Yes, Bitcoin (BTC) is a fiat currency.But there's an interesting aspect of BTC that makes it different from what we normally think of when we hear this term.First, here's a definition of the term: "Currency that a government has declared to be legal tender, but is not backed by a physical commodity.The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of."(source: Fiat Money Definition | Investopedia).Although Bitcoin is not governed by national government or law in the traditional sense (like the US dollar in the United States), the technical properties of BTC - like the supply - is governed by the network of Bitcoin-operators (miners) who agree to use the same algorithm.For example, if a sufficient majority of the operators agree to change the supply of BTC from 21 million to 21 trillion, then it will happen.For a contemporary example, look at Ethereum: The Ethereum Soft Fork Has Been Adopted by Major Mining Pools.

“Mining pools” are perhaps simply the new governors of an alternative currency: Public governance of central banks: an approach from new institutional economics.Legal jurisdiction is another matter.Few national jurisdictions legally recognize BTC as a form of legal tender.That said, if two counterparties share a legal agreement that treats BTC as legal tender for transactions between those counterparties, then BTC as tender should be able to stand up in court.Two things to be clear.Fiat: an official order given by someone who has power (Merriam-Webster) i.e.fiat currency means a currency that is forced into circulation by a government.Bitcoin: The technology is known as the Bitcoin blockchain.The "data" transferred is know as bitcoins.Notice I emphasized data because bitcoin is data, with a financial incentive attached to it.Transfer of bitcoin is voluntary and does not have to be accepted by the receiving party.Although there are countries that are starting to accept the use of bitcoins as "money" so to speak, most countries don't enforce the use of bitcoin hence not a fiat currency.No.

It is not a fiat currency, no government or law has made it legal tender for general use within their specific geographic boundaries.It does not have any backing of any sorts (as of yet).Its price is based on supply / demand (be it speculative or genuine).Some institutions or players might decide to back their bitcoins with some currency and/or commodity, but that would be a very narrow band and only for those who are part and parcel of that ecosystem.Two great reads on process involved for new bitcoins mined (in plain English).Can someone explain mining like I'm 5 please?Bitcoin Mining in Plain EnglishA University of Pennsylvania economics professor and an advisor to the Philadelphia Federal Reserve recently released a claiming that Bitcoin is a fiat currency.Their paper investigates a hypothetical economy of privately competing currencies where entrepreneurs “can issue their own fiat currencies in order to maximize their utility.” Jesús Fernández-Villaverde and Daniel Sanches suggest that Bitcoin and other cryptocurrencies are actually more “fiat” than public monies because they cannot be used to pay taxes in most countries.

It’s time to set the record straight: Bitcoin is not a fiat currency.There are not different degrees of “fiatness,” as the authors imply, and privately issued-currencies are the opposite of fiat currencies created by government legislation.Fiat comes from Latin, and means, “it shall be.” Bitcoin is an open-source software that allows individuals to trade without an intermediary.Deemed the first “cryptocurrency,” Bitcoin has seen its spot price soar to $750/Bitcoin in recent days.best bitcoin escrowBitcoin’s market cap of almost $12 billion has garnered interest from investors, academics, and regulators.bitcoin lovers unitedPrivate currencies, such as Bitcoin or the Vodafone mPesa, are not examples of fiat currencies, even if a commodity such as gold or silver does not back them.bitcoin crash oct 2014

Several cryptocurrency pundits have accepted the notion that Bitcoin is a fiat currency for this very reason.While it’s true that Bitcoin is not backed by a commodity, this fact only fulfills half the requirements of the definition of fiat.Fiat comes from Latin, and means, “it shall be.” A fiat currency means the government declared the currency to be legal tender even though the currency does not have a commodity backing.bitcoin world cup bettingFiat monies include the U.S.bitcoin supply capdollar, the British pound, the European euro, and the Chinese Renminbi, amongst others.bitcoin mozambiqueYou Keep Using That Word Degrees of “fiatness” do not exist.A currency is either enforced by government fiat (decree) or not.In the paper “Can Currency Competition Work?” Professor Fernández-Villaverde and FED advisor Sanches find that the optimal strategy for entrepreneurs who produce private currencies is to limit currency production to a constant nominal supply.

If an entrepreneur prints too much currency, the demand for the entrepreneur’s currency will decrease because the money becomes worthless.The authors mention that the market naturally limits the over-issuance of private currencies because entrepreneurs who produce worthless currencies will eventually go out of business.Unlike private currencies, fiat currencies remain on the market even though central banks overissue.This is because a government can force individuals to use a government-issued currency via a fiat law.If the government creates a cryptocurrency with a “manageable” supply and declares that cryptocurrency to be legal tender via fiat, then that would be an example of a fiat cryptocurrency.The authors claim cryptocurrencies are more “fiat” than public monies, such as the U.S.dollar, because they cannot be used to pay taxes in most sovereigns.However, fiat is primarily a noun, not an adjective.Contrary to what the authors imply, degrees of “fiatness” do not exist.

Bitcoin is not enforced by government mandate.Bitcoin should actually be considered a "retro-fiat currency" because there is no central authority that could force people to use it.The term retro-fiat refers to the American free-banking era from 1816–1863 when “wildcat” banks issued private currencies that were convertible into gold or silver.These commodity-backed currencies flowed freely between states before the US government enacted legal tender legislation in 1862 and granted a monopoly in minting money to the government in 1863.Such a term as “private fiat” is an oxymoron because only the government can legally force individuals to involuntarily use a currency.Bitcoin is a modern example of a retro-fiat currency because cryptocurrency users transact voluntarily without the legal pressure of a government fiat or mandate.From a legal perspective, governments have categorized Bitcoin differently.Some governments, such as Switzerland, consider it to be a currency; others, like Australia, claim it is an intangible asset.