Definition of a Commodity & Are Bitcoins a Commodity?

[Anonymous]

I would argue that TIME is a resource and therefore bitcoins are nothing more than a store of TIME.In essence a hard commodity extracted through mining with proof that the mining took place.


Is time a resource equal to other resources?Untill Satoshi invented bitcoins there was no way to capture time and store it.

[fresno]

Red & creighto: Maybe we should define the definition of "definition" then. Mine comes from Black's Law Dictionary. Possibly you have a more accepted authority to quote from?

[MoonShadow]

I would argue that TIME is a resource and therefore bitcoins are nothing more than a store of TIME.In essence a hard commodity extracted through mining with proof that the mining took place.


Is time a resource equal to other resources?Untill Satoshi invented bitcoins there was no way to capture time and store it.

http://www.ithacahours.com/

[MoonShadow]

Red & creighto: Maybe we should define the definition of "definition" then. Mine comes from Black's Law Dictionary. Possibly you have a more accepted authority to quote from?

That just becomes an appeal to authority.  Yes, there are better definitions of financial terms to be found than within a legal dictionary, but I'm not going down this rabbit hole.

[Red]

I know that doing this means I'm using an appeal to authority, but from Economist.com...

Commodity

A comparatively homogeneous product that can typically be bought in bulk. It usually refers to a raw material – oil, cotton, cocoa, silver – but can also describe a manufactured product used to make other things, for example, microchips used in personal computers. Commodities are often traded on commodity exchanges.

No problem with an appeal to authority on definitions. I'm obviously not the definitive authority on the language.

But I'm not seeing what separates us, even from this definition. The green parts clearly fit bitcoin. Do you read the red part as absolutely excluding bitcoin?

I don't think it is up to you to decide if or what use a commodity is.

I'm not attempting to do so, and the same accusation can be leveled at yourself.  This is also borderline an attack upon the man, not the argument; something not done in polite circles.

I apologize for the tone here. It was flippant, but I didn't intend for it to be an ad hominem attack.

I was referring back to the previous thread where you said:

If there is no use for something outside of the context of a currency, then it is not a commodity.

I really thought that was the main separator between us.

If that is not it, I'm really at a loss to know where I am failing?

----

This is by no means authoritative either, but I offer it as background in my use of the term commodity...

What drew me to bitcoin, was not the monetary policy. It was the promise of making anonymous transactions. Like many noobs, I presumed that there would exist serialized digital coin files, and that they would change hands in some verified fashion.

My first thought was, "Hey, I could use such coins as a proxy for verifying the ownership of other things! I didn't care about their monetary value. I just wanted a very cheap uniquely identifiable digital commodity." I was thinking about something like a transferable access key. I have the right to access something digital on the internet. I can sell that right to you anonymously. Now you can access that thing, and I can't. But no third party gets to know who you are.

It turns out the existing bitcoin implementation is not suitable for what I was considering, but I did see either 2 or 3 other people postulate the same type of proxy use for bitcoins.

So I started out thinking of bitcoins as a commodity not a currency. As others discussed bitcoin's properties it tended to re-enforced my views on its commodity characteristics.

Scarcity = Not generally a property of commonly used currencies. Often associated with commodities, especially gold.
Pre-fixed Quantity = No commonly used currencies I know of have this property. It is easy to point to limited edition commodities.
Dynamically Variable Value = In the two months since I came to this site, the value of bitcoin in dollars has risen 10 fold. That is not a property of any other common currency. It is a property of some commodities.
Trading on exchanges by competitive bidding = This is a property of many commodities. Most people don't acquire their everyday currency this way.
Use of the terms Buy and Sell Bitcoins = This means to buy bitcoins using a currency. Or sell bitcoins for a currency. That is the same pattern for commodities. People never seem to say, buy dollars or sell dollars in the same sentence with bitcoin.
Use of the term trade = People often say I'll trade web development for bitcoins. That is very commodity barter like. People rarely say I'll trade web development for dollars.

None of these are authoritative. But I found they reenforced my notion of bitcoin as a commodity.

But I'm willing to be persuaded I'm wrong. Fresno would prefer that.

[fresno]

I know that doing this means I'm using an appeal to authority, but from Economist.com...

Commodity

A comparatively homogeneous product that can typically be bought in bulk. It usually refers to a raw material – oil, cotton, cocoa, silver – but can also describe a manufactured product used to make other things, for example, microchips used in personal computers. Commodities are often traded on commodity exchanges.

No problem with an appeal to authority on definitions. I'm obviously not the definitive authority on the language.

