Bitcoin is another type of fiat money according to the New York Fed

[bbc.reporter]

I am shaking my head. This classification is clearly wrong, however, why do this and why now?

I speculate that this might be a sign of desperation. However, it might also be a sign that the American government might do another round of attacks against the cryptospace because the digidollar is coming soon hehehe.


Michael Lee of the Federal Reserve Bank of New York

An editorial for the New York Federal Reserve’s Liberty Street Economics blog just classified Bitcoin as “another example of fiat money.”

In a post entitled “Bitcoin is Not a New Type of Money,” New York Fed Research and Statistics economist Michael Lee and Research and Statistic’s group Senior Vice President Antoine Martin envision money in three categories: fiat, asset-backed, and claim-backed.

Lee and Martin classify “fiat money [as] intrinsically worthless objects that have value based on the belief that they will be accepted in exchange for valued goods and services.” Incredibly, they assert that central-bank issued currencies are not pure fiat because of their “legal tender status.” They then go on to label Bitcoin, which the CFTC has classified as a commodity, as a fiat currency.

“Examples of fiat money without legal tender status include Rai stones or Ithaca HOURs. And Bitcoin is just another example of fiat money.”

Read in full https://decrypt.co/32940/new-york-fed-bitcoin-fiat-money

[Darker45]

If that is how they define fiat, skewed or not, self-serving or not, it's up to them. They may classify Bitcoin as another fiat, then. What do we expect from no less than the Fed? As a matter of fact, that is already a considerably generous definition coming from them.

What they cannot deny, however, are the features of this another fiat which is obviously a world much better than the old fiat they are hopelessly defending tooth and nail.  

At the very least, this new fiat is not something imposed on the people. Whether this new fiat succeeds or not would simply be out of sheer freedom. The abhorrent old fiat, its system, rules, and regulations are forced upon a populace which doesn't have much choice.

[Maus0728]

What they cannot deny, however, are the features of this another fiat which is obviously a world much better than the old fiat they are hopelessly defending tooth and nail.  

Yup, I think so, posting blabberish content apropos to bitcoin is an obvious indication that they fear a disruptive technology wherein their power will become obsolete in the first place.
Are they the one who give birth to the definition of old "fiat" or they are just giving another definition? What institution or group of people who give orders to create bitcoin in the first place? An invisible entity?

[mnporter2001]

I find it unreasonable. Why is bitcoin fiat money when it is not approved by any government agency as a currency? Besides, it is considered an intangible asset and we will never see bitcoin in real life. it is a non-physical asset and cannot be traded directly from hand to hand. I think people should no longer struggle to think about Bitcoin becoming a common currency. it is unworthy, the supply is limited and a lot of whales hold it to manipulate the market. This is unfair and it's wrong to see bitcoin as a payable currency everywhere.

[The Cryptovator]

@OP, it's better to use quote to avoid future claim about plagiarism since most of part collected from article on your post. Although you used link bottom but didn't mention as a source. Anyway I can't see any valid explanation about this fiat claim. How bitcoin would a like fiat since there is huge volatility and its not accepted by any central government from any country. Perhaps it's a one kind of attack to bitcoin. First thing is fiat money issued by a government where bitcoin is created by a unknown person called satoshi nakamoto. So it doesn't fit to call fiat currency. You may see on wikipedia when we can call a currency as a fiat money.

[Lucius]

Let no one be offended, but all these Lee guys messing around with crypto really have one very special trait, and that is that they mostly have no idea what they’re talking about. By that I mean the famous expert Lee (Fundstrat), or Bobby Lee (BTC China), which very often go public with various speculations, which of course are mostly complete failures.

This is just another in a series of attempts to show that Bitcoin is actually useless, that it has no real value to support it, and that the good old US dollar only should be trusted. This is entirely in line with what the Secretary of the Treasury (US) is spoken some time ago when he said the US would do anything to defend the US dollar as the world's dominant currency.

The fact is that any large and powerful country will never come to terms with the fact that Bitcoin is decentralized and has a limited supply. The system they govern is just the opposite, and I have no doubt that they will do their best to preserve that system.

[mk4]

It's just either one of both:

1. The writer is simply ignorant about this *or just utterly stupid* which I really doubt for a statistics economist and for a dude that works for the federal reserve.

2. He's just spreading negativity to fit the agenda of the entity he's working for. I'm betting that this is the case. If anything, the fed is disincentivized for people holding bitcoin.

