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
Mining is income at the value at time of earning, I would use an index like XBX to determine price. Asset appreciation is capital gains. These aspects of crypto-assets are not a gray area in the US financial sector, and have been addressed for almost half a decade now. "A perfectly-implemented fiat currency, printed and ordained by a perfectly omniscient, perfectly competent, and perfectly benevolent central bank (let's call it God money""), is the ideal. ""  Guess I had to come out of the woodwork here. Sounds like you just described bitcoin. :)  Plus it is nice because it is much cheaper and easier to digitally transfer than heavy metal.   Since bitcoin has a very finite supply, and probably upsets Keynesian economics,  I could see an alt-coin that would have an automatic calculation built in to create more money based on inflation." &gt;$1,000 worth of electricity to generate  The cost of Bitcoin always tracks the price of Bitcoin.   There is a fixed amount of Bitcoin available to be mined every day.  The cost to mine bitcoin rises because of competition (they increase the difficulty of the problems to maintain a fixed supply of Bitcoin).  The electricity cost to mine Bitcoin is directly related to the amount of miners, which is directly related to the current cost of Bitcoin. More people want to mine when the price is high.  If you really think about it, what you are really saying is that the intrinsic value of bitcoin is the value of Bitcoin. Its a completely circular mirage. Part of the value of bitcoin is indeed in speculation about its future. Will it be a store of value, like gold is? Will it be *the* medium of exchange for online and offline transactions? Will it be a representation and insurance for services (to be) rendered?   It currently most resembles the first, but don't forget that bitcoin is still in its infancy. There's a lot of room for it to grow, and the technology behind it *can* grow. Can someone please explain how this is not the definition of a Ponzi scheme? Bitcoin has a $100B market cap. This is a financial instrument with very little real value to either consumers or businesses. However, Bitcoin has experienced a meteoric rise in value as more and more people buy in. Is the bottom not going to fall out here? I know I'm late to the party, but a couple of rebuttals as a recent bitcoin advocate. I may be out of place in this subreddit as I come from a primarily technological background, not a financial one.   &gt; Bittcoin is not a currency, it's a store of value, because it is not widely accepted as tender by most people.  Bitcoin is not a currency *yet*, but because it does not have widespread adoption *yet*. Like other revolutionary technologies, there is an [inflection point](https://medium.com/@mcasey0827/speculative-bitcoin-adoption-price-theory-2eed48ecf7da) where adoption goes from hardly anyone to almost everyone very quickly. [Example chart](https://cdn-images-1.medium.com/max/1600/0*E4eb7wxHinGNdYQq.)  &gt;Even as a store of value, it's not very good. It's volatile and the fact that there is a limited supply of bitcoin is not a good thing. Sure, in the short run it results in speculation that drives up the price of a coin and makes it all the rage among gamblers but I don't think anyone can explain how, if used on a larger scale, wouldn't lead to deflation in the price of goods.  To me, this is basic supply and demand, and it would in theory become less volatile and more stable following mass adoption. Bitcoin has virtually no inflation, and I agree that this could lead to the deflation of goods, but only insofar as that valuation is determined in bitcoin. For example, milk is still $2, but as the value of bitcoin fluctuates, I may pay .001 BTC or .0005 BTC for that milk. It's important to remember we're dealing with a digital asset in an increasingly more digitized world, a point-of-sale device like we use for credit cards could certainly tackle that conversion in the future.   &gt;Also, at the end of the day, fiat currencies are based on trust and accountability of the government. How does Bitcoin or any other online currency solve that problem? There's no accountability, and it effectively acts as as an anti-currency, fueled by mistrust in the establishment.  This is the best part of bitcoin, understanding the incentives. If you follow that supply and demand logic, then it is in the best interest of *everyone who uses bitcoin* that the bitcoin software and the system itself be reliable and secure. The software is open source so anyone can see how it works and where its flaws and weaknesses are - and it is still standing strong after 8 years. The biggest weakness so far has been in software updates and changes to the core protocol. Without any central structure (i.e. accountability) it can be slow to reach a democratic consensus is such a way that doesn't split the blockchain or fracture the network. This has led to some of the recent extreme volatility.   