Semantics of "fiat"

[amspir]

It seems to me that many bitcoin proponents use the word "fiat" to describe central bank issued fiat currency, but don't use the word to describe Bitcoin.

In my opinion, Bitcoin is the ultimate fiat currency, since it has no inherent value (you can can't use it for anything other than paying someone else bitcoin).  It is a currency issued by "decree" through a protocol enforcing a consensus of users and miners.

If bitcoin is not fiat, can you really call it a commodity currency?   If the argument is that is a commodity in the sense that it valuable a currency, one could also say that USD has commodity value in that its only guaranteed value is that it can be used to pay taxes and keep an American taxpayer out of jail for failure to do so.

[1715005942]

1715005942

[teukon]

In my opinion, Bitcoin is the ultimate fiat currency, since it has no inherent value (you can can't use it for anything other than paying someone else bitcoin).  It is a currency issued by "decree" through a protocol enforcing a consensus of users and miners.

The term "fiat" in this context describes the root of the value of a currency, not its issuance.

[thelibertycap]

It seems to me that many bitcoin proponents use the word "fiat" to describe central bank issued fiat currency, but don't use the word to describe Bitcoin.

In my opinion, Bitcoin is the ultimate fiat currency, since it has no inherent value (you can can't use it for anything other than paying someone else bitcoin).  It is a currency issued by "decree" through a protocol enforcing a consensus of users and miners.

If bitcoin is not fiat, can you really call it a commodity currency?   If the argument is that is a commodity in the sense that it valuable a currency, one could also say that USD has commodity value in that its only guaranteed value is that it can be used to pay taxes and keep an American taxpayer out of jail for failure to do so.

definition by wikipedia
Fiat money is currency which derives its value from government regulation or law.

how is it related to bitcoin?

[amspir]

In my opinion, Bitcoin is the ultimate fiat currency, since it has no inherent value (you can can't use it for anything other than paying someone else bitcoin).  It is a currency issued by "decree" through a protocol enforcing a consensus of users and miners.

The term "fiat" in this context describes the root of the value of a currency, not its issuance.

And the root of the value is?   Without a network of computers and people and businesses willing to trade it for something of value, what exactly is that value?

[amspir]

definition by wikipedia
Fiat money is currency which derives its value from government regulation or law.

My problem is with the semantics, and just because the great oracle of wikipedia qualifies the definition of fiat with the descriptor "government", doesn't mean bitcoin is not a fiat currency as opposed to a commodity currency.     My point is that bitcoin is a rather novel way of creating a fiat currency without a government, or at least what is considered a government.

how is it related to bitcoin?

The issue is why people consider Bitcoin not to be a fiat currency.

[R2D221]

definition by wikipedia
Fiat money is currency which derives its value from government regulation or law.

My problem is with the semantics, and just because the great oracle of wikipedia qualifies the definition of fiat with the descriptor "government", doesn't mean bitcoin is not a fiat currency as opposed to a commodity currency.     My point is that bitcoin is a rather novel way of creating a fiat currency without a government, or at least what is considered a government.

how is it related to bitcoin?

The issue is why people consider Bitcoin not to be a fiat currency.

So, are you disregarding the definition altogether?

[amspir]

So, are you disregarding the definition altogether?

No, I am saying there is a problem with the definition.   Currency is either fiat currency or a commodity currency.   A representative currency represents either fiat currency or a commodity.

Since bitcoin represents no commodity, I conclude that it is a fiat currency.   Before cryptocurrency, there was no way to create a fiat currency without a government.   That doesn't mean bitcoin is not a fiat currency, but rather the ultimate in a fiat currency, since it requires no conventional government to issue it. 

[R2D221]

So, are you disregarding the definition altogether?

No, I am saying there is a problem with the definition. [...]

Yes, but you can't arbitrarily redefine words. People need to understand each other, and that's why there are words with agreed meaning.

And the agreed meaning of “fiat currency” is “a currency which value is regulated by a government”.

[amspir]

So, are you disregarding the definition altogether?

No, I am saying there is a problem with the definition. [...]

Yes, but you can't arbitrarily redefine words. People need to understand each other, and that's why there are words with agreed meaning.

And the agreed meaning of “fiat currency” is “a currency which value is regulated by a government”.

That's not the definition of fiat.   The only "value" that the US government can control on your US dollars is the amount of US Dollars needed to pay your taxes and keep you out of jail for tax evasion.   Everything else is determined by how many US dollars a seller will take from a buyer for something else of value.

If you meant to say the meaning  of fiat is "currency issued by a government not backed by a commodity" --

then replace "government" with a "a consensus of bitcoin miners" and you have Bitcoin.   

[aantonopoulis]

So, are you disregarding the definition altogether?

No, I am saying there is a problem with the definition.   Currency is either fiat currency or a commodity currency.   A representative currency represents either fiat currency or a commodity.

Since bitcoin represents no commodity, I conclude that it is a fiat currency.   Before cryptocurrency, there was no way to create a fiat currency without a government.   That doesn't mean bitcoin is not a fiat currency, but rather the ultimate in a fiat currency, since it requires no conventional government to issue it.  

