Hacker News Reader

Comment by gnaritas | Hacker News Reader

> If mining additional Bitcoins at present is not economically viable than Bitcoins are not (currently) a fiat currency.

Whether Bitcoin can be mined or not has absolutely nothing to do with whether it's a fiat currency or not, so your logic does not follow. Fiat doesn't mean "can easily manipulate". Any currency that isn't backed by (value derived from) a hard asset is a fiat currency. Burning electricity to create bitcoin's is not "backed by", that electricity is gone, used up, wasted. Other crypto currencies like peercoin or primecoin address bitcoins wasted energy, but they are all fiat currencies. Their value derives from confidence, not assets.

View on HN

> Any currency that isn't backed by (value derived from) a hard asset is a fiat currency.

(I'm not a gold bug, I could care less about gold, if gold offends, substitute some other tangible commodity)

That's my point that Bitcoin is more of a commodity currency and is not (at present) a fiat currency. The fact that the electricity is gone doesn't make any difference. Mining gold requires fuel and labor which is gone, used up, and what remains is gold. This expense is what limits the production of and correlates the commodity to the underlying economy.

What is really interesting is your assertion that the value derives from confidence and not assets. I would argue that value derives from the fact that its supply is limited by the use of resources and labor.

I agree it's acting more as gold now, but there's no doubt it's intended to be a currency and as a currency it's inherently a fiat currency. However gold is a hard asset that has actual real world uses outside its monetary value; it's a fantastic metal.

Its limited supply doesn't give it value because it's but one of many crypto currencies[1] and its value is derived only from being the first mover and thus network effects and confidence. That money could easily abandon Bitcoin and flee into another crypto currency any time general confidence in it fails; for example if say LTC or PPC show more stability over time because of their differences from BTC and BTC fails to stabalize over time due to its deflationary nature.

[1] http://coinmarketcap.com/

Reply on news.ycombinator.com