There is a new editorial in the cryptonews issued by the US Federal Office, entitled “Bitcoin Is Not A New Kind of Money” and covering the similarities of BTC with fiat money. Written by the economist for the Federal Reserve Bank of New York’s Research and Statistics Group, Michael Lee, the editorial has been published and since then, faced a lot of criticism from members of the crypto community.
The reason for the above mentioned is very simple. As you probably know from our Bitcoin news, the US Federal Office has a notorious stance against Bitcoin. Before this, a publication from the Federal Reserve’s Kansas City branch noted that Bitcoin is neither digital gold nor a safe haven in economic crises. The publication made study of the performance of 3 types of assets (gold, treasury bonds and Bitcoin) where it concluded that only Treasury bonds have acted as a safe haven in times of crisis over the past decade.
According to the publication, Bitcoin along with cryptocurrencies like Ethereum, Litecoin and XRP are money – but not a new kind of money. On the contrary, the editorial states that money with the characteristics of Bitcoin has existed for centuries but the new thing about cryptocurrencies is not in their intrinsic properties but in their exchange mechanism. In this manner, they make a distinction between 3 types of money as well as 3 types of exchange mechanisms.
Alright, so this is insane. Given that other Fed branches have opined intelligently on the topic, I'm kind of shocked to see this level of ignorance, misclassification, and abuse of language from the NY Fedhttps://t.co/v9w1btB7yU
— nic carter (@nic__carter) June 19, 2020
However, a popular critic and the founder of Castle Island Ventures named Nic Carter pointed out that the study has a misguided definitition of fiat money. He said:
“Fiat means ‘by decree’. no one is decreeing or insisting that bitcoin be worth anything. no one is enforcing its value at the point of a gun. I know we’re in a post structuralist era where the meaning of words doesn’t matter, but cmon. Do better.”
When it comes to exchanging money, the editorial by the US Federal Office also makes a distinction between physical, electronic as well as exchange through a trusted third party. According to it, electronic transfers on Bitcoin are without a trusted intermediary:
“Bitcoin is not a new type of money. Instead, it is more accurate to think of Bitcoin as a new type of exchange mechanism that can support the transfer of monies as well as other things.”
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