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Bitcoin: Commodity or Currency?
Bitcoin: A Liberating Technological Innovation
As a result of the emergence and rapid proliferation of technologies such as personal computers and the internet, innovations in related areas have occurred as well. Among the most remarkable of these innovations, with regard to personal finance, involves the emergence of cryptocurrency. The premier cryptocurrency of today goes by the name of Bitcoin.
Disclaimer: I'm not an expert on the underlying technology behind Bitcoin. For more in-depth analysis on what Bitcoin is and how its decentralized, peer-to-peer system functions, I recommend a site such as Coindesk.com. Yet I have been involved in this area for three years now, have been using bitcoin for just as long, and have read a substantial amount of material on the subject.
However, due to this technology having only existed for a mere seven years, quality information does indeed appear to be most difficult to find. And anywhere one looks in the mainstream, most articles have a severe anti-bitcoin bias: they seem obviously skewed toward viewing this technological breakthrough as inherently "bad" for some reason. All that said, I will do my best to both provide a collection of intriguing information and quality sources, along with attempting to avoid any biases as much as possible.
Although no matter what, a pro-bitcoin bias will be bound to shine through in my writings. That's because this technology has done two major things for myself: 1) made financial transactions much faster, easier, and more efficient, and 2) Preserved hard-earned purchasing power against a declining dollar due to a reckless central bank.
Another disclaimer: No one can guarantee that number two will work out for you as it has for myself - it's somewhat a matter of timing, as with any other asset. Yet in general, over the long-term, Bitcoin has performed extremely well against the US Dollar - soaring from $0.07 in July of 2010, to over $1000 in December 2013, before appearing to have found somewhat of an equilibrium around $450 in 2016. Overall, at today's prices in USD, that represents a 6428.57% increase. Bitcoin has been the best performing currency worldwide during its time, and was the best-performing asset during the year of 2015.
The Rise of Financial Liberty
The rise has been even more dramatic in countries with fiat currencies declining in purchasing power even faster than that of the dollar. Make no mistake - central banks around the world have engaged in a coordinated effort, a "race to the bottom" to devalue their currencies. That means one thing - bet against the central banks. Become your own central bank.
Now back to the question at hand - is bitcoin a commodity or currency? The answer must be both. It must be produced, and has finite quantity in existence - like oil, for example. And in America, the IRS has classified bitcoin as a commodity. For more detailed information on the regulatory implications of cryptocurrency, see here. Yet despite existing as somewhat of a commodity, bitcoin's decentralized, peer-to-peer network allows it to function as a currency as well.
Bitcoin functions as a lightning-fast, futuristic currency transmission network that enables financial transactions to happen at near the speed of light - literally. And this has no modern comparison, make no mistake.
A revolutionary new technology has been created here - the bitcoin protocol - and as former day-trader, creator of the Hollywood Stock Exchange, and host of RT's The Keiser Report, Max Keiser has famously said, "You can't regulate E = MC2. It's been discovered". In comparing bitcoin technology to Einstein's famous equation, Keiser has evoked an enduring analogy: that of the timeless principles of technology and science existing forever beyond the reach of power-hungry bureaucrats and politicians.
And for this final and most outstanding reason, I believe bitcoin will change the world and alter the course of human history for the better. If we can all become our own central banks (and we can now, thanks to bitcoin), then each and every individual can become their own sovereign. And that was, after all, what the founding fathers of America intended - absolute freedom for each individual. That's what the meaning of freedom involves - the absence of external control.
All in all, bitcoin appears to be both a commodity AND a currency. In this regard, it remains unique. This new financial system has been embraced by tech geeks and Libertarians everywhere for years - and now appears to be going mainstream. Market cap has increased from about 4.5 Billion USD last year, to over $7Billion in 2016! Market cap figures can be found at coin desk.com. I'm quoting these figures from my direct observations of the market. More information on the market cap can be found on my blogs: bnibley.blogspot.com, and MeaningofFreedom.com