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Author Topic: Is it correct to call BitCoin a currency?  (Read 4596 times)
niklas_a
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June 01, 2011, 10:34:13 PM
 #1

The front page of BitCoin.org states that BitCoin is a P2P currency. Others in the forums refer to it to as an asset (e.g gold).

Both of these analogies has merits and flaws. For example, nobody knows the amount of gold in the world or when it will be found, but we know the amount of BitCoins that will be available so here the analogy with gold breaks down. Currency is related to a physical object with either intrinsic value or backed by a gov't, and BitCoin is neither.

The whole analogy thing reminds me of the movie industry comparing downloading a movie to stealing a car - the analogy breaks down pretty quickly.

My feeling is that BitCoin is neither a currency or an asset. It certainly shares properties with both but it can be misleading to push the analogy too far.

What are your thoughts?
Is my thinking flawed - is BitCoin perfectly analogous with a currency?
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cloud9
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June 01, 2011, 10:48:41 PM
 #2

Oxford dictionary's definition of currency is http://oxforddictionaries.com/definition/currency?view=uk .

 noun (plural  currencies)

    *
      1 a system of money in general use in a particular country:the dollar was a strong currency[mass noun] :travellers cheques in foreign currency
    *
      2 [mass noun] the fact or quality of being generally accepted or in use:the term gained wider currency after the turn of the century
    *
      the time during which something is in use or operation:no claim had been made during the currency of the policy

Its not correct to call a global digital accounting system a currency.  Just like gold is physical proof of atom ownership, Bitcoin is a right to digital proof of ownership of a solution to a complex mathematical problem.  Bitcoin is not anonymous as well, there's a publicly available blockchain recording every transfer.  So yes, bitcoin.org need to change its description of bitcoin.  Isn't it more like digital rights to cryptographic key certificates which can be transfered, bartered, bought or sold?  But then would the general public have a knowledgable buzz word for that?  So would it be technically not a currency, but more like a very unique, secure, valuable baseball card?

Disclaimer:  Postings of Cloud9 are only individual views of opinion and/or musings and/or hypothesisses.  On a non-authoritative, peer-to-peer public forum, you do not need permission from Cloud9 to derive your own conclusions or opinions, so please do.  Calculations and assumptions to be verified.
abyssobenthonic
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June 01, 2011, 11:00:07 PM
 #3

Oxford dictionary's definition of currency is http://oxforddictionaries.com/definition/currency?view=uk .

 noun (plural  currencies)

    *
      1 a system of money in general use in a particular country:the dollar was a strong currency[mass noun] :travellers cheques in foreign currency
    *
      2 [mass noun] the fact or quality of being generally accepted or in use:the term gained wider currency after the turn of the century
    *
      the time during which something is in use or operation:no claim had been made during the currency of the policy

Its not correct to call a global digital accounting system a currency.  Just like gold is physical proof of atom ownership, Bitcoin is a right to digital proof of ownership of a solution to a complex mathematical problem.  Bitcoin is not anonymous as well, there's a publicly available blockchain recording every transfer.  So yes, bitcoin.org need to change its description of bitcoin.  Isn't it more like digital rights to cryptographic key certificates which can be transfered, bartered, bought or sold?  But then would the general public have a knowledgable buzz word for that?  So would it be technically not a currency, but more like a very unique, secure, valuable baseball card?

Wiktionary:

1.  Money or other item used to facilitate transactions.
2.  Paper money
3.  A countable unit which symbolizes real value
4.  Acceptance or use (e.g. "The jargon's currency")
5.  The state of being current

bitcoins qualify under #1, arguably as an extension of #2, and probably under #3 (depending on what "real value" means)... the other two definitions aren't really relevant to monetary issues.

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cloud9
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June 01, 2011, 11:24:21 PM
 #4

Oxford dictionary's definition of currency is http://oxforddictionaries.com/definition/currency?view=uk .

 noun (plural  currencies)

    *
      1 a system of money in general use in a particular country:the dollar was a strong currency[mass noun] :travellers cheques in foreign currency
    *
      2 [mass noun] the fact or quality of being generally accepted or in use:the term gained wider currency after the turn of the century
    *
      the time during which something is in use or operation:no claim had been made during the currency of the policy

Its not correct to call a global digital accounting system a currency.  Just like gold is physical proof of atom ownership, Bitcoin is a right to digital proof of ownership of a solution to a complex mathematical problem.  Bitcoin is not anonymous as well, there's a publicly available blockchain recording every transfer.  So yes, bitcoin.org need to change its description of bitcoin.  Isn't it more like digital rights to cryptographic key certificates which can be transfered, bartered, bought or sold?  But then would the general public have a knowledgable buzz word for that?  So would it be technically not a currency, but more like a very unique, secure, valuable baseball card?