The defining characteristic of fiat is zero (or effectively zero) cost of production.  Hence, bitcoin is not fiat.  "Commodity money" is a redundancy, as any tradeable good, including money, and yes proof of hash work, is a commodity.  In particular, money is an exchange commodity.  

    

[R2D221]

So, are you disregarding the definition altogether?

No, I am saying there is a problem with the definition. [...]

Yes, but you can't arbitrarily redefine words. People need to understand each other, and that's why there are words with agreed meaning.

And the agreed meaning of “fiat currency” is “a currency which value is regulated by a government”.

That's not the definition of fiat. [...]

Let's see what the Internet says about it:

Fiat money is currency which derives its value from government regulation or law.

Currency that a government has declared to be legal tender, but is not backed by a physical commodity.

money (as paper currency) not convertible into coin or specie of equivalent value

Paper money or coins of little or no intrinsic value in themselves and not convertible into gold or silver, but made legal tender by fiat (order) of the government.

To be fair, from my quick search, there's one site (Merriam Webster) that mentions nothing about the government; but others do. So, you can't just say “That's not the definition of fiat” when most people disagree with you.

[cellard]

So, are you disregarding the definition altogether?

No, I am saying there is a problem with the definition.   Currency is either fiat currency or a commodity currency.   A representative currency represents either fiat currency or a commodity.

Since bitcoin represents no commodity, I conclude that it is a fiat currency.   Before cryptocurrency, there was no way to create a fiat currency without a government.   That doesn't mean bitcoin is not a fiat currency, but rather the ultimate in a fiat currency, since it requires no conventional government to issue it.  

The defining characteristic of fiat is zero (or effectively zero) cost of production.  Hence, bitcoin is not fiat.  "Commodity money" is a redundancy, as any tradeable good, including money, and yes proof of hash work, is a commodity.  In particular, money is an exchange commodity.  

    

But how is fiat zero cost production? The paper, ink, machines that do the printing, the artists that decorate the cash... who pays these then?

[amspir]

The defining characteristic of fiat is zero (or effectively zero) cost of production.  Hence, bitcoin is not fiat.  "Commodity money" is a redundancy, as any tradeable good, including money, and yes proof of hash work, is a commodity.  In particular, money is an exchange commodity.  

I'm not arguing that bitcoin is not modeled after a commodity, but the "value" is virtual.  If I hand you a paper wallet with an address and a private key on it, you can't use it for anything else other than scanning the key and spending it on something with a seller that will give you something for it in trade.   With gold you can use it in building electronics that need non-corrosive conductors, oil can be used to run your car, rice can be eaten.  Bitcoin's only value is that it can be traded for something of value which started when the first person ordered someone else a pizza for bitcoin.

You seem to be saying that there is no difference between a fiat currency and a commodity.  That is one way to look at things, because you could argue that a post-Nixon US dollar has value as a commodity because the US government accepts it to pay your taxes and keep you out of jail.

[amspir]

Yes, but you can't arbitrarily redefine words. People need to understand each other, and that's why there are words with agreed meaning.

And the agreed meaning of “fiat currency” is “a currency which value is regulated by a government”.

That definition would be wrong.   The value of a currency is determined by what other people are willing to trade for it.   The government may try to regulate the value by pegging a currency to another government fiat currency, forbidding non-government exchanges, or fixing prices on goods, but inevitable black markets and black market currency exchanges will give you the true value.

[R2D221]

Yes, but you can't arbitrarily redefine words. People need to understand each other, and that's why there are words with agreed meaning.

And the agreed meaning of “fiat currency” is “a currency which value is regulated by a government”.

That definition would be wrong.   The value of a currency is determined by what other people are willing to trade for it.   The government may try to regulate the value by pegging a currency to another government fiat currency, forbidding non-government exchanges, or fixing prices on goods, but inevitable black markets and black market currency exchanges will give you the true value.

Because money printing doesn't affect the value at all.

Als, you seem to disregad my last comment, about the multiple definitions of fiat money online.

[amspir]

Let's see what the Internet says about it:

Fiat money is currency which derives its value from government regulation or law.

Completely wrong.   Governments can regulate commodities and tell you how much they are worth, but it doesn't make it a fiat currency.

Currency that a government has declared to be legal tender, but is not backed by a physical commodity.

Legal tender, meaning that you can pay a government debit with it.   A generally accepted definition of fiat currency, in that it is not backed by a commodity.

money (as paper currency) not convertible into coin or specie of equivalent value

That makes no sense.  Misquote?

Paper money or coins of little or no intrinsic value in themselves and not convertible into gold or silver, but made legal tender by fiat (order) of the government.

Sounds close.

To be fair, from my quick search, there's one site (Merriam Webster) that mentions nothing about the government; but others do. So, you can't just say “That's not the definition of fiat” when most people disagree with you.

Here is the rub:  If you classify currency as EITHER fiat OR a commodity or commodity-backed currency (USD before Nixon),  then I think bitcoin is a fiat, with the "government" being the consensus of miners regulating the issuance of bitcoin.   You just can't go back to the miner and ask for some electricity and hardware in exchange for the bitcoin they mined that you currently hold.

