[Ads-l] toward a hierarchy of currencies

Sat Jul 8 20:09:41 UTC 2017

So how about the case in the Wikipedia article (https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory <https://en.wikipedia.org/wiki/Legality_of_bitcoin_by_country_or_territory>) where governments accept bitcoin as legal tender but do not issue it? BB

> On 8 Jul 2017, at 13:04, Dan Goncharoff <thegonch at GMAIL.COM> wrote:
> 
> I think government issuance is the important distinction. The 'fiat' in
> fiat currency refers to the government accepting it as legal tender. Other
> entities can proclaim something (eg, Bitcoin) as accepted for transactions,
> but that doesn't make it fiat currency. As mentioned, Bitcoin is property,
> so selling something for Bitcoin is not a sale for tax purposes, but an
> exchange of property.
> 
> On Jul 8, 2017 3:16 PM, "Barretts Mail" <mail.barretts at gmail.com <mailto:mail.barretts at gmail.com>> wrote:
> 
>> 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 <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>
>> <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 <mailto: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>
>> <mailto: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>> <
>>>> 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 <mailto: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 <mailto: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/ <https://en.wikipedia.org/>
>>>>>> wiki/Alternative_currency <https://en.wikipedia.org/ <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> <
>>>> https://en.wikipedia.org/ <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> <
>>>>>> 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> <
>>>>>> 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> <
>> https://en.wikipedia.org/ <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 <http://www.americandialect.org/>
>>>>>> 
>>>>> 
>>>>> ------------------------------------------------------------
>>>>> The American Dialect Society - http://www.americandialect.org <http://www.americandialect.org/>
>>>> 
>>>> 
>>>> ------------------------------------------------------------
>>>> The American Dialect Society - http://www.americandialect.org <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- <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- <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/> <
>> http://www.americandialect.org/ <http://www.americandialect.org/>>
>> 
>> ------------------------------------------------------------
>> The American Dialect Society - http://www.americandialect.org <http://www.americandialect.org/>
>> 
> 
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> The American Dialect Society - http://www.americandialect.org <http://www.americandialect.org/>

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