Wiktionary:

1.  Money or other item used to facilitate transactions.
2.  Paper money
3.  A countable unit which symbolizes real value
4.  Acceptance or use (e.g. "The jargon's currency")
5.  The state of being current

bitcoins qualify under #1, arguably as an extension of #2, and probably under #3 (depending on what "real value" means)... the other two definitions aren't really relevant to monetary issues.

1.  In which currency do you measure your money?
2.  In which currency do you hold your paper money?
3.  In which currency are you counting your value?
4.  Which currency are you accepting?
5.  In which currency are you current?

I would rather go with: A SYSTEM of money in GENERAL use in a PARTICULAR COUNTRY

Otherwise all goods/services that can be bartered in any economy becomes currency as well.

The Roman empire used to give salt to their subjects as salary (salt -> salary).  Are you worth your salt, or are you worth your weight in gold?  Smiley Salt used to be traded equally in their weight for gold in Timbaktu as it was scarce and vital to the preservation of food.  The Romans however still had their currency coins with Caesar's head on it.

Disclaimer:  Postings of Cloud9 are only individual views of opinion and/or musings and/or hypothesisses.  On a non-authoritative, peer-to-peer public forum, you do not need permission from Cloud9 to derive your own conclusions or opinions, so please do.  Calculations and assumptions to be verified.
abyssobenthonic
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June 01, 2011, 11:34:28 PM
 #5

Oxford dictionary's definition of currency is http://oxforddictionaries.com/definition/currency?view=uk .

 noun (plural  currencies)

    *
      1 a system of money in general use in a particular country:the dollar was a strong currency[mass noun] :travellers cheques in foreign currency
    *
      2 [mass noun] the fact or quality of being generally accepted or in use:the term gained wider currency after the turn of the century
    *
      the time during which something is in use or operation:no claim had been made during the currency of the policy

Its not correct to call a global digital accounting system a currency.  Just like gold is physical proof of atom ownership, Bitcoin is a right to digital proof of ownership of a solution to a complex mathematical problem.  Bitcoin is not anonymous as well, there's a publicly available blockchain recording every transfer.  So yes, bitcoin.org need to change its description of bitcoin.  Isn't it more like digital rights to cryptographic key certificates which can be transfered, bartered, bought or sold?  But then would the general public have a knowledgable buzz word for that?  So would it be technically not a currency, but more like a very unique, secure, valuable baseball card?

Wiktionary:

1.  Money or other item used to facilitate transactions.
2.  Paper money
3.  A countable unit which symbolizes real value
4.  Acceptance or use (e.g. "The jargon's currency")
5.  The state of being current

bitcoins qualify under #1, arguably as an extension of #2, and probably under #3 (depending on what "real value" means)... the other two definitions aren't really relevant to monetary issues.

1.  In which currency do you measure your money?
2.  In which currency do you hold your paper money?
3.  In which currency are you counting your value?
4.  Which currency are you accepting?
5.  In which currency are you current?

I would rather go with: A SYSTEM of money in GENERAL use in a PARTICULAR COUNTRY

Otherwise all goods/services that can be bartered in any economy becomes currency as well.

The Roman empire used to give salt to their subjects as salary (salt -> salary).  Are you worth your salt, or are you worth your weight in gold?  Smiley Salt used to be traded equally in their weight for gold in Timbaktu as it was scarce and vital to the preservation of food.  The Romans however still had their currency coins with Caesar's head on it.

What does a particular country have to do with anything?  Your definitions make absolutely no logical sense.

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June 02, 2011, 12:07:19 AM
 #6

Currency is anything with current value.  Money is anything with future value.  Investments are things which increase in value.

Bitcoin pretty clearly has current value.  It may be money, like precious metals, despite the fact that nothing guarantees it as such.  It may also be an investment, albeit a risky one.

