It's not by definition a fiat money, but has similarities: - it is declared by a group of cooperating people to be a form of tender (legally protected only via
by parasubvert 14y ago
It's not by definition a fiat money, but has similarities:
- it is declared by a group of cooperating people to be a form of tender (legally protected only via contract law),
- they effectively have no intrinsic value,
- nor is it fixed in value to any objective standard
It's effectively not that different from currency of the "free money" era in the 1700 through early 1800's, where there were hundreds, if not thousands, of currencies in the USA issued ("by fiat") by independent banks. The civil war mostly was what changed that.
- jshen 14y agoI usually see the term "fiat money" used in the context where people are arguing that a central banks ability to control the money supply is either good or bad. Fiat money in that context is used as the contrast to something like the gold standard. In this current context, bitcoin is more like the gold standard that typical fiat money. The supply of bitcoin can not be manipulated to manage the economy.
- parasubvert 14y agoThe one area that Bitcoin is NOT like fiat currency and like the gold standard is that it is (somewhat) finite. However, keep in mind that the programmers behind Bitcoin can change their minds and decide to generate more bitcoins. Or they can create offshoot bitcoin currencies that do this. That's how it's like Fiat money -- there's just people and trust behind it, not shiny rocks in the ground. What's curious is why some think managing the economy (to a limited degree) is a bad thing.