Topic: Bitcoin is independent? or depends on fiat currency - page 13. (Read 3214 times)

Bitcoin is an independent currency and it is very pleasing. Its independence is proved by the fact that its price does not react to economic events on which Fiat money depends so much. This is very good and very happy. Soon I hope the dollar will collapse and maybe cryptocurrencies will go to a new level of turnover.

Tell me. What are USD(or any fiat currencies) do when we got a major rise of btc valuation at october last year? Or at least what news/events that significantly  related to the major rise?
I disagree with it. Btc valuation has nothing to do with fiat. Simply because the key factor of valuating BTC is supply and demand chain. Nothing fundamental aspect has do significantly into btc  valuation

Bitcoin, unfortunately, has long lost its originality, for which it was created. Now it's a completely dependent tool in the hands of big players.

I do not think the BTC price is tied to any fiat currency in the world. Still, I think that BTC is not as independent of the governments of the big countries as we want it to be.

at least so far bitcoin has done a positive thing with fiat, can coordinate with each other when they need each other. 

A currency unit acts as an intermediary used to dominate cash flows, and is also a means of storing values in case you do not want to invest. When viewed independently, currencies do not have the cash flow nor can they be measured, but they can be priced based on other currencies. In the long run, currencies are widely accepted as intermediaries, and for them to store better value over time will increase their prices relative to other currencies. have these characteristics. In the short run, other forces include the government trying to manipulate exchange rates that can stand up.

Many other Fiat currencies are in dollars, in my opinion, as well. If there is nothing to measure Bitcoin, then the value will not be there. The appearance of it in the market must depend on the most commonly used currency in the world, the dollar. Today, Bitcoin prices determine the price of Altcoins, in other words, Altcoins depend on Bitcoin.

Right now I am thinking that one is dependent from local currencies because the only way how you can buy your bitcoin for real it is by using a local money as USD/EUR/GBP and etc.

Between bitcoin and altcoin, there is a synergistic effect if one of them has a price change that will cause the market to fluctuate.

I think what you say is that bitcoin does not depend on fiat, bitcoin prices are never influenced by the rise or fall of any fiat currency, fiat and bitcoin are only things that are exchanged in transactions.

Bitcoin is independent because it was run in the digital world. The value of Bitcoin is moving up and down because of it supply and demand in the market. Infact the money exchange between Bitcoin and dollars will always be like that as dollars is seen as a higher value currency in the world.

I believe that everything is made for a certain or specific purpose just like how bitcoin is made. It is made for a certain purpose different to fiat. I do not think bitcoin is made to create a thing against fiat. It is not always the negativity that runs over something.

To me I could say bitcoin is independent to any currency particularly the most currency tradable in the world market which is dollar($). Sometimes there could be a fall or decline in dollar rate and doesn't have a effect on our bitcoin dito to other fiat currency like €,£ etc. This fiats doesn't affect bitcoin for whatsoever reason.

bitcoin has a fluctuating nature which in other words will not be regulated by the state, so because this is why bitcoin is not based on the money stock exchange and has no effect with fiat money as you conclude. bitcoin growth is due to limited supply and market needs between buyers and sellers.

Bitcoin in my opinion does not depend on fiat currencies. The fact that it's the easiest way for people to measure it for instance in USD deosn't mean something bad will happen with bitcoin if there was no USD.

In my opinion it's independent because i'm sure one day bitcoin will replace any fiats and be a global currency.
If not bitcoin, i bet it still around blockchain or cryptocurrency

You are wrong.Bitcoin is valued in different currencies in the corresponding countries.Its mostly mentioned in dollars asvit could be easily understood all over the world and that doesn't mean that bitcoin value depends on fiat currency.

You shouldn't be misunderstanding the relationship between fiat and cryptocurrency. The Bitcoin's value is interpreted via fiat so that anyone regardless of their country's currency has a reference value to convert from. Also when you buy Bitcoin you use fiat that is the main relationship of the two. In terms of system Bitcoin is not dependent on fiat. They are both currencies but doesn't have the same purposes. After all, Bitcoin is decentralized and independent.

I suggest you read this, Tim Swanson wrote the! Why Bitcoin Needs Fiat (And This Won't Change in 2018)



Tim Swanson is the director of research at Post Oak Labs, a U.S.-based technology advisory firm, and the former director of research at distributed ledger technology consortium R3.
Imagine a parallel universe in which the U.S. economy could only grow at $50 every 10 minutes generating a mere $2.6 million of output per annum. That due to a hard-coded economic planning computer program, every four years the income its inhabitants collectively generated divided in half. Such that in year nine, its output shrank and was $12.50 every 10 minutes or $657,000 a year.

That is to say, irrespective of how productive and skilled the labor force became or how large the labor force grew, the productive output in the U.S remained fixed and static with the only change (downward in this case) occurring just once every four years.

How many people would volunteer to live and work in that "Upside Down" world?

This situation effectively mirrors the static, internal economy of bitcoin and many other cryptocurrencies.

For instance, with proof-of-work networks like bitcoin, the marginal productivity of labor is zero. It does not matter how many more units of labor are added to the income generation (mining) process as the network will always produce the same amount of economic output.

Today, after nearly nine years of operation, the bitcoin network – better referred to as Bitcoinland – generates 12.5 bitcoins roughly every 10 minutes. Irrespective of external economic conditions, of demand, the Bitcoinland economy will generate about 657,000 bitcoins per year in its third epoch.

