An editorial on the New York Fed’s Liberty Street Economics blog says Bitcoin is like any other fiat money
An editorial on the New York Federal Reserve’s Liberty Street Economics blog called Bitcoin “another example of fiat money (fiat)”. Those are words of struggle in Bitcoin circles – words that Nic Carter, founder of Castle Island Ventures and Coin Metrics, called “playfully out of base”.
In a post entitled “Bitcoin is not a new type of money,” economist Michael Lee of Fed Research and Statistics in New York and senior vice president of Research and Statistic, Antoine Martin, view the money in three categories: fiduciary, backed by assets and backed by claims.
Lee and Martin classify “fiat money as intrinsically useless objects that have value based on the belief that they will be accepted in exchange for valuable goods and services”. Incredibly, they claim that the coins issued by the central bank are not pure and simple because of their “legal status”. They then label Bitcoin, which the CFTC has classified as commodity, as fiat currency.
“Examples of fiat money without legal status include“ Rai stones or Ithaca HOURs ”. And Bitcoin is just another example of fiat money. “
The bizarre twist on the commonly understood meaning of “Fiat” was not lost on Carter: the Federal Reserve of New York is “simply redefining words to suit them,” he said.
Fiat money, as the book defines it, is a currency – like a paper currency – issued by decree, usually by a government, but which is not redeemable by any type or underlying asset.
“Fiat is Latin for‘ by decree ’. It means money that is commanded, through the threat of violence and the local monopoly that a state enjoys, to be used in society, ”Carter told Decrypt. “Its value comes from the tax liability that requires individuals to maintain and use the currency.”
“Shells, beads, Rai stones and Bitcoins make money because society ends up finding their unique characteristics useful, and a market around them. This is the exact antithesis of fiat money.
In addition, the authors of the New York Fed not only looked for Bitcoin with new definitions in the old words, but also for gold. They wrote that gold is “commodity money” – which could be considered a more appropriate definition for something like a dollar in the gold standard. In other words, gold is not “backed by commodities”; it is the commodity, argue the traditionalists.
“Gold coins are not redeemable for some assets, such as [os autores do Fed de Nova York] imply, ”said Carter. “They are only valuable because there is a global gold market, because money from commodities is useful for society.”