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Bitcoin is a commodity for efficient bartering that has a governance structure to ensure that the commodity doesn't flood the market and crash prices. It will

Bitcoin is a commodity for efficient bartering that has a governance structure to ensure that the commodity doesn't flood the market and crash prices. It will become a currency when it can be directly used to satisfy a tax debt, to avoid the punitive threat of the law.

drcode 9y ago
Transaction fees on Bitcoin are essentially a tax, and they can be paid for with Bitcoin.
- SubiculumCode 9y ago
  A cost, yes, but not a tax. A tax is a debt owed to a state, under threat of imprisonment for failing to pay. If you owned only property, but no dollars, you would need to convert some of your property into dollars to pay the tax, or go to jail. If you owned only property, but no bitcoins, you would need to convert some of your property into bitcoins, to use bitcoins.
tbabb 9y ago
You are right that bitcoin is a commodity, but I disagree about your condition for currency. It doesn't suddenly become money when some government "recognizes it" in an arbitrary way. People make comparisons to gold, but gold is also a commodity (whether the government accepts it for taxes or not), and we now know that using gold as if it were currency is a very very bad idea[1]. A currency is a unit of measurement, while commodity is something with (perceived) value that can be traded. Those are not the same: The commodity itself has utility; and that utility can be measured in the units of a currency. The currency itself is not valuable; it merely measures the value of something else. For example, a dollar in your wallet might measure the time you spent (a valuable thing) producing its fraction of your paycheck. It's the difference between a kilometer, and something that's a kilometer long; say a length of chain. Many things have length, but they are not standards of measurement. Bitcoin has "length" (it is valuable, for now), but it is not a very good standard of measurement for wealth. Its demand fluctuates, but its supply is fixed by the algorithm. Therefore its value is demand-driven, and there is no upper or lower bound to what its actual value could be. Compare to a "real" currency, whose supply is increased or contracted by a central bank to ensure that the value changes slowly and predictably. Given sound decision making, a centrally-managed currency can be a consistent measure of wealth no matter how many or how few people want to use it. So as we all know, Bitcoin's value fluctuates significantly, and therefore does not measure a consistent amount of wealth. So this makes it a terrible currency. Its volatility also can't be fixed by wider adoption or "recognition" by the government, because a fixed supply is built into its very design. So it will never be a reliable standard of measurement for wealth. [1] https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock
alexasmyths 9y ago
"It will become a currency when" It will 'become a currency' when people use it to actually buy and sell stuff commonly.

drcode 9y ago

Transaction fees on Bitcoin are essentially a tax, and they can be paid for with Bitcoin.

SubiculumCode 9y ago
A cost, yes, but not a tax. A tax is a debt owed to a state, under threat of imprisonment for failing to pay. If you owned only property, but no dollars, you would need to convert some of your property into dollars to pay the tax, or go to jail. If you owned only property, but no bitcoins, you would need to convert some of your property into bitcoins, to use bitcoins.

tbabb 9y ago

You are right that bitcoin is a commodity, but I disagree about your condition for currency. It doesn't suddenly become money when some government "recognizes it" in an arbitrary way. People make comparisons to gold, but gold is also a commodity (whether the government accepts it for taxes or not), and we now know that using gold as if it were currency is a very very bad idea[1]. A currency is a unit of measurement, while commodity is something with (perceived) value that can be traded. Those are not the same: The commodity itself has utility; and that utility can be measured in the units of a currency. The currency itself is not valuable; it merely measures the value of something else. For example, a dollar in your wallet might measure the time you spent (a valuable thing) producing its fraction of your paycheck. It's the difference between a kilometer, and something that's a kilometer long; say a length of chain. Many things have length, but they are not standards of measurement. Bitcoin has "length" (it is valuable, for now), but it is not a very good standard of measurement for wealth. Its demand fluctuates, but its supply is fixed by the algorithm. Therefore its value is demand-driven, and there is no upper or lower bound to what its actual value could be. Compare to a "real" currency, whose supply is increased or contracted by a central bank to ensure that the value changes slowly and predictably. Given sound decision making, a centrally-managed currency can be a consistent measure of wealth no matter how many or how few people want to use it. So as we all know, Bitcoin's value fluctuates significantly, and therefore does not measure a consistent amount of wealth. So this makes it a terrible currency. Its volatility also can't be fixed by wider adoption or "recognition" by the government, because a fixed supply is built into its very design. So it will never be a reliable standard of measurement for wealth. [1] https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock

alexasmyths 9y ago

"It will become a currency when" It will 'become a currency' when people use it to actually buy and sell stuff commonly.