Bitcoin is fiat. Now go ahead, take the time you need to get it out of your system. He took a deep breath. Blood pressure still high? Okay, let’s try this then.
What does fiat mean? Improper order or declaration. Fiat currencies are assigned value by government mandate. They have no value because the State decides they have value, and will accept them when taxes are paid. So how is Bitcoin fiat?
The king raises his hand and gives a fiat value. But there is no King of Bitcoin. OK? It’s wrong. Say it.
We collectively give Bitcoin value by our decision to use it. We make it exist by our collective decision without reason. Despite all the memes and descriptions of Bitcoin as digital gold, it is by no means a commodity. Bitcoin does not have a separate use value and exchange value. It is not a raw material that can be transformed into something else. It is a web site that resides on your computer. And mine. And everyone else.
The only reason Bitcoin is a parallel thing in the first place is because
everyone arbitrary decision to apply the same rules to verify changes in its database. Otherwise, Bitcoin will just be multiple copies of conflicting information in different states around the world. There would be no Bitcoin, and therefore no value.
Its use-value is something its exchange rate. They are two sides of the same coin, created only by the collective law of fiat.
Bitcoin could become a hard currency, it could run out of supply, it could be all of these things that could change economic incentives around the world. But it’s also fiat. Every property it has, everything it is, exists because of our collective and irrational decision to make it exist.
Bitcoin is the world’s first stateless fiat.
This article is a Take it. The views expressed are entirely those of the author and do not reflect those of BTC Inc or Bitcoin Magazine.