[davis196]

This guy is actually right  
Fiat money actually means "trust money". Many people think that fiat money are only the paper money printed by the central banks,but this is actually one of the forms of fiat money. Bitcoin is also "trust money" because the people put their trust into BTC and use it as a payment method and a store of value.
The difference between BTC and paper money is the "legal tender" factor,which means that the people are forced by the government to "trust" paper money,while nobody forces them to trust Bitcoin.
His definition of the term "fiat money" is totally right-worthless objects that are trusted by the people as a medium of exchange.

[Wexnident]

Why does the said blog seem like words of someone ignorant of what Bitcoin is even? The definition is rightly skewed to fit to the fact that their fiat with its "legal tender status" is better than what Bitcoin or as they say, just another type of fiat. It's like the person who wrote it doesn't even know how to define the words "fiat". Just like what the article said, it's "by decree", and I don't really see anyone forcing others to use Bitcoin as a form of currency.

Ngl, their definition of fiat (the one from Fed) actually suits the definition of fiat or the Central bank-issued currencies.

[Yaunfitda]

It's just either one of both:

1. The writer is simply ignorant about this *or just utterly stupid* which I really doubt for a statistics economist and for a dude that works for the federal reserve.

2. He's just spreading negativity to fit the agenda of the entity he's working for. I'm betting that this is the case. If anything, the fed is disincentivized for people holding bitcoin.

I say number 2 will be likely the case here, they definitely have a agenda behind this statement and it's easy to understand where they are coming from. And probably this is the closest that they attack crypto, to the point that they have to compare it to fiat, LOL. So everyone should not be surprise.

[jossiel]

What's that? bitcoin is not a new type of money?   amazing.. clap.. clap.. coming from fed?

They're starting to condition the mindset of the people of what bitcoin is. That's a ridiculous description about bitcoin if that's how they described it. Well, if there's something that's going to come out from them.

They have to make their opponent look bad and competition by giving wrongful information about what bitcoin is.

Ngl, their definition of fiat (the one from Fed) actually suits the definition of fiat or the Central bank-issued currencies.

Yes, it's the opposite that they're describing.

[hatshepsut93]

I like this, Bitcoin used to be a "bubble", "ponzi", "tulip bulb", "rat poison", "commodity" and now it's fiat money. At this rate the mainstream will proclaim it a global reserve currency in a few years 

But seriously, let's look at Wikipedia:

Fiat money is a currency established as money, often by government regulation, but that has no intrinsic value. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value

So, Bitcoin is clearly fiat under this definition. Bitcoin has no other use aside from being money, so it has no intrinsic value. It's just that in Bitcoin community the word "fiat" became synonymous with "centralized inflationary money", which isn't correct because as per definition fiat money is much wider than just national currencies.

[JayJuanGee]

This guy is actually right  
Fiat money actually means "trust money". Many people think that fiat money are only the paper money printed by the central banks,but this is actually one of the forms of fiat money. Bitcoin is also "trust money" because the people put their trust into BTC and use it as a payment method and a store of value.
The difference between BTC and paper money is the "legal tender" factor,which means that the people are forced by the government to "trust" paper money,while nobody forces them to trust Bitcoin.
His definition of the term "fiat money" is totally right-worthless objects that are trusted by the people as a medium of exchange.

Your attempt to say that Michael Lee is right in his definition fiat is confusing as fuck.

Your definition of fiat and your attempt to agree with Lee is confusing as fuck too.

The concept of fiat, in itself, suggests some entity to be able change the terms of the money at will, and bitcoin does not have that feature - or at least, it would be quite difficult to change bitcoin's money.

You, davis196, might be getting bitcoin mixed up with some shitcoin such as ethereum or one of the bcashes... bitcoin is quite the opposite of fiat.

Furthermore, your throwing in the concept of trust (or maybe you are trying to say that fiat and trust are the same thing, which they are not), of course, there may be some elements of trust that come with having a currency backed by a government or backed by gold or backed by hash power (such as bitcoin), but having trust in bitcoin for whatever reason is a concept that is different from the concept of fiat (even though they both garner trust, but based on different reasons).

Probably, davis196, you need to brush up on your understanding of the meaning of some words (maybe read the dictionary) because you seem to be mixing up ideas in an attempt to make some attempt at a profound point that makes hardly any sense in the context that you presented it.

[cryptoperkele]

So, this is getting confusing. Has there ever been a fiat money in the known history that has value that hasn't been maintained and manipulated by the government to be stable?

[figmentofmyass]

It's just either one of both:

1. The writer is simply ignorant about this *or just utterly stupid* which I really doubt for a statistics economist and for a dude that works for the federal reserve.

