Hacker News Reader

Comment by oivey | Hacker News Reader

Yes, crypto is fiat money just like government issued currency. The USD, though, is backed by the US (the government, military, economy, etc.) and generally monetary policy is an advantage of government issued currency.

With crypto, usually be design, you actually have zero ability to alter how it is managed. It’s even less power than your vote gives over the USD.

View on HN

It may be backed by the US but there is no guarantee of it holding its value especially when the government has become extraordinarily reckless with monetary policy. While we’ve never experienced a serious crisis of confidence in the dollar and there are many who have predicted hyperinflation since the 70’s, I do not believe you can exponentially increase the supply of something and not see its value diminish. The pace and looseness of monetary easing over the last decade and especially the past few years cannot be overstated.

The USD actually has to always inflate to stay relevant since it drives much of the world's markets. Over time there has to generally be an increased supply of the green bills because other countries become more affluent. It is one of the reasons why the Nixon Shock happened - the gold standard became too restrictive, and since the USD was tied to it, it became unsustainable. Countries like France were considering exchanging their USD with gold, which would have seriously depleted the US gold deposits.

The guarantee is that the USD will _not_ hold its value. And if you don't trade your natural resources in USD, the other guarantee is that your country will get bombed.

I think that depends. An active participant in the Ethereum ecosystem probably has much more influence on Ethereum policy than a median US voter has on USD.

Possibly due to crypto still being niche and relegated to internet communities while the USD is the official currency of several countries, the largest having over 300 million people and trillions of dollars flowing through it per year.

I was trying to not be that blunt in refuting the parent’s point, but, yeah.

To add: the not-always-obvious point is that cryptocurrencies' rules and policies do evolve through social and political processes. Even Bitcoin.

Some people consider that a feature of crypto, not a bug. They want a currency that isn’t manipulated by governments.

Of course they fail to realize that the manipulation just gets shifted to the core developers.

The greatest feature of a centralized currency is the ability for the governing body to step in and become a lender of last resort when once a century crises hit to stave off a depression that could take decades to repair. The trouble is that once a century is becoming once a year now.

We don’t have a lot of good history on this, but there’s basically only one instance of such a deep and lasting depression and it occurred after central banking was established, not before.

> there’s basically only one instance of such a deep and lasting depression

Because we didn’t measure for it. (18th-century GDP is post hoc estimated.) The 19th century, during the free banking era, featured multiple 30%+ drawdowns in business activity, greater than the Great Depression, albeit against a smaller baseline [1].

[1] https://en.m.wikipedia.org/wiki/List_of_recessions_in_the_Un...

I don't think this is the correct interpretation of 'fiat currency'.

'Fiat' of course refers to making something come into existence simply by saying it, as G_d supposedly did with the words 'Let there be light'.

My understanding of 'fiat currency' is that it is not the currency as a whole which comes into existence by fiat (which would seemingly apply to most currencies, including Bitcoin and metallic ones), but that individual units of the currency come into existence by fiat. The government (meaning the union of the Fed and the Treasury) can create additional dollars simply by writing 'X has Y dollars'. No one can create Bitcoin in this manner, so it is not a fiat currency.

Reply on news.ycombinator.com