Bitcoin = cash or commodity

[ecoexperiment]

I’ve only been looking into bitcoin for about a month and I have to admit I researched more about how to obtain and use it than why.  (How vs Why?)  I also have to admit I was attracted by it’s 22% growth in value vs the dollar in a recent month.
My question is how do you view bitcoin?  I was surprised when I found this forum how many people seemed to be clinging to it as if it were a commodity to use as an investment while touting it’s use as internet cash to be spent anonymously.
It seems dangerous to me long term for a currency to be both.  Not for the existence of the currency but to investors.
So bitcoin currency or commodity?

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[molecular]

I’ve only been looking into bitcoin for about a month and I have to admit I researched more about how to obtain and use it than why.  (How vs Why?)  I also have to admit I was attracted by it’s 22% growth in value vs the dollar in a recent month.
My question is how do you view bitcoin?  I was surprised when I found this forum how many people seemed to be clinging to it as if it were a commodity to use as an investment while touting it’s use as internet cash to be spent anonymously.
It seems dangerous to me long term for a currency to be both.  Not for the existence of the currency but to investors.
So bitcoin currency or commodity?

For me, it's a commodity money.

EDIT: like silver/gold, just with lower transaction cost, higher divisibility, better storability/securability and less tradition.

[Portnoy]

Yes commodities are often used as currency.  Heck back in the wild west they used to use playing cards as money in some places.

It would be better, legally speaking, if the powers-that-be 'did' just consider it to be something like trading cards or game tokens,
but it seems that it has already been self-defined as a currency in Satoshi's white paper.

[MysteryMiner]

Bitcoin is anything but a cash or gold. It have a potential to transcend both paper cash or gold. But it also have potential to fail overnight when there is successful attack on network, the underlying cryptography is goatsed or internet as we know it ceases to exist.

it seems that it has already been self-defined as a currency in Satoshi's white paper

Seppuku Fujitsu together with Jamie Quicktrigger from wild west described playing cards as a currency in his brown paper. This does not make them a real currency in legal sense of things. Bitcoin are totally novel thing that is the next gear of value transfer.

[BCB]

That is a loaded question.

You can read this paper
http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf

and following some of the interesting discussions that have resulted from it.
https://bitcointalk.org/index.php?topic=121186.msg1305576#msg1305576
https://bitcointalk.org/index.php?topic=121271.msg1306698#msg1306698

After that, I'd be more interested to hear your opinion.

[Gabi]

I consider it digital gold. Is gold money? No. 

[BCB]

the concept of Digital Gold IS and interesting idea.

[molecular]

That is a loaded question.

You can read this paper
http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf

and following some of the interesting discussions that have resulted from it.
https://bitcointalk.org/index.php?topic=121186.msg1305576#msg1305576
https://bitcointalk.org/index.php?topic=121271.msg1306698#msg1306698

After that, I'd be more interested to hear your opinion.

this topic has been discussed on this forum througout the (more recent) history of bitcoin (at least since I have joined). Really good threads pop up from time to time. Why oh why isn't bitcointalk more like reddit .

@MysteryMiner: I agree bitcoin has a totally new quality. But yet I consider it a commodity money.. one that has pretty awesome properties and above all is _not tangible_ in the sense that you can physically touch it. It is tangible however in the sense that one can deny access to it (an that's the sense that matters with money, after all, it's about that, not about physically caressing your gold-bars at night).

[molecular]

on a side-note: goldbugs sometimes say: "Gold is backed by the energy that was put into mining it". Fuckin' LOL!

While I don't agree that "backed by" is the correct term here (because it implies redeemability and buying energy with gold is not redeeming, it's simply buying) I really like how well above quote fits with bitcoin.

Holding a bitcoin key implies ownership of pretty much nothing: at the beginning of the transaction chain there is just the proof-of-work.. the energy someone put into the blockchain through mining.

[BCB]

the ENERGY and COST of mining gold coupled with it's limited availabiltiy as a natural resource is what makes it rare.

It is our perception of the value of gold that gives it value, whether we use it to make jewelry, or to hedge inflation.

