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Comment by eric_cc | Hacker News Reader

Same with paper fiat currency.

I know? The point is: neither bitcoin nor fiat currencies are asset-backed. In both cases, there are commercial entities that offer accounts where you can deposit the "thing", and the "thing" is then loaned to someone else, and this is done for some kind of valuable inducement.

The question is: why is one called fractional reserve banking, a behavior that is acknowledged to increase the money supply, and the other one called "oh no this is definitely not increase of the money supply, it's just you relinquishing custody of your bitcoin and why would you do that, there's no reason you'd ever do that".

Actually paper fiat currency is accepted by a government to pay property tax. In this way you need it to keep possession of land, so the entire land value of the linked country, and all the infrastructure built on it, is the backing for 'fiat' currency.

I think I responded to your other comment, but I don’t think this is true. Do you have any further reading?

A currency is not backed by land value. It’s usually “backed” by a combination of sovereign debt obligations and its status as legal tender.

I think that's right - fiat currency is not asset backed; in the case of the USD, it's backed by "the full faith and credit" of the U.S. government.

Accepting some form of unbacked currency does not give the currency intrinsic value and therefore make it backed. El Salvador made bitcoin legal tender, which means that USD or Bitcoin could be used to pay property taxes there, that doesn't mean that suddenly Bitcoin is backed by El Salvador property.

> Bitcoin could be used to pay property taxes there

There are no annual property taxes in El Salvador :)

But this may be a technicality, based on the Salvadoran legal definition of the term. So it really depends on what is understood as tax in each jurisdiction.

El Salvador law differentiates between taxes and fees. Taxes are born from an "generating action", like selling a computer generates sales tax. While Fees are born from a "service provided" .

So there are monthly fees payable to the local city/town/village hall based on property size and location for services they provide in that area Some common ones are garbage collection, CCTV, city lighting, road maintenance and the contribution for each City/Town annual Festival. A monthly fee for each town's annual party :O Does that exist in other countries?

So once you get your city hall invoice, and wanted to pay in bitcoin, you'd have to visit the city hall to pay in their bitcoin terminal.

At least four city halls are connected to BitRefill which allows online invoice payments using Bitcoin/Lightning. BitRefill connects to a local payment network, then the user types or scans the Invoice barcode, and makes the bitcoin payment for the fees bill.

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