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Fiat does not imply constructed. The notion that gold (or tulips) are valuable are equally constructed ideas by humans. Nothing has 'inherent' value apart from

by pixie_ 14y ago

Fiat does not imply constructed. The notion that gold (or tulips) are valuable are equally constructed ideas by humans. Nothing has 'inherent' value apart from the value humans perceive these things to have. No, the only thing fiat implies is manipulation - the ability for a government or person to mess with the value of a currency by 'willing it to be.' Bitcoin is not fiat.

teebs 14y ago
Just based on the Wikipedia article, I don't think you're right that fiat implies manipulation: http://en.wikipedia.org/wiki/Fiat_currency http://en.wikipedia.org/wiki/Fiat_currency So, based on that definition, it is true that Bitcoin is not a fiat currency because it is not given value by law or government. However, although it technically does not have a centralized issuing authority that can arbitrarily create Bitcoins, Satoshi Nakamoto did hard code a creation rate for Bitcoin. In a sense, he is the original issuing authority. The only difference between Bitcoin and fiat currencies, when it comes to currency manipulation, is that Nakamoto committed early on to a specific plan for issuing currency. The government (or the Fed) not only does not make that commitment, but it is unable to make such a strong, unbreakable commitment, although it verbally makes similar commitments all the time.
- nullc 14y ago
  You're making the mistake of consulting a medium writable by throngs of InternetLibertarians™. :P There is nothing inherent in the economic concept of a fiat currency of government. What is a law or a government in any case? Bitcoin is created by rules. The rules are embedded in a program instead of a law-book. The governed users opt in by using the software rather than by living in some geography. The rules are enforced by being mathematically unbreakable rather than with courts and prisons. These factors alone shouldn't be especially significant, other than that they make Bitcoin more just and efficient.
  - pixie_ 14y ago
    Bitcoin is created by rules of mathematics and mined by problem solving. Gold is creating by mining and refining and governed by the rules of physics.. What does any of this have to do with the definition of fiat? It's already defined, lookup the latin - 'it shall be'
    - tedunangst 14y ago
      Exactly. Somebody said "it shall be" and behold, there were bitcoins. Fiat currency means no physical asset backing it. Bitcoins have no physical backing.
      - pixie_ 14y ago
        Please, go ahead. Create some Bitcoins. I'm waiting..
  - Jd 14y ago
    Although I do agree with you that the difference between Bitcoin and other fiat currencies is a matter of degree and not type, there is a rather important difference that you are skipping over. The fact is that there is accountability with respect to Bitcoin issuance, whereas there is little to none with respect to the amount of currency issued in other venues (i.e. central banks), except the possibility that people will flee the currency and devalue it. In fact, with respect to money creation there are not a lot of set rules. The main problem is keeping supply matched with demand. From a governmental standpoint demand is usually enforced (at the very least by forcing taxes to be paid in your currency).
tedunangst 14y ago
You have made the Internet-libertarian/goldbug mistake of thinking fiat is a dirty word.
- pixie_ 14y ago
  Show me a fiat currency the appreciates over time and maybe I'll look at it differently. Have you ever thought of that the root of our over-consumption society might be caused by the need to keep our money always moving to prevent it from depreciating?
  - Jd 14y ago
    This is a very complicated and interesting topic. Many economists believe that inflation is necessary to keep people from hoarding. Spending, either in the form of acquisition or investment, is necessary to keep the economy juiced up. In other words, your criticism would be considered a design feature by many economists. Some even considered adding a fee (demurrage) instead of facilitating inflation, encouraging you to use whatever money you had. This would be akin to a 1% asset tax instead of an income tax.
  - tedunangst 14y ago
    Sure. Bitcoin is a fiat currency that has, so far, generally appreciated.
    - pixie_ 14y ago
      It's not fiat because you can't create Bitcoins from nothing. If you can then create one. I dare you to create a single Bitcoin.
      - tedunangst 14y ago
        ooo, I can play this game. I dare you to create a single US dollar. ha! proof that the US dollar isn't fiat.
        14y ago

by pixie_ 14y ago

teebs 14y ago

Just based on the Wikipedia article, I don't think you're right that fiat implies manipulation: http://en.wikipedia.org/wiki/Fiat_currency http://en.wikipedia.org/wiki/Fiat_currency So, based on that definition, it is true that Bitcoin is not a fiat currency because it is not given value by law or government. However, although it technically does not have a centralized issuing authority that can arbitrarily create Bitcoins, Satoshi Nakamoto did hard code a creation rate for Bitcoin. In a sense, he is the original issuing authority. The only difference between Bitcoin and fiat currencies, when it comes to currency manipulation, is that Nakamoto committed early on to a specific plan for issuing currency. The government (or the Fed) not only does not make that commitment, but it is unable to make such a strong, unbreakable commitment, although it verbally makes similar commitments all the time.

nullc 14y ago
You're making the mistake of consulting a medium writable by throngs of InternetLibertarians™. :P There is nothing inherent in the economic concept of a fiat currency of government. What is a law or a government in any case? Bitcoin is created by rules. The rules are embedded in a program instead of a law-book. The governed users opt in by using the software rather than by living in some geography. The rules are enforced by being mathematically unbreakable rather than with courts and prisons. These factors alone shouldn't be especially significant, other than that they make Bitcoin more just and efficient.
- pixie_ 14y ago
  Bitcoin is created by rules of mathematics and mined by problem solving. Gold is creating by mining and refining and governed by the rules of physics.. What does any of this have to do with the definition of fiat? It's already defined, lookup the latin - 'it shall be'
  - tedunangst 14y ago
    Exactly. Somebody said "it shall be" and behold, there were bitcoins. Fiat currency means no physical asset backing it. Bitcoins have no physical backing.
    - pixie_ 14y ago
      Please, go ahead. Create some Bitcoins. I'm waiting..
- Jd 14y ago
  Although I do agree with you that the difference between Bitcoin and other fiat currencies is a matter of degree and not type, there is a rather important difference that you are skipping over. The fact is that there is accountability with respect to Bitcoin issuance, whereas there is little to none with respect to the amount of currency issued in other venues (i.e. central banks), except the possibility that people will flee the currency and devalue it. In fact, with respect to money creation there are not a lot of set rules. The main problem is keeping supply matched with demand. From a governmental standpoint demand is usually enforced (at the very least by forcing taxes to be paid in your currency).

tedunangst 14y ago

You have made the Internet-libertarian/goldbug mistake of thinking fiat is a dirty word.

pixie_ 14y ago
Show me a fiat currency the appreciates over time and maybe I'll look at it differently. Have you ever thought of that the root of our over-consumption society might be caused by the need to keep our money always moving to prevent it from depreciating?
- Jd 14y ago
  This is a very complicated and interesting topic. Many economists believe that inflation is necessary to keep people from hoarding. Spending, either in the form of acquisition or investment, is necessary to keep the economy juiced up. In other words, your criticism would be considered a design feature by many economists. Some even considered adding a fee (demurrage) instead of facilitating inflation, encouraging you to use whatever money you had. This would be akin to a 1% asset tax instead of an income tax.
- tedunangst 14y ago
  Sure. Bitcoin is a fiat currency that has, so far, generally appreciated.
  - pixie_ 14y ago
    It's not fiat because you can't create Bitcoins from nothing. If you can then create one. I dare you to create a single Bitcoin.
    - tedunangst 14y ago
      ooo, I can play this game. I dare you to create a single US dollar. ha! proof that the US dollar isn't fiat.
      - 14y ago