Bitcoin is also a fiat currency. A fiat currency is a currency that is not represented by a good but instead a belief that that thing is worth something. The US dollar use to be federal reserve notes that represented Gold or silver, now they moved away from that standard so they can make as much money without having to worry about pumping out gold for fort Knox.
That is how you gain them, one could argue that money is represented as debt notes that countries like, germany, japan, and china buy from us so we can make more money. Also it could be represented by the paper, fabric, electricity, and labor it takes to make $1. But if you ran to the government and said, I want my fair share of what this dollar is worth, what will they give you? What will someone in the bitcoin community give you? They can give you a product, because they believe in that currency, not that it actually represents anything. My father argued about this with me a while back and had said that, well dollars are represented by our trust in the US government, Bitcoin is represented by the trust in the big players.
Take this snippet from wikipedia, "Fiat money has been defined variously as:
Any money declared by a government to be legal tender.[5]
State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.[6]
Intrinsically valueless money used as money because of government decree.[1]
While gold- or silver-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of gold or silver, fiat money's value is unrelated to the value of any physical quantity. A coin is fiat currency to the extent its face value, value defined in law, is greater than its market value as metal.[3]"
It does state government issued or state issued, but I believe that is due to the fact that crypto isn't that widely known, I do believe this is still covered under this.
Also see this snippet from techopedia.com:
"As a counter-culture movement that is often connected to cypherpunks, cryptocurrency is essentially a fiat currency. This means users must reach a consensus about cryptocurrency's value and use it as an exchange medium. However, because it is not tied to a particular country, its value is not controlled by a central bank. With bitcoin, the leading functioning example of cryptocurrency, value is determined by market supply and demand, meaning that it behaves much like precious metals, like silver and gold."
One could argue that Bitcoin is a completely different beast. It is not issued by a central bank, quite the opposite. It has a decentralized nature that makes it impossible to "print" more and manipulate its price. The "physical"aspect of it is nonexistent but it is backed by the mining operations, the blocks are limited and will become rarer as time passes. It is a type of digital gold, decentralized and rare.
Even Gold has no intrinsic value to it. You can't eat gold or build shelter with it, the value is what we believe it is. The difference from the fiat Dollar to Gold is that we can't just print or make Gold from nothing, just like Bitcoins it needs to be mined.
D
I am not saying bitcoin is the same as money, just that they are both fiat currency. I am not saying gold has a value, just that one dollar represents one gold pound, or something else if it wasn't a fiat currency. A bitcoin doesn't represent one dollar or one piece of bread or anything, instead it is a fiat currency dictated by supply and demand for that currency.
Take a look at a snippet from Investopedia:
The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Fiat is the Latin word for "it shall be".
Bitcoin is also a fiat currency. A fiat currency is a currency that is not represented by a good but instead a belief that that thing is worth something. The US dollar use to be federal reserve notes that represented Gold or silver, now they moved away from that standard so they can make as much money without having to worry about pumping out gold for fort Knox.
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bitcoin is represented by hardware costs , electricity costs and maintenance costs to name a few
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That is how you gain them, one could argue that money is represented as debt notes that countries like, germany, japan, and china buy from us so we can make more money. Also it could be represented by the paper, fabric, electricity, and labor it takes to make $1. But if you ran to the government and said, I want my fair share of what this dollar is worth, what will they give you? What will someone in the bitcoin community give you? They can give you a product, because they believe in that currency, not that it actually represents anything. My father argued about this with me a while back and had said that, well dollars are represented by our trust in the US government, Bitcoin is represented by the trust in the big players.
Take this snippet from wikipedia, "Fiat money has been defined variously as:
Any money declared by a government to be legal tender.[5]
State-issued money which is neither convertible by law to any other thing, nor fixed in value in terms of any objective standard.[6]
Intrinsically valueless money used as money because of government decree.[1]
While gold- or silver-backed representative money entails the legal requirement that the bank of issue redeem it in fixed weights of gold or silver, fiat money's value is unrelated to the value of any physical quantity. A coin is fiat currency to the extent its face value, value defined in law, is greater than its market value as metal.[3]"
It does state government issued or state issued, but I believe that is due to the fact that crypto isn't that widely known, I do believe this is still covered under this.
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Also see this snippet from techopedia.com:
"As a counter-culture movement that is often connected to cypherpunks, cryptocurrency is essentially a fiat currency. This means users must reach a consensus about cryptocurrency's value and use it as an exchange medium. However, because it is not tied to a particular country, its value is not controlled by a central bank. With bitcoin, the leading functioning example of cryptocurrency, value is determined by market supply and demand, meaning that it behaves much like precious metals, like silver and gold."
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One could argue that Bitcoin is a completely different beast. It is not issued by a central bank, quite the opposite. It has a decentralized nature that makes it impossible to "print" more and manipulate its price. The "physical"aspect of it is nonexistent but it is backed by the mining operations, the blocks are limited and will become rarer as time passes. It is a type of digital gold, decentralized and rare.
Even Gold has no intrinsic value to it. You can't eat gold or build shelter with it, the value is what we believe it is. The difference from the fiat Dollar to Gold is that we can't just print or make Gold from nothing, just like Bitcoins it needs to be mined.
D
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I am not saying bitcoin is the same as money, just that they are both fiat currency. I am not saying gold has a value, just that one dollar represents one gold pound, or something else if it wasn't a fiat currency. A bitcoin doesn't represent one dollar or one piece of bread or anything, instead it is a fiat currency dictated by supply and demand for that currency.
Take a look at a snippet from Investopedia:
The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of. Historically, most currencies were based on physical commodities such as gold or silver, but fiat money is based solely on faith. Fiat is the Latin word for "it shall be".
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https://steemit.com/power/@bendjmiller222/seeing-more-details-about-the-money-you-make-on-steem
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