I don't get the impression that most people here understand what fiat actually means. I think they like to act like fiat currency is the devil because they are Libertarian or something, and moaning about fiat money makes them feel more like a good upstanding libertarian. Personally, I can't stand libertarian economics, and one of the reasons why is that the hatred of things like fiat currency is completely irrational.
BTC, BTC lite and other cryptocurrencies are digital currencies. Cryptocurrency is not commodity currency, it is not fiat currency and it isn't representative currency, either. It is new. Economists call it digital currency. Treat it as something new, rather than trying to shoehorn it into some mercantile era jargon that you don't actually understand.
Describing it poorly is not only doing a disservice to your ability to use it, it is doing a disservice to anybody trying to learn about cryptocurrency. Giving a new person a bad analogy will confuse them enough to be suspicious of you, which will make them not buy or use BTC.
FIAT is a mechanism to get projects done with limited "commodity" eg gold, so you get promissory notes develop, and when these become delinked from, a commodity, they can be printed at will,
That is FIAT should always be mentioned in the same breath as fractional reserve banking, and CRR the (capital reserve ratio) which is set by the Basel II accord.
FIAT is not bad, rather it allows larger projects and enterprises to get off the ground because people come to believe in the value of their money
But what happens is when the GOVT starts doing wasteful projects, acting in efficiently, eg almost everything they do or make stupid regulations/law (most of them), the FIAT loses it value, as people did things, but what they built no one needed, so their work was worthless, and fiat is devalued from it face value. But people see they need more FIAT to buy the same commodity because the actual value of FIAT has been sucked out, but they were still working for at the assumed rate of fiat.
BTC short circuts this, it give the govt no where to hide their inefficiency.
The other limb to this is the only way to get non cash money in to the system is by an approved deposit taking institution (bank) issuing a loans to the limit of their CCR requirement.
The kicker is the only way to pay off these loans is the ADI has to issue more loans, or you have to increase the velocity of cash.
So you get this massive ever increasing inverted pyramid, of endless executing loans to service prior loans.
The only way you get paid (apart from cash) is some one stood infront of an ADI and executed a loan.
Most people have no idea about this.
FIAT is a mechanism to organize society
BTC is another mechanism
BTC is more efficient and harder to manipulate and cannot be artificially inflated to hide in efficiencies
edit [this is the bit where you see your wages shrink versus cost of living, because your productive work is being siphoned of by banks / money printer who then award the money to themselves]
for this reason it will suck the life out of FIAT
