When Satoshi Nakamoto created the first Bitcoin in 2009, he called it cryptocurrency. Since then, a lot has changed, and things have developed to a great extent. Today, Bitcoin is the most extensive user base and the most trusted among people worldwide. Thousands around the world have either already bought bitcoins or are planning to invest in some.
The most recent debate has been about the nature of crypto, especially Bitcoin. To understand this at length, we need to understand the difference between currency and commodity first.
How are Commodity and Currency different?
A commodity is an economic good that one can buy, sell and invest in. Commodities are fungible resources, and the market treats them as equivalent to the source of production. In short, you can say that a commodity is anything with great value.
Coming to currency, it is a tool with which one can carry on transactions. The currency also has a great value but not in itself. For example – We cannot invest in money; we can instead buy and sell with the help of cash.
Is Bitcoin a currency or a commodity?
To address this long standing debate, let’s look into the nature of Bitcoin. Here are a few features of Bitcoin that will help us judge whether Bitcoin is a currency or a commodity.
- A single Bitcoin costs $64.47K.
- One can buy, sell, and trade Bitcoin.
- The value of Bitcoin keeps changing almost every day.
- Bitcoin’s price is dependent on the ratio of supply and demand of crypto.
- Throughout the world, people actively invest in Bitcoin.
- One cannot share the ownership of a Bitcoin, and it belongs to one singular person.
How is Bitcoin a commodity?
Bitcoin, much like any other cryptocurrency, is something in which people invest money. Just like a commodity, the price or the value of Bitcoin is subject to change. So when someone buys a Bitcoin, they are well aware that they might make a profit or a loss. This activity is of traditional modes of investment such as stock market or share market. Moreover, the crypto market is constantly growing, and people are buying Bitcoin for a whole different reason. While many Bitcoin owners make payments in their daily life with the help of Bitcoin, most use it as a way of investing. Platforms such as Bitcoin Revolution help in dealing with Bitcoin. Therefore, it won’t be incorrect to look at Bitcoin as a commodity.
How is Bitcoin a currency?
Cryptocurrency has the word currency in itself, and that makes things amply clear. Nakamoto designed Bitcoin as any other kind of currency. There is no physical existence, and there is no central power controlling the functioning of these coins. Technically, Bitcoin is a currency. However, people have been majorly investing in Bitcoin due to the lack of any other option. But gradually, businesses are warming up to the idea of accepting Bitcoin as a legit mode of payment. With such a change, things are looking bright from the currency end. People are making purchases with Bitcoin.
So what is Bitcoin after all?
Bitcoin is primarily a digital currency that exists in the virtual world, in a blockchain. On the other hand, due to the inaccessibility of Bitcoin, one can seldom use it to make purchases regularly. Bitcoin trading is a real thing, and people are earning thousands of dollars by buying and selling crypto. While one can invest in Bitcoin, they can also pay for their coffee with Bitcoin. Future conditions matter a lot when it comes to determining the true nature of Bitcoin. If the majority of the businesses start accepting it as a mode of payment, it can become more of a currency than a commodity.
Bitcoin’s exponential growth in the last half-decade has shown us the massive possibilities that the future has on hold for it. The commodity-currency debate will continue as long as people are speculative of Bitcoin’s nature. At this point, Bitcoin is still a commodity with the potential of being an alternative currency.