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Bitcoin can be classified as a currency as it can be used as an medium of exchange or classified as an commodity given its speculative and volatile nature.

What should we classify Bitcoin as ??

marked as duplicate by mhoran_psprep, Chris W. Rea, JoeTaxpayer, Dheer, DumbCoder Mar 19 '14 at 8:42

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    Can we include "fad" in the list of choices? – Chris W. Rea Mar 18 '14 at 19:21
  • It is a con. As in bitcon. – BAR Feb 7 '15 at 3:03
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It has properties of both. Tax authorities will eventually give their opinion on this. Through its properties of finite quantity, fungibility, and resistance to forgery/duplication, it acts as a commodity. It can be sent directly between any two parties anywhere on Earth, without regard for the quantity transacted or physical distance, to act as a currency.

By the way, establishing trust in a trust-free environment through cryptographic proof-of-work is a remarkable invention. Sending economic value, cheaply and securely, around the world in minutes, not days/weeks, is a remarkable invention. This is where the value comes from.

  • I'm sorry, but why do you need bitcoins to send money? Paypal is as free and fast... – littleadv Mar 18 '14 at 23:34
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    @littleadv Bitcoin isn't the answer, but Paypal isn't always free, isn't always fast, and has a nasty habit of freezing your account and walking away with all your money on a whim – Yamikuronue Mar 19 '14 at 0:45
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    @Yamikuronue yeah... Mt.Gox etc... Paypal is always free if its between two individuals and not a business transaction, I've been transferring money through paypal. I do agree that they tend to freezing money occasionally, but that mostly happens in the US because they're unregulated. IIRC in the EU they're treated as a bank and cannot do such shenanigans. – littleadv Mar 19 '14 at 6:41
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    @littleadv Paypal is a for-profit private company and only works in a handful of countries. The majority of people on Earth can't use it. – not22 Mar 19 '14 at 11:45
  • @not22 That is actually not true (the majority of people can't use it part). – littleadv Mar 19 '14 at 16:01
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Its neither. Its a scam. there's no value underlying it, and it has proven to be the most speculative and untrustworthy investment there is.

The scam works like a pyramid scam, so the more people come later on the more people who came in earlier on gain, so that is why you see so much hype around it encouraged and fueled by those early adopters who'll cash out at your expense. Imagine people who jumped on the bandwagon when each coin was worth a mere fraction of a dollar - they want you to "invest" at the current price of hundreds of dollars per unit so that they could cash out.

You'd be better off with tulips, really.

(And don't be discouraged by the downvotes on this answer, of course those scamers will try to shut me down. That will just prove the point.)

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    I really don't understand the hoopla behind Bitcoin. People will only learn after they have been hit hard and lose money. – DumbCoder Mar 18 '14 at 17:05
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    At least I can see a tulip. – MrChrister Mar 18 '14 at 19:32
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    How is the issue you're describing any different than a fiat currency, like the US Dollar? What is the "value underlying" a fiat currency. Fiat currencies and bitcoin are similar in that their only value is the "faith" that causes people to accept them in exchange for goods or labor. The U.S. Dollar is just as much a scam... it's just been around longer. – Bart Oct 27 '14 at 17:27
  • @Brat a very tiring argument. I can explain to you how wrong you are, but why would I bother? Would it matter to you? – littleadv Oct 28 '14 at 2:39
  • @Bart - ongoing discussion such as this should be taken to a chat room. – JoeTaxpayer Oct 29 '14 at 12:32
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I would classify Bitcoin as a hybrid.

Currency : It is accepted by e-businesses as a form of payment

Commodity : Chart illustrating the volatility and speculative nature of Bitcoin

  • If it's a currency, it's a bad one: 1 hour confirmation times and total price instability. – user11865 Mar 18 '14 at 17:06
  • @quantycuenta - I believe in your previous posts you were a diehard proponent of Bitcoin. Why this change of heart now ? – DumbCoder Mar 18 '14 at 17:23
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    @DumbCoder I'm a diehard proponent of cryptos. Bitcoin has a long way to go to becoming the ideal currency, but at least they proved it can work: a secure system of transferring money with the extremely important added benefit of having to be backed by nothing except its own supply. We'll never hear a Fed type question about Bitcoin: "what happens if the Treasuries & mortgages backing the Fed collapse?". The problem is that it needlessly takes 1 hour for funds to clear with 100% confidence and is price unstable. The crypto that can solve that changes the world for the awesome. – user11865 Mar 18 '14 at 18:41
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    @quantycuenta secure? Mt.Gox etc... If someone steals money from my bank - I couldn't care less. What happens when someone steals your bitcoins from Mt.Gox? You don't have bitcoins. – littleadv Mar 19 '14 at 6:43
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    @littleadv MtGox != Bitcoin. Is the stock market now fundamentally unsound because of Bernie Madoff? If I were in a poorer country without the luxury of deposit insurance, or worse, my country goes so far as to suspend withdrawals, or worst, seizes my money, say, because it wasted the country's resources on, say, a real estate bubble to the point where it has more than a few empty megalopolises, I'd much rather hold my wealth in something like BTC despite all of the economic flaws. Variance is cheaper than losing everything. – user11865 Mar 19 '14 at 12:43

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