7 votes

Bitcoin takes out 600 USD

Bitcoin is on a tear again.

I actually think this is a symptom of the risky position of the fiat currencies, as well as the inherent advantages of Bitcoin. We are witnessing the death of many currencies around the world.

Yes, Bitcoin is probably in overbought territory, but I don't think it is a bubble.

Edit: BTC/USD breached 800, I think it is soon time for a correction. Nothing goes straight up forever.

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http://www.antiwar.com/

http://antiwar.com/donate/ accepting bit coins.

Free includes debt-free!

Possibly One Person Out of 10,000

...recognizes the bubble before it pops. This is how bubbles become possible to begin with.

The bubble makers just wait and collect the collateral.

I suggest, don't buy BTC on margin, or mortgage.

Free includes debt-free!

You people are killing me...

Please stop embarrassing yourselves and calling bitcoin fiat.

Here is the definition of Fiat.
http://dictionary.reference.com/browse/fiat?s=t

Clearly no decree from government mandates Bitcoin has any value. It is the free market that has determined Bitcoins value. Therefore Bitcoin is not fiat.

What you are trying to say is that Bitcoin is not backed by anything tangible. That is true, but it is not Fiat.

So now the question arises; is it a problem that it is not backed by anything tangible?

I would argue the answer is no. Tulips are tangible, but that was insufficient for them to remain valuable.

Domain names, eg: google.com or money.com are not tangible but they have maintained/increased in value for 2 decades. So tangibility is neither sufficient or necessary to be a store of value.

So why has the market determined given value? Is the market retarded?

The market gives all things value that are both scarce and useful. It is as simple as that. Bitcoin is certainly both. It is scarce in that there will never be more than 21 million of them. and it is valuable for many reasons.
1) it allows for free and instant international transfer of wealth.
2) It is violence resistant.
3) In an age of bail-ins, it is a relatively secure form of wealth.

If you want to learn much more...
The best selling book on amazon on Bitcoin is
http://www.amazon.com/dp/B00CAX5OZQ/ref=as_li_tf_til?tag=suc...

It will be $3.99 well spent for many people in this thread.
(disclaimer - I wrote it.)

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...

Re-examine your definition. It does not say that fiat is exclusive to a government authority.

How big is your commercial operation? You come here to propagandize.

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Are you suggestiing...

that there is a non-govt authority declaring bitcoin has value by decree? If yes, then who is that authority . If not, then what is your point?

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Of course there is an authority

A block is just data. It's a number. Whether or not a number is a bitcoin, or merely a number, is defined by the algorithm. The designer of the algorithm decided that what would matter for bitcoins was a block having a hash value that starts with a certain number of zeroes. That's an arbitrary decision. If the designer had instead decided that a valid hash had to start with ones rather than zeroes, then a different set of integers would be decreed to be of value.

So the algorithm designer is the authority by which numbers are valuable, and the algorithm implements the decision that the algorithm designer made about that. But it's a purely arbitrary decree. FRNs are only of value because people are willing to treat them that way, based on the authority (the govt) that declares them to be of value. Bitcoins are only of value because people are willing to treat them that way, based on the authority (the algorithm) that declares them to be of value. The government could have used a different ink pattern on the paper for FRNs, and the algorithm designer could have used a different bit pattern for the hash value for bitcoin blocks.

In the case of the government, of course, the decree is backed up by guns and violence. With bitcoin, it's just that people are willing to view a certain subset of the integers as valuable, because some algorithm designer said so.

There is no decree for value.

If I build a chair, I guess you could say I decree that it has 4 legs, but I cannot decree that you buy it.

Every product designer "decrees" what his or her product is. Unless you use force or threat of violence to get someone else to buy it, then you have not "decreed" it has value.

Hence Bitcoin is not fiat because there is no threat of force or violence to buy or use bitcoin.

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The first definition

on your link was "an authoritative decree, sanction, or order: a royal fiat. Synonyms: authorization, directive, ruling, mandate, diktat, ukase." That's the essence of the meaning of "fiat," and in fact the word "fiat" itself tells you that. It can be backed up with violence, as with FRNs, or rely solely on popularity and voluntary adoption, as with bitcoin, but in both cases the authority is essential.

If you want to know whether a piece of paper with an ink pattern on it is an FRN or not, you can't tell without reference to an authority. In this case, the US treasury. If you want to know whether a bit pattern is a valid bitcoin block or not, you can't tell without reference to an authority. In this case, the algorithm.