While comparisons with aggregate measurements like GDP and money supplies may be an imperfect analogy, the fact that economic expansion as measured in output can – with the exception of a fork and rule change – never change in bitcoin due to its inelastic coin supply is arguably detrimental to its unit of account.

The purposefully planned sameness is often extolled as a "feature not a bug," and many cryptocurrency enthusiasts like to daydream for when regulators and financial institutions of our own world disappear, eaten up by grey goo nanites funded by bitcoins.

But before bitcoiners can reach their Upside Down nirvana state, they need to resolve the underlying omnipresent economic calculation challenge facing their security system and labor force.

The phenomenon is simple to describe: virtually no participant in Bitcoinland conducts economic calculations (such as pricing) for any goods or services in cryptocurrencies such as bitcoin.  There are many reasons for this, including chronic volatility.


ncreasingly high ($10+) transaction fees that result in hemorrhaging of merchants (even their very own Cobra Commander acknowledges this issue).


Labor force
If Bitcoinland is viewed as its own sovereign (virtual) nation-state, the only wages any native participant receives in return for any kind of service rendered is what miners are paid to solve and "vote" on a benign problem about once every 10 minutes.

From the perspective of the network: developers, maintainers, administrators, enthusiasts, Twitter sock puppets, meme artisans, flame war veterans, self-appointed thought leaders, pumpers, hat wearers, etc., are all viewed as foreign third parties and can only receive bitcoins after they are first minted by the miners.

Much like multinational corporations (MNC) with large overseas operations, miners of cryptocurrency networks as a whole do not measure the income they receive in terms of bitcoins (or other discrete cryptocurrencies), but instead they measure their income in terms of "fiat" from foreign financial markets, specifically converting bitcoins into the local fiat currency where their mining operation physically resides.

However, unlike MNCs that eventually repatriate some or all of their capital back to their headquarters, aside from a recycling of coins into ICOs, most cryptocurrency-focused companies are still dependent on what amounts to foreign domestic income (FDI), regular injections of foreign capital from venture firms in order to grow or even measure enterprise valuations.

Miners do this because the unit of account for fiat currency is typically stable and liquid, such that they can pay wages to their employees, pay rent, electrical costs, property taxes, etc. There are exceptions to stability, such as planned economies of Venezuela and Zimbabwe which have suffered from years of political chaos, but in general, most developed countries and even developing countries have relatively stable domestic currencies relative to Bitcoinland.

And because bitcoin is still not used as a unit of account, its labor force (miners), rely on a third-party reference data in order to conduct all economic calculations.  That is to say, in order for Bob the miner to accurately calculate if he should increase or decrease consumption (and investment) of capital, or to measure whether his mining operation is profitable, Bob projects future revenue based on a unit of account that is stable, in this case, currency from foreign capital markets.

During the Cold War there was a joke in academia: that the Soviet Union would conquer the world with the exception of New Zealand (other versions used Switzerland as the cut-out). New Zealand would be left alone because the Politburo needed a functioning market so that the Soviets could know what the market prices were for goods and services.

While Bitcoinland may be attracting large sums of foreign capital, miners continually still need very liquid over-the-counter (OTC) and spot exchanges denominated in foreign currencies because it is with these foreign currencies that they pay their bills.

In this case, despite their own defects and problems, the U.S., eurozone, Japan, South Korea, China and several other countries effectively stand in for "New Zealand," such that the national currencies and prices in these countries reflect dynamic economic conditions that bitcoin miners can use as reference rates in their capital consumption projections.

Final remarks
In 2018, just as the past nine years, miners will still depend on foreign financial markets for both stable pricing and liquidity. If the existing traditional financial markets became chaotic and unstable, miners would be unable to rationally plan and allocate for future investments.

For instance, the unseen costs of hash generation for a hypothetically stable $20,000 bitcoin would be about $13 billion in capital consumed by miners in their rent-seeking race.

And that is just one proof-of-work coin. If there were dramatic bouts of volatility, or even an extended bear market, this could result in bankruptcies like CoinTerra, HashFast or KnC previously went through, though that is beyond the speculation of this article.

Ironically, despite all the bluster, because cryptocurrency ecosystems lack a circular flow of income, they will still be dependent on the very financial system they vilify for daily support and stability.

And while there have been many "stablecoin" projects announced and launched over the past year, nearly all of them are not only dependent on commercial bank accounts, but also on the economic stability of a specific economic region they aim to serve. Guess what set of entities provides that type of relative stability?

Ideological enthusiasts will likely resort to whataboutisms and respond by bitcoinsplaining: how dirty filthy statists will censor your virtuous darknet market transactions and that maintaining proof-of-work networks is worth any cost to the environment! But again, that is for a snarky article on a different day.

Empirically with proof-of-work-based blockchains, the labor force and the liquidity providers all still depend on functional, mature foreign capital markets in order to convert their coins into real money. Perhaps this will change as more hedging products, courtesy again of foreign financial markets, are brought online.

While the traditional financial markets will continue to exist and grow without having to rely on cryptocurrencies for rationally pricing domestic economic activity, in 2018, as in years prior, Bitcoinland is still fully dependent on the stability of foreign economies providing liquidity and pricing data to the endogenous labor force of bitcoin.

Source: https://www.coindesk.com/bitcoin-still-needs-fiat-currency-wont-change-2018/

bitcoin still depends on fiat. look only at the recent leap course and what happened to bitcoin and everything will become clear to you