23 Sep Is Bitcoin a Commodity?

As reported by Bloomberg, the Commodity Futures Trading Commission has now ruled that bitcoin, the peer-to-peer digital currency, is a commodity. This means the CFTC can regulate it and punish evildoers. Several in the bitcoin industry intend to challenge the CFTC’s jurisdiction. They say it’s not a commodity but rather a currency, or just property. Avoiding currency issues and government interference was one of the goals of developing bitcoin I believe, so those in the industry are not thrilled to see these moves.

According to Wikipedia, bitcoin was invented by one Satoshi Nakamoto who published a paper on it in 2008. However, in a footnote it says, “It is not known whether the name Satoshi Nakamoto is real or a pseudonym, or if it represents one person or a group.” So we don’t really know who started it. And no one is claiming to be running it, it kind of runs itself. But retailers like that transaction fees are paid by the purchaser unlike with credit cards. So some major online retailers and over 100,000 others now accept bitcoin, but it hasn’t fully caught on yet. Bitcoin miners, who keep records and verify transactions, can get free bitcoins. It’s a fascinating industry for sure. Some worry about the use of bitcoin by criminals since it is anonymous and apparently untraceable. Some countries like China do not allow using bitcoin to purchase goods. There have been hacks and thefts of bitcoin from several exchanges.

Some say it’s a Ponzi scheme. But there’s no real expectation of profit when you buy bitcoin so I say no to that one. And while its value does go up and down, so do currencies as against other currencies. Bitcoin seems like money to me.