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Damn... maybe crypto/blockchain isn't so bad (self.chat)

submitted 2 years ago by metaltoilet to c/chat

40 comments fedilink hide all child comments

I'm going to keep this short but I just fell down the rabbithole of crypto again and maybe it isn't as bad as I thought. Many of their ideas are very similar to the fediverse's. The idea of decentralized finance using a stablecoin sounds awesome to me. (though i'd much prefer to live in a world where money isn't needed) Maybe the technology is actually good but the techbros and scammers ruin it with their false promises and complicated words. Hopefully, in a few years after the rest of those scammers have moved on to scamming with AI this tech could be truly used for meaningful purposes.

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[–] doodimus 2 points 2 years ago (1 children)

well, fiat money is issued by a central authority and its value depends entirely on the faith people have in that central authority. Compare that to monetary systems based on the gold standard, where a unit of currency has a fixed value in terms of gold. When the dollar followed the gold standard, it was technically possible to exchange dollars at the bank for a fixed amount of gold. While with fiat, you could say that the market decides how much gold one dollar is worth.

Bitcoin and other cryptocurrencies are more like gold or silver than they are dollars or euros or whatever other fiat currency. The value that gold itself has is determined by a lot of things, but ultimately it comes from its rarity. You can if you want go out into the hills and spend time and energy digging up gold. Likewise, you can if you want spend time and energy mining bitcoin. This is why people often say bitcoin is digital gold - it's rare and it takes time and energy to find.

[–] yozul 8 points 2 years ago (1 children)

Gold is a fiat currency. There are things that are far rarer and harder to extract that are worth far less. Sure, the metal itself has some intrinsic uses, but that's not where most of its value as a currency comes from. It's just pretty and lasts a long time, so we decided it made a good currency. That's still an arbitrary decision, and if we collectively decide we don't care about that anymore its really not worth much more than copper is for its usefulness and rarity. It's valuable because it is the original fiat currency.

[–] doodimus 1 points 2 years ago

No that's not it, sorry. If you're genuinely interested in the actual meaning of fiat, and how it's different to currency that is pegged to a fixed quantity of some precious resource, a good place to start is wikipedia. One important distinction is that fiat money can be created or destroyed at the issuer's discretion. This is a big part of why most governments left the gold standard in the 20th century, and a big part of the motivation behind bitcoin and other cryptocurrencies.