Hacker News Reader

Comment by teebs | Hacker News Reader

Just based on the Wikipedia article, I don't think you're right that fiat implies manipulation: 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.

View on HN

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.

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'

Exactly. Somebody said "it shall be" and behold, there were bitcoins. Fiat currency means no physical asset backing it. Bitcoins have no physical backing.

Please, go ahead. Create some Bitcoins. I'm waiting..

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).

Reply on news.ycombinator.com