<p>Sidechains (at least the two-way pegged sidechains, as described in our paper), are about creating a new blockchain that uses the same currency as <em>another blockchain</em>.</p>

<p>Fiat isn't native to any blockchain, so it doesn't fit that category. You can't prove to the chain that fiat tokens are actually exchangable for real fiat. Fiat just doesn't live in the same world: it's defined by real world banks, not by a cryptographically verifiable ledger.</p>

<p>There are however many other ways to have fiat-representing tokens in an auditable ledger of transactions (a "blockchain"). It doesn't need pegging, or proof-of-work, or a sidechain (but isn't incompatible with them either). Still, a lot of the ledger technology itself can be reused. However, all of these solutions inherently require trusting an issuer, who promises to exchange the tokens for real fiat, forever - presumably by holding as much fiat in reserve as assets are issued.</p>

CC BY-SA 3.0
2016-10-14T18:02:25.080Z
so what [https://factom.com] and [http://kyc-chain.com] is trying to do may not work then. The aim is just to make auditing more efficient [https://medium.com/@3ntry/distributed-accounting-ledgers-d527d31870fe#.1yjgxnzi2]
iivri  andre
CC BY-SA 3.0
2016-10-14T17:15:27.170Z
2016-10-14T17:39:50.093Z
2016-10-14T17:39:50.093Z
Pieter Wuille
<p>How could sidechains be used for auditing fiat transactions?</p>

<p>How would the accounting transaction in fiat and the record in a journal be merged? </p>

CC BY-SA 3.0
2016-10-14T14:11:48.310Z
why don't you propose an idea and then I'll tell you if I think it's legit
smatthewenglish
CC BY-SA 3.0
2016-10-14T14:19:34.760Z
@s.matthew.english lol. Ok I am not sure completely but this is the problem : How would the accounting transaction in fiat and the record in a journal be merged? Simply merging accounting systems with a decentralized ledger would be necessary but not sufficient. The actual transaction, not just the records have to be transferred to the blockChain. THE COMPANIES WILL NOT USE BITCOIN
iivri  andre
CC BY-SA 3.0
2016-10-14T15:23:13.667Z
I'm not sure this question is specific enough to find a good answer here.  Your comment seems to suggest that you're interested in a discussion rather than to ask a question. Perhaps you could delimit and clarify what type of answer you're looking for. If you're looking for a discussion another platform such as reddit might be a more suitable format.
Murch
<blockchain><sidechains>
Can sidechains be used for fiat currencies?
iivri  andre
# Can sidechains be used for fiat currencies?

(Asked by: username_0 on 2016-10-14)

How could sidechains be used for auditing fiat transactions?

How would the accounting transaction in fiat and the record in a journal be merged?

**Tags:** blockchain, sidechains

> **Comments:**
> **username_1**: why don't you propose an idea and then I'll tell you if I think it's legit  
> **username_0**: @s.matthew.english lol. Ok I am not sure completely but this is the problem : How would the accounting transaction in fiat and the record in a journal be merged? Simply merging accounting systems with a decentralized ledger would be necessary but not sufficient. The actual transaction, not just the records have to be transferred to the blockChain. THE COMPANIES WILL NOT USE BITCOIN  
> **username_2**: I'm not sure this question is specific enough to find a good answer here.  Your comment seems to suggest that you're interested in a discussion rather than to ask a question. Perhaps you could delimit and clarify what type of answer you're looking for. If you're looking for a discussion another platform such as reddit might be a more suitable format.  

---

## 1 answers

### Answer by username_3 on 2016-10-14. Score: 5

Sidechains (at least the two-way pegged sidechains, as described in our paper), are about creating a new blockchain that uses the same currency as *another blockchain*.

Fiat isn't native to any blockchain, so it doesn't fit that category. You can't prove to the chain that fiat tokens are actually exchangable for real fiat. Fiat just doesn't live in the same world: it's defined by real world banks, not by a cryptographically verifiable ledger.

There are however many other ways to have fiat-representing tokens in an auditable ledger of transactions (a "blockchain"). It doesn't need pegging, or proof-of-work, or a sidechain (but isn't incompatible with them either). Still, a lot of the ledger technology itself can be reused. However, all of these solutions inherently require trusting an issuer, who promises to exchange the tokens for real fiat, forever - presumably by holding as much fiat in reserve as assets are issued.

> **Comments:**
> **username_0**: so what [https://factom.com] and [http://kyc-chain.com] is trying to do may not work then. The aim is just to make auditing more efficient [https://medium.com/@3ntry/distributed-accounting-ledgers-d527d31870fe#.1yjgxnzi2]  

---