The term "government" in relation to fiat currency is vague.   US dollars are issued by a private bank AKA the Federal Reserve that is not really controlled by the US government.   Euros are not issued by one government, but rather a cartel of governments.

[twiifm]

Let's see what the Internet says about it:

Fiat money is currency which derives its value from government regulation or law.

Completely wrong.   Governments can regulate commodities and tell you how much they are worth, but it doesn't make it a fiat currency.

Currency that a government has declared to be legal tender, but is not backed by a physical commodity.

Legal tender, meaning that you can pay a government debit with it.   A generally accepted definition of fiat currency, in that it is not backed by a commodity.

money (as paper currency) not convertible into coin or specie of equivalent value

That makes no sense.  Misquote?

Paper money or coins of little or no intrinsic value in themselves and not convertible into gold or silver, but made legal tender by fiat (order) of the government.

Sounds close.

To be fair, from my quick search, there's one site (Merriam Webster) that mentions nothing about the government; but others do. So, you can't just say “That's not the definition of fiat” when most people disagree with you.

Here is the rub:  If you classify currency as EITHER fiat OR a commodity or commodity-backed currency (USD before Nixon),  then I think bitcoin is a fiat, with the "government" being the consensus of miners regulating the issuance of bitcoin.   You just can't go back to the miner and ask for some electricity and hardware in exchange for the bitcoin they mined that you currently hold.

The term "government" in relation to fiat currency is vague.   US dollars are issued by a private bank AKA the Federal Reserve that is not really controlled by the US government.   Euros are not issued by one government, but rather a cartel of governments.

I agree with you.  I find it especially annoying that these bitcoiners just learned the word "fiat" and they keep using it all the time.  Nobody goes around calling modern money fiat unless they're a conspiratard.  We just call it "money"

The word fiat is just Latin for "let it be done", "it shall be" aka created from thin air.  Which is Bitcoin.  Created from thin air.  Big difference is USD derive the price from Treasury bonds (future debt of USA).  Bitcoin price derived from millennial speculators

[R2D221]

Fiat money is currency which derives its value from government regulation or law.

Completely wrong.   Governments can regulate commodities and tell you how much they are worth, but it doesn't make it a fiat currency.

Wikipedia is the encyclopedia where anyone can edit. So, if you're sure that your definition is correct, you shuold fix it for the benefit of the community. But, remember the [citation needed].

money (as paper currency) not convertible into coin or specie of equivalent value

That makes no sense.  Misquote?

I don't know. I only show the sources. If you think this definition doesn't make sense, then you should contact Merriam Webster.

Here is the rub:  If you classify currency as EITHER fiat OR a commodity or commodity-backed currency (USD before Nixon),  then I think

You think?

bitcoin is a fiat, with the "government" being the consensus of miners regulating the issuance of bitcoin.   You just can't go back to the miner and ask for some electricity and hardware in exchange for the bitcoin they mined that you currently hold.

As a matter of fact, you can. It's called “selling a product or service”.

The term "government" in relation to fiat currency is vague.   US dollars are issued by a private bank AKA the Federal Reserve that is not really controlled by the US government.   Euros are not issued by one government, but rather a cartel of governments.

OK, from the site of the Federal Reserve (emphasis mine):

The Federal Reserve System fulfills its public mission as an independent entity within government.  It is not "owned" by anyone and is not a private, profit-making institution.

As the nation's central bank, the Federal Reserve derives its authority from the Congress of the United States. It is considered an independent central bank because its monetary policy decisions do not have to be approved by the President or anyone else in the executive or legislative branches of government, it does not receive funding appropriated by the Congress, and the terms of the members of the Board of Governors span multiple presidential and congressional terms.

However, the Federal Reserve is subject to oversight by the Congress, which often reviews the Federal Reserve's activities and can alter its responsibilities by statute. Therefore, the Federal Reserve can be more accurately described as "independent within the government" rather than "independent of government."

As far as I understand, the Federal Reserve is subject to the government, and so, by transitivity, the money they create is also subject to the government.

As for the EU, a “cartel” of governments, as you call it, also means that the Euro is government-controlled. I don't understand what's your confusion here.

[amspir]

The word fiat is just Latin for "let it be done", "it shall be" aka created from thin air.  Which is Bitcoin.  Created from thin air.  Big difference is USD derive the price from Treasury bonds (future debt of USA).  Bitcoin price derived from millennial speculators

It is, and I think the definition should derive from the translation of the word, not what is currently listed in Wikipedia.   I think that millennials have like, completely changed the meanings of LITERALLY MILLIONS of words.

[R2D221]

The word fiat is just Latin for "let it be done", "it shall be" aka created from thin air.  Which is Bitcoin.  Created from thin air.  Big difference is USD derive the price from Treasury bonds (future debt of USA).  Bitcoin price derived from millennial speculators

It is, and I think the definition should derive from the translation of the word, not what is currently listed in Wikipedia.   I think that millennials have like, completely changed the meanings of LITERALLY MILLIONS of words.

Exactly. That's how language evolution works, We can't hang on to the definitions of the past, which nobody uses anymore in the present.