Bitcoin is fiat. Now go ahead, take the time you need to get it out of your system. Take a deep breath. Blood pressure still rising? OK, let’s try this again.
What does fiat mean? An arbitrary order or decree. Fiat currencies are valued by the authority of governments. They have value because the state decides they have value, and will accept them in payment of taxes. So how is bitcoin fiat?
A king discards his hand and pays fiat value. But Bitcoin has no king. right? wrong this is us.
We collectively value Bitcoin through our decision to use it. we Bring it into being By our collective discretion. Despite all the memes and descriptions of Bitcoin as digital gold, it is by no means a commodity. Bitcoin has no separate use-value and exchange-value. It is not a physical raw material that can be converted into something else. This is a database that sits on your computer. and mine And everyone else’s.
The only reason Bitcoin is even a coherent singular thing in the first place
everyone’s An arbitrary decision to use the same rules to validate changes in your database. Without it, Bitcoin would be countless copies of conflicting databases in different states all over the world. There would not be a single bitcoin, and therefore it could have no value.
Its use-value is Its exchange-value. They are two sides of the same coin, brought into existence by a collective fiat decree.
Bitcoin could be hard money, it could be limited in supply, it could be all of these things with the potential to change economic incentives globally. But it’s also fiat. Every entity that exists exists only because of our collective and arbitrary decision to make it exist.
Bitcoin is the world’s first stateless fiat.
This article is a take. The views expressed are solely those of the author and do not necessarily reflect the views of BTC Inc or Bitcoin Magazine.
