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Why is Bitcoin called fiat currency (fiat currency in Bitcoin)?

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Why is Bitcoin called fiat currency? Bitcoin\’s value is mainly reflected in two

Why is Bitcoin called fiat currency (fiat currency in Bitcoin)?

Why is Bitcoin called fiat currency? Bitcoin’s value is mainly reflected in two aspects: as a medium of exchange and as a monetary policy.

Generally speaking, the demand for legal digital currency by countries is the highest, so there is a saying that cash can be exchanged for gold or similar things for investment. This is understandable, but it is not the only form and there are many problems that need to be solved. For example, the paper and hard disk we use today are not real currencies like bank deposits, but “electronic wallets” that can only be used for storage and redemption, without any practical use. Assets cannot be withdrawn or transferred. At this time, this technology must be used to store one’s information and transaction records. If it is not convenient, it is best to send it directly to others through the network for payment of bills, and then convert these data into US dollars and transfer them to other places, so as to complete the capital turnover. And Bitcoin has a certain degree of decentralization attribute (distributed accounting), so its price is also very cheap. Of course, at present, Bitcoin’s price is relatively stable, because it is determined by supply and demand, not controlled by an organization. However, due to its special nature, Bitcoin itself is not so easy to be hacked or manipulated, and it is difficult to be affected by government regulatory departments, which has led many people to believe that encryption algorithms are scams, and thus the so-called “lightning torch” appears.

In fact, from a historical perspective, as people’s understanding of blockchain technology continues to increase, more and more mainstream companies are beginning to accept this emerging technology field. For example, Facebook’s announcement of the Libra project has attracted great attention in the market, and even caused some central banks to call it a Ponzi scheme. “I believe everyone has heard of this concept,” said an anonymous person named Peter Thiel on Twitter. “Although virtual currency has not been launched yet, I believe more companies will adopt this application in the future, especially in China.”

However, some people also say, “The reason why Bitcoin is so popular is because it is more suitable for the development of the world today. It provides a new infrastructure for the global economic system and can support cross-border trade, settlement, and other business activities. Like every financial transaction on the Internet, it can achieve real-time settlement through point-to-point transmission, and it can also use smart contracts to automatically execute payments and save costs.”

Fiat currency in Bitcoin

In the development process of Bitcoin, many trading platforms have converted fiat currency into digital currency. According to Bitcoinist’s data statistics, the trading volume on January 3, 2017, exceeded 10 billion US dollars, while the trading volume in mid-December of last year was less than 1 billion US dollars. Therefore, although the price of Bitcoin fluctuates greatly, it actually does not affect people’s confidence in Bitcoin. For example, users use dollars to purchase cryptocurrencies, which is different from the legal payment system in that it adopts an electronic cash system instead of traditional paper money.

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