This is an interesting  read.
http://www.gold-eagle.com/editorials_02/mehta052402.html

[Stephen Gornick]

It seems dangerous to me long term for a currency to be both. 

If Bitcoin weren't used as a currency there would be no demand for them.   They are not useful for anything else.  Thus they would be of no interest to an investor.

[molecular]

It seems dangerous to me long term for a currency to be both.

If Bitcoin weren't used as a currency there would be no demand for them.   They are not useful for anything else.  Thus they would be of no interest to an investor.

I am sure you are aware of Greshams Regression Theorem and how there is a discussion wether bitcoin disproves it or wether it has to be reinterpreted? EDIT: or wether bitcoin is just not money (forgot about that option)

[molecular]

the ENERGY and COST of mining gold coupled with it's limited availabiltiy as a natural resource is what makes it rare.

It is our perception of the value of gold that gives it value, whether we use it to make jewelry, or to hedge inflation.

This is an interesting  read.
http://www.gold-eagle.com/editorials_02/mehta052402.html

Interestingly, perception alone (without scarcity) seems to suffice... look at diamonds.

[BCB]

Absolutely.   Frankly it ALL comes down to perception.

Some places it is cows.

It used to be shells

Now it is cryptographic digital signatures.  It has value because those of use use use it say so.

Simple as that.

[molecular]

Absolutely.   Frankly it ALL comes down to perception.

Some places it is cows.

It used to be shells

Now it is cryptographic digital signatures.  It has value because those of use use use it say so.

Simple as that.

Cool (and absolutely correct). So,... let's "say so" a bit more

[BCB]

EXACTLY.

Which is way someone from this community (if not the The Bitcoin Foundation) has to publish a response to that ECB paper.

[molecular]

EXACTLY.

Which is way someone from this community (if not the The Bitcoin Foundation) has to publish a response to that ECB paper.

And be like 2 children: "no", "yes", "no", "yes", "NOO", "YESSS"

Seriously, though. We could probably try to crowdwrite a nice "objective" paper and ask TBF to publish it.

We might want to switch forums to do that.

[BCB]

Yes I don't think it could possibly happen here.

However I did notice that as long as this ECB discussion has been going on in these several threads now, the usually trolls who arrival to a thread signal the down fall of any intelligent conversion have yet to arrive here.

Either they haven't found it yet, or this conversation is just too far over their heads they'd have no idea to reply.

[molecular]

Yes I don't think it could possibly happen here.

However I did notice that as long as this ECB discussion has been going on in these several threads now, the usually trolls who arrival to a thread signal the down fall of any intelligent conversion have yet to arrive here.

Either they haven't found it yet, or this conversation is just too far over their heads they'd have no idea to reply.

Well, there's not much in these threads to comlain about / attack, is there. The ECB is not taking part in the discussion. Maybe that's why?

[ecoexperiment]

That is a loaded question.

You can read this paper
http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf

and following some of the interesting discussions that have resulted from it.
https://bitcointalk.org/index.php?topic=121186.msg1305576#msg1305576
https://bitcointalk.org/index.php?topic=121271.msg1306698#msg1306698

After that, I'd be more interested to hear your opinion.

Thanks, That a really good read.  I'm saving it on my laptop.  All newbie like me should read it.  I'm working my way through the second thread.

My opinion of the paper is that it great information for someone new to bitcoin.  I totally agree with their suggestion that increased usage could cause a deflationary spiral which most holder of bitcoin would probably love to see.  I think the problem with that idea is that there have to be more ways to use it for it's use to increase.  This growth could be spurred by vendors seeing people actually spending bitcoin.  I actually tried to sell some gift cards on bitmit at a loss without any bites.  Small experiment I guess but at even about a 10% discount to the US dollar I saw no bids.


I did think the paper played up the security risk to users and seem to suggest that there was a "need" for the banking professionals.  I don't tend to agree with that.  I can just remember Alan Greenspan (former US Fed Chief) telling congress those in US investment banking, he included were not smart enough to see the housing bubble and the danger of CDOs.

For now I'm not buying bitcoins with money or selling items.  I'll get it the old fashion way.  I'll earn them!