this post was submitted on 07 Nov 2024
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Fiat is government-issued currency with no underlying commodity and no upper limit. Crypto has no government backing and its issuance is determined by each cryptocurrency system (maintained by miner consensus). Some crypto has upper limits and others do not. I think having no supply limit is the distinction you're trying to define as fiat.
It just means that it is a representation of some other wealth. Gold isn't fiat because gold itself is the thing that has value, currency is fiat because it is a representation of value not in and of itself valuable.
All currency is by definition fiat because all currency is a representation of value. And the crypto Bros keep telling us that bitcoin and similar are currency so they are therefore fiat.
Value of anything only exists in the minds of humans. No value is inherent to anything. You're absolutely correct that gold isn't fiat. But gold could absolutely be used as currency. Its in circulation and used as a medium of exchange. You're also right that crypto is a currency. But its not a fiat currency. Crypto and fiat are both mediums of exchange not backed by a commodity. The key distinction is that fiat also relies on trust from the issuing institution.