Is Bitcoin a commodity or a currency [duplicate]
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. "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.)" 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
"During Graham's career, gold and currency were the same thing because of the gold standard. Graham did not advise investing in currencies, only in bonds and stocks, the latter only for intelligent speculation. Graham died a couple of years after Nixon closed the gold window, ending the gold standard.  Gold may be thought of as a currency even today, as endowments and other investors use it as a store of value or for diversification of risks. However, currency or commodities investing does not seem Graham-like. How could you reliably estimate intrinsic value of a currency or commodity, so that you can have a Graham-like margin of safety after subtracting the intrinsic value from the market value?  Saying that gold is ""clearly underpriced in today's market"" is just hand-waving. A Graham analysis such as ""net net"" (valuing stocks by their current tangible assets net of all liabilities) is a quantitative analysis of accounting numbers audited by CPAs and offers a true margin of safety." "Since you are going to be experiencing a liquidity crisis that even owning physical gold wouldn't solve, may I suggest bitcoins? You will still be liquid and people anywhere will be able to trade it. This is different from precious metals, whereas even if you ""invested"" in gold you would waste considerable resources on storage, security and actually making it divisible for trade. You would be illiquid. Do note that the bitcoin currency is currently more volatile than a Greek government bond." That makes sense. So yeah it basically sounds like a speculative bubble based on limited supply and high demand, but without any significant change to the market itself.  What's kind of neat is that bitcoin seems to be closer to a commodity than a currency "You are entirely correct that it is an assumption, so I will not argue the point any further other than to say that I don't think it's a very large stretch of the imagination to say that a more robust bitcoin ""economy"", and a larger user base would smooth it out the volatility. It seems pretty reasonable to me that the instability in prices can't be accounted for from the technology that runs bitcoin, and yet it is obvious that the current bitcoin economy is borderline abysmal. It's the things bitcoin allows you to do outside of financial institutions that give it a robustness over typical government backed fiat currencies. When we utilize this advantage, **real** people will use the technology, and a genuine bitcion economy could flourish.   As a caveat to this, I'm not 100% convinced that *""bitcoins""* are the answer. To me, bitcoins are one particular brand of free (as in speech), decentralized, crypto-currencies. When I speak of bitcoins, I'm promoting the idea it represents more than this particular implementation, although I do believe bitcions (the exact software you can download and run at this moment) have the potential for tremendously more use than they're currently being used for." Yes, money is created out of thin air, and it is a good and necessary thing. All money, even commodity money such as gold, is given value only by what can be traded for it. So in that sense *all* money is created out of thin air, because it represents the payment of a future debt. Money merely serves as IOUs between traders.  Who do you think should be responsible for adding money to the system? Inndividuals? Been tried, doesn't work so well. Individual banks? Been tried, doesn't work so well. Nation states? Works a lot better, although can still fail.  So far having a central bank issue money as an economy needs it for trade has been the most successful method to deal with who gets to issue the IOUs.  EDIT: see my post above on a little how and why it works as it does. It is literally what he said, and yet folks here are quick to note that it is certainly not what he meant.  The 7 years aspect is not the unusual part here. The unusual aspects are:   - It has been in a bubble for as long as it has existed, and will continue to be in such a state indefinitely.     - It doesn't have an underlying intrinsic value.  I think you'll agree that this is somewhat less commonly seen.  (For clarity, I don't believe either of those statements to be true, but this is what many of the folks calling Bitcoin a bubble actually believe. See [Alan Greenspan](http://www.koreaherald.com/view.php?ud=20131205000421) and [Warren Buffet](https://www.cnbc.com/2014/03/14/buffett-blasts-bitcoin-as-mirage-stay-away.html)'s positions on the topic for example.) Here are some pros and cons.  Note the list is not comprehensive, but should be a good start. Pros: Alternative to Fiat Money supply - it is an international currency and can be thought of as a protection against having your money in dollars or pounds for example.  Some people think that it will eventually replace fiat money supply.  This is unlikely to happen any time soon. Move money anywhere - Anyone who has an internet connection can download a wallet and receive bitcoins. Route into Altcoin market - A lot of money is being made in alternative cyrptocurrencies such as etherium, often the best way to buy these is with Bitcoin. Potential massive gains - Bitcoin has gone from 1 dollar 7 years ago to over 2000 dollars, some think it may go even much higher in the future. Fixed money supply - Fixed cap of bitcoins, there will never be more than a fixed amount (unless code changes) which is one reason why it has gained so much value. Secrecy - Some cryptocurrencies are anonymous - which means you can hide your wealth and move it about. Negatives: Storage of bitcoins - If you hold your wallet on your computer and lose it without a backup, you have lost everything.  If you hold it on an online exchange and they go down/something bad happens you could lose it.   Regulation is in its infancy.   There is also a pro here - if you have access to your wallet then no one can freeze your account like a bank potentially could. Tax/Legal implications - Legislation against bitcoins could occur and can cause issues for users.  Tax implications can be confusing and an issue. Massive swings - price can go up massively and also down massively - it is not currently a stable investment. Negative ties - Some people associate bitcoin with money laundering and buying drugs - slightly unfairly as it is nothing you can't do with cash (and cash doesn't have a permanent record of your transaction) - but it does have this negative connotation. Summary. Could be worth investing in bitcoin, could potentially make good gains.  Could also lose everything or get in trouble with authorities if they suspect you of financial crime.  I wouldn't invest anything you couldn't afford to lose and I would be mindful of the risks. "Once again, do you have any specific reason why you think bitcoin wont succeed? ""you guys"" never have any real arguments as for why bitcoin will fail, and if you look at the facts, bitcoins are worth more now than they have ever been. You can believe whatever you want, but the market has spoken"