Both of those are arbitrary decisions. The US Treasury could have picked purple ink and pictures of penguins, and if they had, then those would be the ink patterns for FRNs instead of what we have now. The bitcoin algorithm designers could have picked SHA-256 hashes that start with a certain number of ones, rather than zeros, and if they had then those would be the bit patterns for bitcoins instead of what we have now.

Contrast that with gold, silver, and any other element. Those aren't distinctions decided by some authority (unless you want to say it's "god" or 'nature"). Those are distinctions you can discover by looking at the materials themselves. It's the intrinsic properties of gold -- again, things that you can discover by looking at nature not things you have to consult an authority about -- that make it serve so well as money.

You can define new ink patterns, but they won't have the Treasury's blessing. You can define new bit patterns, but they won't have the bitcoin algorithm's blessing. But you can't create a new precious metal and add it to the periodic table.

These are the reasons that gold has been a reliable store of value for millennia.

So let me get this straight....

Governments are an authority.
Algorithms are an authority.
But god is not an authority?
And the periodic table is not an authority?

Now I don't believe in God, but I thought perhaps you may, so I just wanted to point this out in case it happened to shock some sense into you.

Wether something has voluntary(free market) value or is valued by fiat is not determined by what chart you have to look it up in. or what technique you have to use to see if it is real.

If you consult a periodic table to find out if a lump of metal is gold, or if you rub pearls against your teeth or if you have an algorithm decide if a string of bits is a bitcoin is not a measure of value. They are measures of authenticity.

Once authenticity is determined, now the market or an authorityt can decide if it has some value. (The market values everything that is scarce and useful). Without any authority forcing people to buy or use bitcoin the market has voluntarily said a bitcoin is worth $700 at time of writing.

The market has said gold is worth $1270 at time of writing.

The government has said, you must transfer all of those form of wealth into US$ to pay your taxes. That is the decree. That decree artificially increases the value of FRN's. That is why FRN's are fiat.

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Another way to look at it

Maybe this makes the distinction clearer.

Gold existed before humans noticed it. Civilizations could *independently* discover gold even if they never communicated with each other in any way. Even a distant alien civilization that has no contact with us at all will discover the existence of gold. The existence of gold is a fact of reality.

FRNs and bitcoins aren't things that can be discovered, because they don't exist independent of being defined into existence. And the definitions are arbitrary -- there's no fact of reality to be discovered about which bit patterns are valid for bitcoins and which ink patterns are valid for FRNs.

They exist and they are what they are only because some authority defined them to be, and that's the essential meaning of "fiat": something that is defined into existence by an authority, whether that declaration is enforced with guns or accepted voluntarily.

Reality isn't arbitrary

If you want to call that "consulting the authority of nature" that's a fancy way of saying it, but the point is it's not arbitrary. There's only one reality. If I give you a lump of metal you can figure out whether it's gold by looking at the lump of metal itself.

But if I give you a pattern of bits on a USB drive you can't tell whether I've given you bitcoins or not, without reference to an authority (the algorithm). Or if I give you some pieces of paper you can't tell whether they're FRNs without reference to an authority (the US treasury). That's because these were both arbitrary decisions. It could just as easily have been a different bit pattern chosen to be a valid hash, in which case bitcoins would have been something other than what they are. It was arbitrary. Or it could have just as easily been a different ink pattern chosen for the new $100 bills, in which case the new $100 bills would have been something other than what they are. It was arbitrary. It's the arbitrariness that is the reason you need an authority to tell you whether a bit pattern or an ink pattern is the "right" one.

But there's no sense in which you can say that gold could just have easily have been something other than gold. There's only one reality. The elements that we observe in nature are what they are. The periodic table isn't about things that someone decided arbitrarily, it's about things that were discovered by looking at the things themselves. That's not true of FRNs or bitcoins.

I agree that the question of authenticity is different from the question of what you can buy with something that passes the test of authenticity. The market determines the latter, not the former.

I agree with your distinction about nature and arbitrary...

But I don't think it has relevance to value, or fiat.

A shareholder certificate is also, but has value and is not fiat

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Shareholder certificates?

A shareholder certificate represents a share of ownership in a company, and companies can have tangible assets, intellectual property, revenue streams, etc., so owning a percentage of that is nothing like bitcoin or FRNs which don't represent a share of ownership of anything.. Not sure where you're going with that.

The relevance of the distinction between nature (i.e., the existence of gold is a fact of nature) and arbitrary (i.e., FRNs and bitcoin didn't exist until they were defined into existence) is that the latter is exactly what "fiat" means: something that doesn't exist until and unless some authority defines it.

tasmlab's picture

I might think bitcoin is more fiat than government currency

Bitcoin's value seems to be hinged on people accepting it as so, on mutual beleif (faith).

