[Ads-l] toward a hierarchy of currencies

Sat Jul 8 19:16:23 UTC 2017

I think you’re being facetious, but bitcoins do not work like that.

Coin issuance differs depending on the cryptocurrency, but mainly, like bitcoin, are issued through a mining process.

In the mining process, a computer is presented with a mathematical problem. When it solves the problem, it is rewarded with a coin (or some amount). The restricting factors making the mined coins valuable are the cost of electricity and the efficiency of the computer. For bitcoin and perhaps all coins, mining is now performed by entities that use dedicated mining devices operated in locations with low power costs, making it financially disadvantageous for the average person to mine coins.

With bitcoin, the mathematical problems become more difficult over time, making the price to mine them higher, which drives up the value/cost.

Also, bitcoin is set up with an issuance cap, so that once the final one has been issued, none will ever be issued again. I think there are coins that do not have a cap and can be issued like the wizard’s imposter, but such systems are not as attractive to investors and are not as likely to succeed.

That being said, fiat currency (https://en.wikipedia.org/wiki/Fiat_money <https://en.wikipedia.org/wiki/Fiat_money>), at least according to Wikipedia, is one that is established as money by government regulation. Since bitcoin is indeed recognized as legal tender by some governments (https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory <https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory>), it is indeed fiat currency according to this definition. FWIW, the IRS considers cryptocurrencies to be property.

BB

> On 8 Jul 2017, at 12:05, George Thompson <george.thompson at NYU.EDU> wrote:
> 
> Why isn't the bitcoin a fiat currency?  An illegitimate son of the Wizard
> of Oz sits behind a curtain and releases some more, as he sees a need for
> more.  They are said to be valuable.  Therefore they are valuable.
> Whereas Confederate currency is still valuable, just not in the way the
> Jeff Davis had in mind.
> 
> GAT
> 
> On Sat, Jul 8, 2017 at 2:40 PM, Barretts Mail <mail.barretts at gmail.com <mailto:mail.barretts at gmail.com>>
> wrote:
> 
>> Good point, and one that is close to the problem of bitcoin being a
>> “digital currency” even though it can be withdrawn from ATMs.
>> 
>> My assumption is that fiat currencies exist in physical form even if they
>> are frequently transacted digitally. So if you spend $50 with a debit card,
>> that $50 physically exists at the bank or a government institution.
>> 
>> https://en.wikipedia.org/wiki/United_States_dollar#Means_of_issue <https://en.wikipedia.org/wiki/United_States_dollar#Means_of_issue> <
>> https://en.wikipedia.org/wiki/United_States_dollar#Means_of_issue <https://en.wikipedia.org/wiki/United_States_dollar#Means_of_issue>> says:
>> "The monetary base consists of coins and Federal Reserve Notes in
>> circulation outside the Federal Reserve Banks and the U.S. Treasury, plus
>> deposits held by depository institutions at Federal Reserve Banks.”
>> 
>> In contrast, the basis or at least the primary basis of a digital currency
>> is in digital form.
>> 
>> BB
>> 
>>> On 8 Jul 2017, at 10:52, Dan Goncharoff <thegonch at GMAIL.COM> wrote:
>>> 
>>> Since most USD exist digitally, how do you differentiate between 2b and
>> 3?
>>> 
>>> On Jul 8, 2017 1:26 PM, "Barretts Mail" <mail.barretts at gmail.com> wrote:
>>> 
>>>> Twice recently, I have implied that bitcoin is an alt coin (“cold -
>>>> inactive, offline” on 28 May and “(cryptocurrency) wallets” on 29 May).
>> It
>>>> may be that the term is sometimes used that way, but that does not seem
>>>> standard.
>>>> 
>>>> Here is a tentative hierarchy of currencies:
>>>> 
>>>> 1. currency
>>>> 
>>>> 2a. fiat currency such as the US dollar, RMB and euro
>>>> 2b: alternative/private currency (https://en.wikipedia.org/
>>>> wiki/Alternative_currency <https://en.wikipedia.org/
>>>> wiki/Alternative_currency>) - any currency used as an alternative to the
>>>> official one. If a state goes rogue and starts printing their own
>> currency,
>>>> that would also qualify.
>>>> 
>>>> 3 (from 2b): digital currency, digital money, electronic money (
>>>> https://en.wikipedia.org/wiki/Digital_currency <
>> https://en.wikipedia.org/
>>>> wiki/Digital_currency>) - a currency whose basis resides in computers
>>>> 
>>>> 4. virtual currency (https://en.wikipedia.org/wiki/Virtual_currency <
>>>> https://en.wikipedia.org/wiki/Virtual_currency>) - a currency used in a
>>>> virtual community.
>>>> 
>>>> 5. cryptocurrency (https://en.wikipedia.org/wiki/Cryptocurrency <
>>>> https://en.wikipedia.org/wiki/Cryptocurrency>) - a currency exchanged
>>>> using cryptography for security
>>>> 
>>>> 5a. bitcoin
>>>> 5b. alt coin (derived from “bitcoin alternative according to
>>>> https://en.wikipedia.org/wiki/Cryptocurrency <https://en.wikipedia.org/
>>>> wiki/Cryptocurrency>) - in turn comprising shitcoins and perhaps another
>>>> category of less-risky alt coins such as ethereum and litecoin
>>>> 
>>>> It should be noted that since there are bitcoin ATMs in Europe and the
>> US
>>>> (at least), the bitcoin is not truly a virtual currency.
>>>> 
>>>> I’m still new to the cryptoworld and am sure further refinements are
>>>> required.
>>>> 
>>>> Benjamin Barrett
>>>> Formerly of Seattle, WA
>>>> ------------------------------------------------------------
>>>> The American Dialect Society - http://www.americandialect.org
>>>> 
>>> 
>>> ------------------------------------------------------------
>>> The American Dialect Society - http://www.americandialect.org
>> 
>> 
>> ------------------------------------------------------------
>> The American Dialect Society - http://www.americandialect.org <http://www.americandialect.org/>
>> 
> 
> 
> 
> -- 
> George A. Thompson
> The Guy Who Still Looks Stuff Up in Books.
> Author of A Documentary History of "The African Theatre", Northwestern
> Univ. Pr., 1998.
> 
> But when aroused at the Trump of Doom / Ye shall start, bold kings, from
> your lowly tomb. . .
> L. H. Sigourney, "Burial of Mazeen", Poems.  Boston, 1827, p. 112
> 
> The Trump of Doom -- affectionately (of course) also known as The Dunghill
> Toadstool.  (Here's a picture of one.)
> http://www.parliament.uk/worksofart/artwork/james-gillray/an-excrescence---a-fungus-alias-a-toadstool-upon-a-dunghill/3851 <http://www.parliament.uk/worksofart/artwork/james-gillray/an-excrescence---a-fungus-alias-a-toadstool-upon-a-dunghill/3851>
> 
> ------------------------------------------------------------
> The American Dialect Society - http://www.americandialect.org <http://www.americandialect.org/>

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