Topic: What prevents Bitcoin going fiat? (Read 5929 times)

I could accept that definition as well.  What bothers me is when people use the word "fiat" to erroneously describe representative money in abstract, such as money with fractional reserve backing, no backing, or some other construct commonly associated with certain fiat moneys.

I consider 'fiat money' to be money that is *created* by government decree, not merely used by order of government decree. And thus if Finland declared Bitcoin to be their national currency, it would not be fiat money by my definition. Likewise if the US government declared gold and silver coins to be legal tender they would not be fiat money.

It pains me to see the word "fiat" used repeatedly this way.  Words have precise meanings.  The word "fiat" means "by government decree". Fiat money is money that is made so by government decree.  It can be paper, gold, bitcoins, notched sticks, or giant stones.  If the government of Finland declares Bitcoin to be their national currency, bitcoins would technically be a fiat currency in Finland.  "Fiat" does not mean representative money, such as notes, checks, or electronic credits. A private bank could hypothetically issue a note without a government decree, and it would still be "worthless paper", but it would not be "fiat".  

+1

The stupid and lazy will always find ways to punish themselves needlessly.

I don't think you understand bitcoin very well (or at all, actually).
If you would freeze the blockchain then no transactions of bitcoin would be possible.
If you were then to trade wallets then you would need a new and separate system from bitcoins.
It would be the most effective way of not needing bitcoins.

The moment the blockchain is frozen is the moment bitcoin is not needed anymore.
Right now, bitcoin is part free, part fiat.
What you effectively talk about is changing bitcoin to pure fiat by completely removing the bitcoin component. Woohoo..

The main cases I think where "Fiat" for Bitcoin (ie. Bitcoins in "bank accounts") would make sense is for microtransactions and instant transactions.
We already sort of have this with Mt.Gox codes for example.

Said it before, and will say it again:

Bitcoin is a backing currency. That's what it's most suitable for. If someone makes proxies, you have to trust the guy, and if too much value piles up, you demand the actual BTC transaction.

With that, it will never be like EUR or USD, where someone just blows the money supply into sky-heights.

This is a great explanation, thanks!

I think that thye next big film that features a 'geeky' topic or such a character could make reference to Bitcoin and that would expose it to the masses.  That would probably imnspire another bubble like last year!

One aspect is its current market capitalisation. $100mill is considered very very small. We need to wait a little while for it to hopefully grow to something more meaningful before its even thought of to be used alongside fiat.

thank's for the inputs. Bitcoin can be many things, also serving conflicting interests.

Yeah, this is a good point... There's no reason why a currency initially backed by bitcoin but eventually broken off from it wouldn't develop. FRB too. But with bitcoin, it's lots easier to transact with the actual underlying currency, so more people would tend to do so, which limits the extent to which the "fiat" side of things is likely to get leveraged.

I still think it would happen.....just not to the degree it has with dollars.

2346 posts and now 2347... who's a troll

This is an prime example of a concern troll.

As you propose, people could create a currency originally tied to bitcoin & eventually break off just like dollars/euros did w/ gold.  The biggest difference is the trade offs made.  There were a lot of pros of using dollars over gold even after it was no longer backed by gold.  Gold is heavy, can't be transferred via check or credit card, etc.  Now look at bitcoins.  What are the benefits of going w/ physical coins or prepaid cards over bitcoin (assuming bitcoin is as popular as dollars/euros)?  None that I can think of.

I got into Bitcoin last fall to educate myself on economics. Living in Europe I kept wondering how short term gains and high risk stakes again and again could get banks and other kind of big business in trouble, they should know better. At the same time governments across Europe including my own, excelled in showing how little control and understanding of the situation they had. I went to business high school in the late 80'ies. Reading about Adam Smith and Marslow made my stomach turn (Marslow was not an economist, he warned about the trap of unhappiness  18'th century factoryworkers ended up in being both workers and consumers to the same factories. In my textbooks his points was turned around to defend this kind of class society stating there was such a thing as x- and y-people, the latter being content with being told what to do and provided with food and shelter.)   It was at the height of the YUPPIE culture. "Wall street" the movie was not praised because of it's warnings amongst my class mates, rather it was seen as an educational film on how to get rich fast. Rather disillusioned I threw myself at electronics engineering, which I have never regretted.