But I'm not seeing what separates us, even from this definition. The green parts clearly fit bitcoin. Do you read the red part as absolutely excluding bitcoin?

You're describing a thing, I'm saying Bitcoin is a method, a convenience; a program.

COMMODITY. In the most comprehensive sense, convenience, accommodation, profit, benefit, advantage, interest, commodiousness. -Black's Law Dictionary, Revised Fourth Edition.

Sure, converting from one thing to another is useful, but that is for others to do. Bitcoin is the convenience that does it, nothing more.

To take on the other jobs is to also take on the other responsibilies. Bitcoin doesn't need to do that, and in order to stay vital, absolutely shouldn't!

Yes, Bitcoin IS a commodity, in the classic sense of the term; an accommodation. It should not claim to be the exchanger, nor the exchange, nor the thing exchanged. Why make things complicated?

[Red]

The spirit of the thread asked what people thought. I listed what I thought and why.

I'm not intending to lobby for everyone calling bitcoin a commodity beyond acknowledging that bitcoin is an uncommon object that does have some characteristics of other things commonly thought of as commodities.

I'm perfectly happy with Liberty's veiw that on this site the word commodity should have economic semantics. Or your view that it should have legal semantics.

Until semantic consensus is reached, I'll use the language as I understand it.

[mizerydearia]

This topic was being discussed over in the animated movie thread and another thread which I'll include when I run into it again.

Universal Dividend
help! Bitcoin Article to be published, please review
On hoarding
Remove economic nonsense from home page
Zitcoins
Lending at negative interest rates. (People like bigger numbers.)
The economics of Bitcoin: How does it work?
Bitcoin does NOT violate Mises' Regression Theorem
New exchange (Bitcoin Market)
Calculating Bitcoin Value...
Deflation
Pros and Cons of Anonymous Digital Cash
The MOST Important Change to Bitcoin
Legal Tender

[NewLibertyStandard]

This topic was being discussed over in the animated movie thread and in these other threads which I just ran into again.

By golly! Would you look at all these threads I just happened to run into again!

[mizerydearia]

This topic was being discussed over in the animated movie thread and in these other threads which I just ran into again.

By golly! Would you look at all these threads I just happened to run into again!

^_^   Be careful not to hurt yourself.

[Red]

Is there a consensus on whether bitcoins are a commodity?

What about the three commonly used types of currency:

Commodity currency - silver coins
Representational currency - silver certificates
Fiat currency - Federal reserve notes

What type is bitcoin?
 

[MoonShadow]

Is there a consensus on whether bitcoins are a commodity?

What about the three commonly used types of currency:

Commodity currency - silver coins
Representational currency - silver certificates
Fiat currency - Federal reserve notes

What type is bitcoin?
 

None of the above.  They are closest to a fiat, without the 'legal tender' part.

They are closest to a LETS system for the internet, if the entire online world can be considered it's own 'locality', but even that isn't accurate.

http://en.wikipedia.org/wiki/Local_Exchange_Trading_Systems

Bitcoin is something new in the realm of currencies, which is what was neccessary.

[Red]

Thank you for the LETS analogy. I had not heard that term in it's originating context. I agree it makes a good point of reference. It seems to differ mostly in terms of "equivalence to the national currency" and "no interest".
 

[FreeMoney]

I don't think it's much like LETS. The main difference being that with LETS you can go negative without even finding a lender. I believe the total number of credits is always zero. This is weak because people can get negative balances and stop using. Also afaik LETS always has a central bookkeeper. These are very large differences.

Can a currency be fiat without a central issuer? I really don't know. I also don't know if legal tender laws are a necessary or coincidental property of fiat. I think all fiat has had legal tender laws though. I mean if people are going to choose to use it without legal tender laws, then it must be a thing they want, which implies it's a commodity, right?

I say bitcoin is a commodity currency.

[MoonShadow]

I don't think it's much like LETS. The main difference being that with LETS you can go negative without even finding a lender. I believe the total number of credits is always zero. This is weak because people can get negative balances and stop using. Also afaik LETS always has a central bookkeeper. These are very large differences.

