Let's scrap "fiat"
Let's scrap crypto vs fiat
Decades of sloppy talk welded “crypto” to anything onchain and “fiat” to everything from banknotes to M2 money supply. It just does not make sense when your crypto is mostly USD-pegged which makes it fiat!
How we got stuck with fiat‑vs‑crypto
Gold bugs and central bankers argued for a century; you inherited the mess. In the pre‑1931 world you either lugged metal or held a paper promise that metal waited in a vault, so every debate was commodity backing against government decree. The pound and the dollar kept to gold pegs, broke them during wars, and limped back when peace returned; by the time Britain scrapped gold convertibility in 1931 the phrase “fiat money” stuck to every paper dollar because nothing metal sat behind it – the tag comes straight from Latin fiat, “let it be done,” a courtroom‑style order that boils down to money existing by decree, not by metal. Hayek shouted that politics would debase that paper; governments shrugged and printed anyway.
When Bitcoin showed up in 2009 you got a programmable version of the gold meme. Proof‑of‑work shackled supply, the block‑reward halving mimicked dwindling mining veins, and early holders framed the coin as digital bullion that made central banks look like printers on steroids. The simplicity is beautiful: Bitcoin = gold, anything state‑issued equals fiat.
Stablecoins ruined the neat border. Tether and Circle promised blockchain speed while pegging tokens to the very dollars the crypto crowd mocked. Now you held a coin that was crypto in code but fiat in price. The crypto-fiat dichotomy stopped making sense.
Now, add real‑world‑asset tokens that peg to beer ($PINTA), carbon credits ($KLIMA, allegedly), or Treasury bills (e.g. $USD0), and the fiat‑crypto fence looks like a toddler drew it in chalk. It just does not make sense anymore.
Four cleaner axes you can pick
Pegged tokens vs currencies
A pegged token keeps value by hitching to something external – a dollar, a pint of lager, a carbon tonne – and lives or dies by collateral and redemption rules. A currency floats on supply, demand, and vibes. Peg breakdown risk differs from market volatility. If the peg snaps you see a cliff, not a wave.
Privately issued vs government issued
A government‑issued unit is a liability of the state and ultimately backed by taxes, guns, and the willingness to inflate. A privately issued token is a corporate promise that can default or get regulated out of existence. The split shines when you ask who captures seigniorage and who the lender of last resort might be. Your bank deposit looks private until the FDIC backstop shows the hybrid reality.
On‑chain vs off‑chain currency
An on‑chain unit lives, moves, and settles inside public‑blockchain consensus; every spend is a state update you can audit without asking. An off‑chain currency travels through non-blockchain ledgers, think bank databases, Visa net messages, or clearing‑house files, where you trust operators and regulators. The split lays bare programmability and censorship resistance while sidestepping questions about collateral or peg mechanics. When a jurisdiction leans on a choke point, on‑chain assets can route around it; off‑chain balances freeze in place. Pick this axis when you worry about payment freedom or composability.
Wrapped vs native
A native asset settles on the ledger it was born for; a wrapped token is an IOU ferrying value to a foreign chain while the real thing sleeps in custody. BTC on Bitcoin and physical cash inside the Fed column are native. USDC, WBTC, ETF shares, and your exchange balance are wrapped. The line tells you where finality lives and where failure begins: with code consensus or with whoever guards the vault.
You transfer USDC between wallets and think dollars moved, yet only the token’s ledger changed; the bank balance anchoring redemption stayed put. Finality on‑chain is probabilistic and arrives in seconds, but legal finality waits until the issuer honours your redemption ticket. If Circle blows up or the bank gets frozen you still own the token, but you might never touch the underlying cash. In contrast, when you push a Fedwire the central bank debits and credits real reserves; the risk window concerns messaging glitches, not custodial bankruptcy. Bitcoin goes further: you settle by convincing the network and nobody can reverse without 51 per cent of hash. Bridge that coin to Ethereum and you trade part of that immutability for custodian honesty or smart‑contract math guarding the bridge.
Mini case studies
USD cash: native, government‑issued, currency. Your dollar bill dies in a barbecue but not in a margin call.
USDC: wrapped, private, pegged. You ride two risks: Trump tweeting something about tariffs, Circle default and banking collapse, and smart‑contract bugs.
Bitcoin: native, private, currency. Supply schedule is public, but price rides the free market rollercoaster.
Conclusion
Dump the fiat‑crypto bumper‑sticker for good. Pick one axis, tag the asset, move on. Use these as your new defaults:
BTC? On‑chain currency: native, private, floating. Done.
USDC? Private pegged chip: wrapped, dollar‑collateral, redeemable when the bank’s awake.
GBP cash? Government currency: native, state liability, off‑chain.
wBTC? Wrapped pegged Bitcoin: bridged custody risk on Ethereum, inherits BTC supply cap.
Say the axis out loud in every pitch deck, legal draft, and product screen. Your users see the risk that matters, regulators see the box they supervise, and you skip the endless “but is it really money?” pub debates.
So next time someone waves “fiat vs crypto” in your face, hit back with a clean label: “It’s an on‑chain currency, mate,” or “It’s a privately issued pegged token, a different beast.” Clarity first, tribal noise never.
DM me or grab me for a coffee if you want the unfiltered version.
Glossary**
Native asset – settles on its home ledger.
Wrapped token – IOU living on a foreign chain.
Peg – fixed ratio to another unit.
Finality – point beyond which a transaction cannot be reversed.
Seigniorage – profit from issuing money.
CBDC – central bank digital currency.
Bridge – mechanism moving assets across chains.
Collateral – stuff backing a peg.
Redemption – turning your token back into the underlying asset.
Settlement risk – chance that a transfer fails or reverses.
Issuer risk – odds the entity behind a token collapses.
DM me or grab me for a coffee if you want the unfiltered version.
UNLICENSE