Bitcoin is fiat. Now proceed, take the time you require to express it. Breathe deeply. Blood pressure still elevated? Alright, let’s approach this differently then.
What does fiat signify? An arbitrary order or mandate. Fiat currencies obtain their value by the power of governments. They hold worth because the State determines they hold worth, and will accept them for tax payments. So how is Bitcoin considered fiat?
A monarch raises his hand and grants fiat worth. But there exists no King of Bitcoin. Right? Incorrect. It’s us.
We collectively bestow value upon Bitcoin through our choice to engage with it. We create it into being through our collective arbitrary choice. Despite all the memes and descriptions of Bitcoin as digital gold, it is never a commodity. Bitcoin has no unique use-value and exchange-value. It isn’t a tangible raw resource that can be transformed into something else. It’s merely a database located on your computer. And mine. And everyone else’s.
The sole reason Bitcoin remains a coherent singular entity in the first place is due to
everyone’s arbitrary choice to adopt the same guidelines to validate alterations to its database. Without that, Bitcoin would simply be countless copies of conflicting databases scattered around the globe. There wouldn’t be a Bitcoin, and consequently, it could not possess any value.
Its use-value is its exchange-value. They are two aspects of the same coin, brought into being solely through a collective fiat mandate.
Bitcoin may be hard money, it may be limited in quantity, it may embody all these characteristics with the ability to shift economic incentives worldwide. Nonetheless, it is also fiat. Every attribute it possesses, everything it is, exists purely because of our joint and arbitrary decision to bring it into existence.
Bitcoin stands as the world’s first stateless fiat.
This article is a Take. The views expressed are solely those of the author and do not necessarily represent those of BTC Inc or Bitcoin Magazine.