Indeed, there are notable differances, and I noted that it wasn't quite right to start with, but it's as close of an existing example that I could think of quickly.  As for central bookkeeping, that is what we have with the blockchain.  There does not need to be any actual script with LETS, either.  Nor is it a requirement that all credit balance to zero within a LETS, but zero sum bookkeeping is a commonly used method within the LETS style local currencies.  Bitcoin is *not* a zero sum system, but upon thinking about it further, I can still say that it's very LETS-like in structure and practice; and as such, we can expect the same kind of legal issues (and defenses) that previous LETS systems have faced.  It's a very good analogy, and a strong precendence to lean upon.  The main differences between other LETS-like local currencies and Bitcoin is that Bitcoin's local sphere of trade is the entire Internet, and not the physical world.  Any reach into the physical world only occurs as an extention by others, not neccesarily an intended use of the currency.  IANAL, but I think that this is something that we could lean upon legally speaking, but only if the bitcoin.org main page and FAQ were to allude to being a "LETS-like" online currency as an intent prior to any legal troubles.

Can a currency be fiat without a central issuer? I really don't know. I also don't know if legal tender laws are a necessary or coincidental property of fiat.

A currency can be a fiat without a central issuer, but not likely without legal tender laws.  The very term 'fiat' implies it is a currency of the nation by a matter of law, as opposed to a naturally occuring currency such as gold coins.

 I think all fiat has had legal tender laws though. I mean if people are going to choose to use it without legal tender laws, then it must be a thing they want, which implies it's a commodity, right?

I say bitcoin is a commodity currency.

It still doesn't matter what you say or don't say.  Bitcoin is not a commodity.  For that matter, neither is any LETS or LETS-like currency that exists or ever has existed. 

[NewLibertyStandard]

Is there a consensus on whether bitcoins are a commodity?

What about the three commonly used types of currency:

Commodity currency - silver coins
Representational currency - silver certificates
Fiat currency - Federal reserve notes

What type is bitcoin?

Silver coins are an example of commodity money. Commodity currency is the currency of a country which heavily relies on the exportation of some particular commodity.

[MoonShadow]

Commodity currency is the currency of a country which heavily relies on the exportation of some particular commodity.

This statement is not true.  A commodity based (backed) currency is such because it physicly is (or represents) a particular commodity of a defined metric.  The nature of foreign trade is irrelevent.

[MoonShadow]

It seems to differ mostly in terms of "equivalence to the national currency" and "no interest".

How does it differ from a LETS regarding the "no interest" condition?  How does bitcoin imply interest without a bitcoin banker?

[fresno]

Let me try once more. Then I will be silent on this subject forever. Maybe.

To label Bitcoin a currency incurs a liabiliy, and hostile governments and organizations will gleefully use such liabilities against us: To promote bitcoin as money, cash, dollars or their commercial equivalents is nothing less than suicide when we are found to be tweaking the noses of the financial industry.

"Mr. satoshi," (having been subpoenaed to participate in seven weeks of Senate procedings against illegal money launderers) "it says here on your program's website that your Bitcoin is a currency, does it not?"

"Mr. kiba," (on suicide watch in a neighboring cell) "in your letter to the EFF, you made the claim that xxx Bitcoins are worth xxx United States Dollars, did you not?"

Bitcoin is very close to being what could be considered sui generis, "of its own kind". We have the choice of defining it according to OUR purposes, or we can use the meathook-filled existing terminology of commerce. Do you understand the tremendous opportunity that this is?

Why piss it away? Why give the opposition just the things it needs to shut this project down? Why let them set a precedent that will deter others from trying anything like this ever again?

I've called Bitcoin a commodity earlier in this thread, and I've defended the term. It's a perfect term for us to use:

"COMMODITY. In the most comprehensive sense, convenience, accommodation, profit, benefit, advantage, interest, commodiousness."

This is the first definition, right out of the weasel's own playbook!

Okay, find another term if you like. But Bitcoin is a convenience. It is an accommodation. It is a benefit. Bitcoin is not money and it shouldn't try to be, nor is it a money exchange. Sure, there are exchanges that use Bitcoin for all sorts of trading, but they are not Bitcoin. That would be like comparing stores and shopping centers to the street that brings people to the stores: The street is common law, and it's ours by right. Bitcoin is a public utility in its own right that the government has no reasonable interest in controlling.

Think about it. If we factor 'Bitcoin the convenience' from 'Bitcoin the community's many uses', we will bring no commercial liability upon ourselves--because we are NOT IN COMMERCE!

There is a letter being written to the EFF, there is also an article being readied for publication. I think this issue needs to be considered before we go further in endorsing them.

[Red]

It seems to differ mostly in terms of "equivalence to the national currency" and "no interest".

How does it differ from a LETS regarding the "no interest" condition?  How does bitcoin imply interest without a bitcoin banker?

I looked up some of the terms used by the guy who coined the concept and term. He would consider coin generation positive interest and transaction fees negative interest.