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cloud9
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June 02, 2011, 12:17:44 AM
 #7

What does a particular country have to do with anything?  Your definitions make absolutely no logical sense.

Isn't a currency used for exchange with goods/services is backed by the central bank of a particular country?  For the us dollar the Lord's name was even added to add confidence by the early illuminatist's with the all-seeing eye and the illuminatists's pyramid side to side.  Some folks use pigs, salt, chickens, eggs, pebbles in rural areas as a barter form of exchange.  So doesn't a currency need to be backed by a government and issued by the government's central bank?  Wouldn't you have difficulty trying to tell which government's central bank is backing the currency, unless bitcoin is issued by the government of online-topia?  Isn't Bitcoin more like a digitally easily transferable good (right to a cryptographic key certificate) that has universal appeal (secure recording of ownership), that may be bartered for anything, like you would barter with water for someones caravan in the desert in exchange for one of the camels on the trade route (or water for anything else - due to its common use)?  This would not make water the saharan currency.  Water is just a very easily tradeable good in the sahara.

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June 02, 2011, 12:29:46 AM
 #8

Currency is anything with current value.  Money is anything with future value.  Investments are things which increase in value.

Bitcoin pretty clearly has current value.  It may be money, like precious metals, despite the fact that nothing guarantees it as such.  It may also be an investment, albeit a risky one.

Ok so your house has current value, let's go buy a bread with it and get the shop keeper's house for change.  Wink

Disclaimer:  Postings of Cloud9 are only individual views of opinion and/or musings and/or hypothesisses.  On a non-authoritative, peer-to-peer public forum, you do not need permission from Cloud9 to derive your own conclusions or opinions, so please do.  Calculations and assumptions to be verified.
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June 02, 2011, 12:41:12 AM
 #9

Didn't bitcoin.org already got all the attention, hype and free publicity from calling bitcoin a currency?  Shouldn't it on the front of the website rather be called a transferable right to a unique secure digital good (something similar to the unique digital licence certificate you get for software that gets unlocked by your unique code)?  And yes - it is not anonymous as well, see blockexplorer.com . That description has fortunately been omitted rightfully from the description - to not mislead the public.

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June 02, 2011, 12:41:25 AM
 #10

Currency is related to a physical object with either intrinsic value or backed by a gov't, and BitCoin is neither.

No, you are confusing currency and money.

Money is any commodity that has the following characteristics...

1) durability;  it does not rot or rust.

2) divisibility; it can be split up into very small divisions without harming the value. 

3) transportability; a small amount of it has a high relative value, and can be thus transported relatively easily.

4) noncounterfeitability; it's hard to fake.

5) fungabilty; any measurable amount is of equal value to any other amount.

A currency can have some or all of these characteristics, but these are not what makes a currency.  A currency is simply a standardized unit of measurement.  It's a raw number. 

A currency can also be a money, and vice versa; but most currencies are not monies, and this is true also with Bitcoin.  Bitcoin has all of the above characteristics except it is not a commodity, as there has never been an alternative use for a bitcoin beyond it's trade value.  So, from a technical perspective, calling Bitcoin a currency is the most accurate description in English.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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June 02, 2011, 04:35:53 AM
 #11

It is currently a currency in a very limited subset of the population, but it seeks to be a proper currency in general use with the bulk of the population.

The key value, in my mind, is that a currency is generally acceptable for trade.  That is not (yet) true.

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June 02, 2011, 06:01:48 AM
 #12

In legal terms, I think possession is quite fundamental. So what is it that is physically possessed?

As cloud9 says, one does not physically possess a bitcoin, no one does, in the way that Yap stones were not possessed by any one individual. What is in your physical possession (the wallet.dat file) is a set of crypto-graphic keys that can be used to transfer bitcoin credit around in the block chain database, like tally-sticks were used to transfer credit.

Crypto-graphically secured, digital signing rights to a public database of limited credit tallies.

It is not largely different than a modern electronic bank account but the mental inertia associated with those allows it to be called money, currency.

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June 02, 2011, 09:58:33 AM
 #13

Currency is related to a physical object with either intrinsic value or backed by a gov't, and BitCoin is neither.

No, you are confusing currency and money.

Money is any commodity that has the following characteristics...

1) durability;  it does not rot or rust.

2) divisibility; it can be split up into very small divisions without harming the value.  

