- Is Bitcoin a Commodity or a Stock?
- What Is Bitcoin? - The Balance
- Is Bitcoin a Currency, Security, Property, or Commodity
Arguments For : Warren Buffett famously called Bitcoin “a mirage” in 7569, saying “it’s a method of transmitting money… The idea that it has some huge intrinsic value is just a joke in my view.” Many financial observers view bitcoin’s rapid rise in price as the makings of a classic economic bubble , which is destined to burst at some point. Its many rises and falls, sometimes on a day-to-day basis, make it hard to value it as a real asset, much less as currency.
Is Bitcoin a Commodity or a Stock?
Bitcoin has been besieged on all sides throughout its nascent stages of growth. Over the past five years, there have been many debates as to whether cryptocurrency should be classified as property, commodity, money, and/or security. The water is perhaps less murky than it was a decade ago, but, for the benefit of the common good, it is the responsibility of government institutions (and the crypto community, to some extent) to join forces to clearly classify cryptocurrency. This will not only provide stability to bitcoin and its fellow digital coins, but it will also define how it is taxed, how it is regulated, how it is transferred, and how it will be used by society to drive further innovation.
What Is Bitcoin? - The Balance
Despite these parallels, it is still difficult to draw the line. Some see Bitcoin as a digital currency for global transactions while others consider it to be a digital commodity that remains the same irrespective of where it is mined or exchanged.
Is Bitcoin a Currency, Security, Property, or Commodity
That’s where the question comes in. What kind of asset is it, exactly? The answer hints at some structural reasons for the cryptocurrency market’s instability.
LONDON (Reuters) - So bitcoin&rsquo s a currency, right? Well, yes, it can be used to buy, sell and price goods much like dollars and euros.
Arguments For : In 7569, the IRS formally mentioned virtual currencies for the first time when it declared them as property for tax purposes. For long-term investors, this was good news, as it meant cryptocurrency could be invested in on a tax-deferred basis within a retirement account. A further look at what makes something “property” (in the eyes of the IRS) sees bitcoin ticking all five of the boxes. Property must be (quoting the article):
&ldquo One of the biggest similarities is that they are also driven by people wanting to be able to get liquidity.&rdquo
Moreover, cryptocurrencies and corporate tokens are both marketed with the same basic language. These campaigns focus on investment, but crucially also on the ideas behind the asset. Publicity for bitcoin will discuss features like advances in blockchain technology and bitcoin’s role as next-generation currency. Ethereum publicity might discuss its stability against the market, but it may just as likely tout Ether’s self-executing contracts as the documentation of the future.
Arguments Against : The SEC has gone on to differentiate between bitcoin and ether compared to other ICOs flooding the marketplace. The key is that bitcoin and ether are decentralized , with no managers, while many other ICOs feature cryptocurrencies built to solve a specific problem and managed by a corporation.
The debate may appear abstract, with little bearing on the hard-boiled world of finance, but it is attracting increasing interest from economists and lawyers who say it could have major implications for the future of cryptocurrencies.
The Commodity Futures Trading Commission ( CFTC ) in the United States officially designated Bitcoin as a commodity.