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by jMyles 1840 days ago
From MW for 'fiat'[0]:

> a command or act of will that creates something without or as if without further effort

A fiat currency is one whose supply can be inflated by a command or act of will. The supply of Bitcoin cannot be inflated in this manner, so it's not a fiat currency. As properties, official and fiat are orthogonal. A currency can be one, or both, or neither.

0: https://www.merriam-webster.com/dictionary/fiat
1 comments
dragonwriter 1840 days ago
“Fiat money is government-issued currency that is not backed by a physical commodity, such as gold or silver, but rather by the government that issued it”. [0] (Commodity-representative/redeemable currencies cam be created at will, but are also not fiat money.) Bitcoin is not fiat money, but not for the reason you present, which tries to use a definition of fiat from outside of the specific context to create a new definition for it in this context, where it has a well-established definition.

[0] https://www.investopedia.com/terms/f/fiatmoney.asp#:~:text=F....

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jMyles 1840 days ago
> can be inflated by a command or act of will

> not backed by a physical commodity

Aren't these two ways of stating the same monetary property? The reason that fiat currencies can be created by fiat is they aren't backed by anything.

> Commodity-representative/redeemable currencies cam be created at will

No they certainly can not. Not without an actual supply of the commodity. At least not in the case of redeemables. Obviously some 'representative' currencies, like those that Zimbabwe has tried, have ended up turning into fiat.

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dragonwriter 1840 days ago
> > Commodity-representative/redeemable currencies cam be created at will

> No they certainly can not. Not without an actual supply of the commodity.

Yes they can. (And there is plenty of historical example of that happening.) Heck, pre-state-monopoly banknotes were essentially a redeemable virtual currency over the currency in which they were denominated which often relied very heavily on this trait.

There is a risk associated with doing so, but that's also true of fiat currency, though the exact failure mode is different.

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