Bitcoin is fiat. Now go ahead, take the time you need to get it out of your system. Breath deeply. Blood pressure still up? Okay, let’s try this then.
What does fiat mean? An arbitrary order or decree. Fiat currencies are given value 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 waives his hand and gives fiat value. But there is no King of Bitcoin. Right? Wrong. It’s us.
We collectively give value to Bitcoin through our decision to use it. We bring it into existence through our collective arbitrary decision. Despite all the memes and descriptions of Bitcoin as digital gold, it is by no means a commodity. Bitcoin has no distinct use-value and exchange-value. It is not a physical raw material that can be converted into something else. It’s 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 is because of
everyone’s arbitrary decision to use the same rules to validate changes to its database. Without that, Bitcoin would just be innumerate copies of conflicting databases in different states all over the world. There wouldn’t be a Bitcoin, and therefore it could not have any value.
Its use-value is its exchange-value. They are two sides of the same coin, brought into existence purely through a collective fiat decree.
Bitcoin might be hard money, it might be finite in supply, it might be all these things with potential to change economic incentives globally. But it is also fiat. Every property it has, everything it is, exists purely because of our collective and arbitrary decision to make it exist.
Bitcoin is the world’s first stateless fiat.Â
This article is a Take. Opinions expressed are entirely the author’s and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