FRNs are backed by the guns of the largest agency of mass murder the world currently knows. Being MADE to value something might be the most absolute form of intrinsic value there is i.e., compliance to avoid the negative value of being hurt.

Currently consuming: Gatto: "Underground history of education..", FDR; Wii U; NEP Football

...

The blind leading the blind. Oh ye of little faith. We must believe in a one world, one permanent ledger, computer tracked and tractable currency. Does ye not understand? Please report to the re-education camps and receive your digital wallet chip. Then return to me and let me scan your forehead.

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enter

dark wallet and trustless mixing

Official Daily Paul BTC address: 16oZXSGAcDrSbZeBnSu84w5UWwbLtZsBms
#standwithrand

I think you might be a little bit confused..

Here is the definition of fiat.
http://dictionary.reference.com/browse/fiat?s=t

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tasmlab's picture

Got it

Thanks, all three definitions do imply force. I was taking it as meaning 'faith', which I"ve heard elsewhere.

So my definition of fiat was certainly cocked up, but my poorly articulated point was that FRNs have more tangible backing than bitcoin e.g., forced agreement vs. voluntary agreement.

Currently consuming: Gatto: "Underground history of education..", FDR; Wii U; NEP Football

I understand your point.

Its like saying, would you rather keep your money in a well funded highly liquid local bank, or Chase (knowing its illiquid and heavily betting on risky assets), but most likely to get bailed out by the government.

"Which has more backing?"

Certainly there is a reasonable argument that says, if push comes to shove, the govt might even steal assets fro the local bank, to prop up Chase and so you have more backing in Chase.

But what if I told you that, the local banks assets were unseizable by the government? What if I told you that yeah Chase might get bailed out twice, three times, or a hundred times bu eventually, there would be no one left to rob to bail them out and you would eventually lose your money if you left it in chase. Further what if I said this fact would drive people to the local bank over the next 10 years seeking protection from governments grabbing its money trying to prop up Chase. What if you understood that every person voting with their dollars by doing so, protected your wealth further.

That is Bitcoin.

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...

The force is strong in this one. Can you read?

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The problem with BitCoin....

The problem with BitCoin is that there is nothing really unique about it. Sure, you can't just "print" more BitCoins. Instead, you can just "print" another cryptocurrency. We already have LiteCoin, et al. At any time, there could be AlternateCoin, OtherCoin, and SomeOtherCoin. As soon as the novelty wears off and the general population catches on to this, the bubble will burst and BitCoin's "inherent" value will inevitably tank.

..

Not so sure about that.

Currency is used as long as people want to use it as a medium of exchange. There is no reason why it should suddenly stop. It is more likely to attract more and more interest.

And there is NOTHING wrong with having many competing crypto-currencies. It is the interest in them that will determine the value. So some with be valued low, some high. So what? Add a thousand competing crypto-currencies. That will not affect bitcoin, it will be the new competing currencies that will be worthless, at least initially.

The main thing is that nobody can ruin them with madmen behind printing-presses.

I am a huge Crypto fan...

but in my mind this is defo the biggest threat. Fast forward 10 years, and all the exchanges accept all the coins and all the apps and all the internet shopping carts handle all the coins.... Is Bitcoins prestige/brand sufficient to keep it valued at a premium 1000x over others.

There is only 1 reason why it would that I can see.

The power of the network. All those ASIC miners can only mine bitcoin.... no other coin. It is the computing power behind the network that gives it its value.

If I want to trust my wealth in a crypto-currency, I am relying on the network to defend against 51% attacks. with all these ASICS it may be sufficient to keep the bitcoin brand valued above others to a degree.

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but all of those currencies

but all of those currencies serve the same purpose, just like there all paper money comes from different mints but still has the same value. therefore, they are not competing among one another, you just have increased supply of a currency.

Before the Civil War each bank issued it's own currency.

Currencies from bankrupt banks were worthless.

Other currencies were discounted. The free market leaves risk-takers to find and exploit value for a fee.

Free includes debt-free!

..

I think if they were interchangable, you would have the problems you are thinking of. But they are not. You can buy one crypto currency with another, but you can not use one for another.

they are not interchangeable,

they are not interchangeable, per se, like you cannot break litecoins into bitcoins, but they serve exactly the same purpose using exactly the same type of system. hence, if you can create one copy of the currency, you can create an infinite number of copies just like you can endlessly print paper money, but you cannot duplicate gold or silver.

...

Just keep the printing presses going so we can pay the power companies in paper please otherwise how will we mine them?

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...

What starts at zero returns to zero.

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