I looked at Scryptcoin and yes I believe that without inflation it's impossible to raise capital for anything as hoarding always will be less risky than investing and consumption in society will suffer. However it has it's own inbuilt cyclic failure. Which only war and abundant resources can mediate, both of which are harder to get,  and get by with, in a globalized economy. My OP was a rather simple question in the same sentiment as people asking if big mining pools are a threat.

I see Bitcoin as a tool to eliminate the man in the middle like what music sharing did for the artists eliminating the need for CD's and their industry. Some labels have adopted and are trying to assimilate free file sharing and commercialize it.
Bitcoin can also act as a safety net in times of economic turmoil and the P2P'ness of bitcoin is important to emphasize. Free money as in free people!

If Bitcoin can be a world currency? It's not my concern i'd rather not, at that point it will only be a brand as things are now. The uptrend we are in right now is kind of distracting but nevertheless the one thing Bitcoin needs to grow. Bitcoin is an educational tool to teach yourself and society about what money in general is. Spread the word, not only the bling. If more people know the concept of decentralized currency people would demand more transparency and not so easily let them self be mislead by promises of growth (quite a popular word in the mouths of european politicians) and other magical catchphrases. Bitcoin is a liberator.

We can blame the state of the world economics on the banks our politicians but equally also on our self, i.e. human nature. Outsmarting the system is a human trait not necessarily the fault of a currency. We need the smartest people in the parliament and not in the financial institutions.

If bitcoin goes fiat by choice in the marketplace, there is no problem. Government fiat currencies are forced upon the population.

Well it's up to the people to educate themselves and prevent such things from happening. A tough task, but the people of society need to learn to stop relying on what media and government and big corporations feed them. Hopefully cryptocurrencies can provide enough upset to the general order of things and be the catalyst to make people begin to realize there's more to what's going on than black or white, red or blue.

I don't know how much you've studied the underlying potential economics of bitcoins, but imo you might be eerily close to what happens in regards to higher level payment systems not because it's inevitable, but because the cost of running bitcoin goes down the fewer people/corporations that run it, making it ripe for a monopoly or something close to one. It's one part of the reason behind my proposal for Decrits, a cryptocurrency that works in a completely different way. Part of the objective is to make sure that running the network is never out of the reach of an everyday person. Bitcoin doesn't care, really. If that piques your interest feel free to check the link in my sig.

Great Etlase2, That's what i'm talking about. I know it's nonsense to talk about the purpose of a currency, but what appealed to me about Bitcoin in the first place was the ideology of a P2P currency. Big private money might decide not to run to an exchange to buy coins, Neither invest in mining gear. They might try to monopolize Bitcoin as a payment issuer or controller through a higher level payment system. Bitcoin can still be the underlying protocol, but no longer the currency people touch. The analogy with email is in some sense right, but webmail do not need smpt or any of the older somewhat tamper-safe protocols any more. You could provide a crappy java webmail interface with ease of use as a selling point, and people would not care that they risk old messages being edited by you or others. In the 80'ies people did not consider an email as trustworthy as a signed letter or a written confirmation, so a lot of thought was put in to the protocol at many levels to prevent forgery. Now people use webmail or Facebook walls and trust Zuckerberg not to erase or change anything. So the ease of use and adoptation has made the idea a global success but the underlying trustworthiness has been forgotten. The same can happen to Bitcoin, worldwide adoptation can turn it into something else, less safe from manipulation, easier to control.

Massive non-sequitur from the title of the post to the contents of it.

As for Bitcoin going fiat: the network prevents it.

Can a fiat currency be made based off bitcoin or an analogous system? sure it can.