2. He's just spreading negativity to fit the agenda of the entity he's working for. I'm betting that this is the case. If anything, the fed is disincentivized for people holding bitcoin.

what he's saying isn't all that outlandish, nor is it FUD. it's just a matter of semantics.

some people define fiat money only as "money declared legal tender by government decree". others include fiduciary money---money that depends for its value on the confidence that it will be generally accepted (not intrinsic value)---under that definition.

Fiat money can be:
-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.
-intrinsically valueless money used as money because of government decree.
-an intrinsically useless object that serves as a medium of exchange (also known as fiduciary money.)
https://en.wikipedia.org/wiki/Fiat_money

i cater to the school of thought that says bitcoin has no fundamental, intrinsic value. its value is derived from market confidence.

while it differs structurally from conventional privately issued fiduciary/fiat monies, in many ways this is the most appropriate category for it. the lack of fundamental usefulness seems to preclude it being defined as commodity money.

the author actually calls "fiat" what i would consider to be "fiduciary" but again, these are just semantic issues.

[bitbunnny]

It's their theory but it's not convincing at all. It's a bit confusing and unreliable and I think that the only goal behind this is to get attention by some negative publicity. It was obvious that Bitcoin users would not accept that so it's also a kind of attempt to provoke. I wouldn't pay any attention to that article, not worth it.

[JayJuanGee]

It's their theory but it's not convincing at all. It's a bit confusing and unreliable and I think that the only goal behind this is to get attention by some negative publicity. It was obvious that Bitcoin users would not accept that so it's also a kind of attempt to provoke. I wouldn't pay any attention to that article, not worth it.

Some of us are paying attention, even if we are being intentionally provoked and/or trolled.

I personally do NOT believe it is a good idea to let trolls spout out misleading information, so to me it seems like an opportunity to provide our own various talking points and to show how desperate and vacuous some of the fed policies seem to be and to laugh in their faces at their seeming level of misleading bullshit that causes bitcoin to look good, comparatively speaking. 

Some people should be able to learn about what differentiates bitcoin, even from these kinds of nonsensical and misleading juxtaposition attempts.

[ChiBitCTy]

I am shaking my head. This classification is clearly wrong, however, why do this and why now?

I speculate that this might be a sign of desperation. However, it might also be a sign that the American government might do another round of attacks against the cryptospace because the digidollar is coming soon hehehe.


Michael Lee of the Federal Reserve Bank of New York

An editorial for the New York Federal Reserve’s Liberty Street Economics blog just classified Bitcoin as “another example of fiat money.”

In a post entitled “Bitcoin is Not a New Type of Money,” New York Fed Research and Statistics economist Michael Lee and Research and Statistic’s group Senior Vice President Antoine Martin envision money in three categories: fiat, asset-backed, and claim-backed.

Lee and Martin classify “fiat money [as] intrinsically worthless objects that have value based on the belief that they will be accepted in exchange for valued goods and services.” Incredibly, they assert that central-bank issued currencies are not pure fiat because of their “legal tender status.” They then go on to label Bitcoin, which the CFTC has classified as a commodity, as a fiat currency.

“Examples of fiat money without legal tender status include Rai stones or Ithaca HOURs. And Bitcoin is just another example of fiat money.”

Read in full https://decrypt.co/32940/new-york-fed-bitcoin-fiat-money

This is painfully obvious of the big picture he's missing here.  All these other types of monies are backed by the good faith/promise of a governed nation.  Bitcoin is obviously completely free of a centralized control , whos value is not promised by a bunch of bullshit like any fiat money is.

[Lorence.xD]

This is painfully obvious of the big picture he's missing here.  All these other types of monies are backed by the good faith/promise of a governed nation.  Bitcoin is obviously completely free of a centralized control , whos value is not promised by a bunch of bullshit like any fiat money is.

In a sense, Lee has a point, bitcoin does not have a value in itself, and I do not think that he is missing the bigger picture instead it is vice versa, you see bitcoin as a panacea for all your problems, try to see both sides of the coin figuratively. It is better if we were to listen and understand instead of blindly following. I might be wrong though and I accept it.

[stadus]

If that is how they looked at bitcoin, they it will be subject with the same regulation of fiat.
I clearly disagree with it for simple reason reason, fiat is centralized while bitcoin is decentralized, without a centralized system we can transact with bitcoin and that separates us from fiat.

The thing is, those regulators has no or little knowledge about bitcoin so they make a wrong judgment about bitcoin, I guess they need to educate themselves first, understand the basics before making some comments about it.