I like the gusto, but maybe I'm dense, or shallow or whatever, but is BTC not also a fiat currency? I realize there's a limited amount, but its value is completely speculative, and it's not backed by hard assets. It's not even backed by a government, which makes it less like a fiat note and more like something I printed on my inkjet when I was twelve. The BIG "if" is whether it gains critical mass and is accepted as a note of value. If or when it does, we'll all saunter over and trade in our euros or yen or dollars for some, I assume. But before it's traded on forex it's gonna be a tough sell for average folk, which means it's not tempered or tested by real markets; just hopeful folks who aren't huge Ayn Rand fans, but have quick recall of pertinent passages in Atlas "just in case".
All currency values ever are completely speculative, the value of a currency is a shared mass consensual hallucination, this even applies to gold. There is no innate reason that it should ever have been considered as a form of money except by the consent of those that offered and accepted it as such. Bitcoin is no exception to this, but that is largely irrelevant with regards to the realities on the ground of how people are currently trading with btc rather than trading in btc.
Those trading with btc just want a fast digital medium of exchange, they have taken to pricing their goods and services in a local fiat currency with more stability than btc (which is pretty much anything with the extreme market swings in btc right now) and a proviso that the conversion will be done at the time of the transaction. So, effectively they are simply treating BTC like cash. Due to the superfluidity of the exchange itself they can afford to ignore the actual exchange rate.
Those trading in btc are hoarding it with the expectation that the price will rise as scarcity increases due to other people speculating in it as well as the network hash rate of the mining effort spiralling upward.
These two points taken together was the core of my hypothetical idea about buying / selling agents that are effectively exchanges coupled with merchant service providers. It reflects the reality on the ground and plays well with both sectors of the market.
Just to answer the obvious points also, something you can print on your inkjet when you're twelve is also printable by any other inkjet holder. The BTC in your account are unique and the total supply of BTC is expanded by a well understood mathematical process at a predictable rate and distribution, not fiat declaration of a central bank. This is what is meant by bitcoin is not a fiat currency.
I also have enlightening perspective changing quotations from jesuits saved up just in case, and I am a militant atheist.