3) transportability; a small amount of it has a high relative value, and can be thus transported relatively easily.

4) noncounterfeitability; it's hard to fake.

5) fungabilty; any measurable amount is of equal value to any other amount.

A currency can have some or all of these characteristics, but these are not what makes a currency.  A currency is simply a standardized unit of measurement.  It's a raw number.  

A currency can also be a money, and vice versa; but most currencies are not monies, and this is true also with Bitcoin.  Bitcoin has all of the above characteristics except it is not a commodity, as there has never been an alternative use for a bitcoin beyond it's trade value.  So, from a technical perspective, calling Bitcoin a currency is the most accurate description in English.

Am I understanding correctly that the services that the oldest profession in the world renders, can then by this definition of the above and not being a commodity (but having usibility, but no intrinsic value) also be defined as a currency?  Isn't bitcoin just providing a very secure accounting service by means of tradeable ownership rights in cryptographic key certificates?

Disclaimer:  Postings of Cloud9 are only individual views of opinion and/or musings and/or hypothesisses.  On a non-authoritative, peer-to-peer public forum, you do not need permission from Cloud9 to derive your own conclusions or opinions, so please do.  Calculations and assumptions to be verified.
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June 02, 2011, 10:36:52 AM
 #14

Currency is related to a physical object with either intrinsic value or backed by a gov't, and BitCoin is neither.

No, you are confusing currency and money.

Money is any commodity that has the following characteristics...

1) durability;  it does not rot or rust.

2) divisibility; it can be split up into very small divisions without harming the value.  

3) transportability; a small amount of it has a high relative value, and can be thus transported relatively easily.

4) noncounterfeitability; it's hard to fake.

5) fungabilty; any measurable amount is of equal value to any other amount.

A currency can have some or all of these characteristics, but these are not what makes a currency.  A currency is simply a standardized unit of measurement.  It's a raw number.  

A currency can also be a money, and vice versa; but most currencies are not monies, and this is true also with Bitcoin.  Bitcoin has all of the above characteristics except it is not a commodity, as there has never been an alternative use for a bitcoin beyond it's trade value.  So, from a technical perspective, calling Bitcoin a currency is the most accurate description in English.

Am I understanding correctly that the services that the oldest profession in the world renders, can then by this definition of the above and not being a commodity (but having usibility, but no intrinsic value) also be defined as a currency?  Isn't bitcoin just providing a very secure accounting service by means of tradeable ownership rights in cryptographic key certificates?

In prisons, war camps, post-collapse economies, etc whiskey and cigarettes get traded like a currency.

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June 02, 2011, 11:00:52 AM
 #15

I think it is correct to call it a currency.

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June 02, 2011, 11:10:18 AM
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From the various definitions Bitcoin would qualify partly as a currency.

However to be a currency of significance in our society it has to be accepted by a large number of people and should ideally not be subject to prohibition by governments.
It is far from clear, if BTC will ever be a currency of significance (e.g. for paying my daily foodstuff at the supermarket).

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June 02, 2011, 12:28:51 PM
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Would a statement like:  Bitcoin, the Net's digital barter good ...  be an accurate description of what bitcoin is?  Does it not just give the holder of a cryptographic key solution (digital data goods) the right of ownership to transfer that right of ownership to anyone who whish to acquire this in exchange/barter for anything else?  This serves as a useful digital accounting system like gold is a physical accounting system.

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June 02, 2011, 02:42:51 PM
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Would a statement like:  Bitcoin, the Net's digital barter good ... 

The word used in English for a "barter good" is "money".  Bitcoin is not a "good" beyond the context of third party exchange and accounting, and is therefore not a "good".

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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June 02, 2011, 03:56:26 PM
 #19

Definitions may vary depending on who is defining!

Dictionary may have 1 defintion, judges/lawyers another, day-to-day speech a third, lawmakers a fourth etc. etc.

It's going to be quite interesting to see how the law in different jurisdictions see BTC!

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June 02, 2011, 05:36:11 PM
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Not really. Currencies are generally political instruments, historically issued as "warehouse receipts" against specie (precious metal), but recently not connected to specie at all.

But is there a better word for it? As a medium of exchange it is actually a money. But people are scared to death of the word "money", seeing how it is "the root of all evil" (though that saying is a misquotation of a Biblical proverb and has absolutely no logical basis whatsoever).

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