Anthony Pompliano, co-founder of early-stage venture capital fund Morgan Creek Digital, is comparing Ethereum (ETH) to traditional currency.
In a new blog post, the outspoken Bitcoin bull explains why he believes Ethereum (ETH) is practically identical to fiat.
“Fiat currencies have (a) no fixed supply, (b) an inflationary supply schedule, and (c) monetary policy decisions that are decided by a small group of individuals. Ether has (a) no fixed supply, (b) an inflationary supply schedule, and (c) monetary policy decisions that are decided by a small group of individuals.”
In responses, Erik Voorhees, founder of crypto startup ShapeShift, cites key differences between ETH and government-backed money.
“Fiat has value by decree of the State. Ethereum, like Bitcoin, gold, and pork bellies, has value by bids and offers in an open market. You can hate on ETH for a number of reasons, but it ain’t fiat…
Having a limited supply is not the condition for avoiding the label of fiat. Fiat means value by legal decree. Ethereum’s value doesn’t come from the decree of government (like dollars, euros, yen).”
Pompliano says he agrees that ETH’s value is set in an open market, but affirms that the second-largest cryptocurrency has a similar monetary structure to fiat.
Voorhees calls for a less binary view, citing other factors that set ETH and fiat apart.
“ETH’s inflation schedule is not the same as Bitcoin. But that doesn’t mean it is the same as USD fiat. And even if its inflation schedule was the same as dollars (ie – at the whim of central banks), that still isn’t a sufficient criteria for fiat…
Yes fiat is traded, yes it has value… but it’s value (and the reason it’s traded) is due to state decree, not market demand.”
As cryptocurrencies emerge, regulators are struggling to classify them.
Unlike pieces of paper or pounds of gold, lines of code are allowing people to transfer value digitally. But what distinguishes them from traditional money are origin, maker and master. These new types of currencies, designed by computer scientists and underpinned by mathematics and cryptography, are not forged, controlled or backed by governments.
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