Bitcoin is a fiat currency. Come on now, take the time you need to get it out of your system. Breathe deeply. Blood pressure still high? Okay, let’s try this then.
What does fiat mean? An arbitrary order or decree. Fiat currencies are given their value by the authority of governments. It has value because the state decides it has value, and will accept it in paying taxes. So how do fiat bitcoins work?
The king gives up his hand and gives a paper value. But there is no owner of Bitcoin. right? mistake. It’s us.
We collectively give value to Bitcoin through our decision to use it. we Bring it into existence Through our collective arbitrary decision. Despite all the memes and descriptions of Bitcoin as digital gold, it is by no means a commodity. Bitcoin has no distinct use value or exchange value. It is not a physical raw material that can be transformed into something else. It is a database located on your computer. And I. And everyone.
The only reason Bitcoin is a single, monolithic thing in the first place is because…
everyone An arbitrary decision to use the same rules to validate changes in its database. Without it, Bitcoin would just be countless copies of conflicting databases in different countries around the world. There would be no Bitcoin, and therefore it could not have any value.
Its use value He is Their exchange value. They are two sides of the same coin, brought into existence by purely collective decree.
Bitcoin may be hard money, its supply may be limited, and all of these things may have the potential to change economic incentives globally. But it’s also a Fiat thing. All its possessions, all that it is, exists only because of our collective and arbitrary decision to create it.
Bitcoin is the world’s first stateless fiat currency.
This article is a takes. The opinions expressed are entirely those of the author and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.