> Fiat money has value because you need it to pay taxes.
One needs to pay taxes only because the government enforces tax law. Fiat (in latin) means "by decree", as in "this money has value by government decree." Its value is backed by the government's ability to enforce legal code. (or on a meta-level, by people's belief/faith that law enforcement officers & public employees will succeed in working as agents & beneficiaries of their government). Money by government decree should be called government-fiat.
But the fiat definition of money actually works well for bitcoin too. Except instead of being decreed by government's legal code, bitcoin is decreed by cryptographers' computer code (Lawrence Lessig's slogan that "code is law" was prescient indeed). Its value is backed by the ability of computer code to enforce the information-theoretic laws of cryptography. (or on a meta-level, by people's belief/faith that financiers & tech users will succeed in working to further their interest & investment in a p2p crypto network). Bitcoin is crypto-fiat.
IMNSHO there are two types of fiat money: gov-fiat and crypto-fiat (bitcoin an instance of the latter).
> Bitcoins are only valuable as long as you can convince someone else that they are valuable.
Well it turns out that this is surprisingly easy: you just put your money where your mouth is. Its a simple strategy which has worked exceedingly well for bitcoin, in quite a short time.
One needs to pay taxes only because the government enforces tax law. Fiat (in latin) means "by decree", as in "this money has value by government decree." Its value is backed by the government's ability to enforce legal code. (or on a meta-level, by people's belief/faith that law enforcement officers & public employees will succeed in working as agents & beneficiaries of their government). Money by government decree should be called government-fiat.
But the fiat definition of money actually works well for bitcoin too. Except instead of being decreed by government's legal code, bitcoin is decreed by cryptographers' computer code (Lawrence Lessig's slogan that "code is law" was prescient indeed). Its value is backed by the ability of computer code to enforce the information-theoretic laws of cryptography. (or on a meta-level, by people's belief/faith that financiers & tech users will succeed in working to further their interest & investment in a p2p crypto network). Bitcoin is crypto-fiat.
IMNSHO there are two types of fiat money: gov-fiat and crypto-fiat (bitcoin an instance of the latter).
> Bitcoins are only valuable as long as you can convince someone else that they are valuable.
Well it turns out that this is surprisingly easy: you just put your money where your mouth is. Its a simple strategy which has worked exceedingly well for bitcoin, in quite a short time.