Bitcoin (and some other cryptocurrencies) have tremendous potential to disrupt existing financial institutions. The private blockchains peddled by banks are at this point [just databases](https://www.youtube.com/watch?v=SMEOKDVXlUo&amp;index=2&amp;list=LL7mI3EyFeE83Ac-VtxNUhxA). At some point, these institutions will realize that they can't create their own Facebook, they need to find ways to become part of the new Facebook market. "Bittcoin is not a currency, it's a store of value, because it is not widely accepted as tender by most people. Even as a store of value, it's not very good. It's volatile and the fact that there is a limited supply of bitcoin is not a good thing. Sure, in the short run it results in speculation that drives up the price of a coin and makes it all the rage among gamblers but I don't think anyone can explain how, if used on a larger scale, wouldn't lead to deflation in the price of goods.   Also, at the end of the day, fiat currencies are based on trust and accountability of the government. How does Bitcoin or any other online currency solve that problem? There's no accountability, and it effectively acts as as an anti-currency, fueled by mistrust in the establishment.   What do you mean, ""cryptocurrencies are growing hundreds of times faster than the market as a whole""?" "The relative value of Gold (or any other commodity) as measured against any given currency (such as the USD), is not a constant function either. If you have inflationary pressure, the ""value"" of an ounce of gold (or barrel of oil, etc) may ""double"", but it's really because the underlying comparator has lost ""half"" its value." "A good reference to what encompasses ""securities"" are detailed in the Securities Act of 1933, which was enacted by the United States federal government. One main exception, which I would still consider securities for your purposes, would be ""commercial paper"". These are exempt from the securities act because they mature in 270 days of less, but they function much like bonds or promissory notes Therefore though, it would not encompass currencies and commodities. It really comes down to the structure of the agreement for transferring or holding the particular kind of underlying asset." "First of all, metals are commodities. So if you're phrasing that as metals and/or commodities, then that's poorly worded. If you're phrasing that as ""metal commodity reports"" then say as such.   Second, and more importantly: what commodities? Power is very different than coffee. Different places specialize in different things, all banks are good in some and weak in others. There's no generic ""commodity"" market but rather a huge range of specifically different products traded in the future.You learn more than a small fraction of this universe so pick one or two specific products from the macro buckets (i.e. energy, grains, metals) and focus on those." This isn't an article discussing the business aspects of bitcoin.  It's a comment on the price movement of bitcoin.  Do we regularly comment about the gyrations of commodities and currencies on this thread?  I tend to find talk of those things on subs like /r/finance and /r/investing. Currencies don't have intrinsic value. Just because you have to pay taxes in USD does not mean it has intrinsic value. The government could theoretically switch currency every second, not that that will ever happen.  But yes the USD is supported by the US government and that's like a safety net for the value of the USD. Bitcoin doesn't have a government accepting bitcoin in taxes (except maybe liberland or something) so BTC doesn't have that safenet. But with such a liquid market and millions of buyorders bitcoin doesn't really need a safenet. There will always be demand. I prefer a scarce currency with growing demand than an inflationary currency backed by a corrupt government that loses value over time. "This is the best tl;dr I could make, [original](http://www.cnbc.com/2017/07/07/strategist-tom-lee-weighs-sees-bitcoin-going-as-high-as-55000.html) reduced by 80%. (I'm a bot) ***** &gt; The strategist&amp;#039;s case for bitcoin is a basic supply-and-demand story, similar to the argument other proponents of bitcoin use when playing up its future as &amp;quot;Digital gold.""  &gt; While the lack of regulation is what has attracted many buyers, many consider bitcoin the &amp;quot;Wild West.&amp;quot; Three years ago, Mt. Gox, the largest bitcoin exchange then, filed for bankruptcy and said it lost 750,000 of its users bitcoins and 100,000 of the exchange&amp;#039;s own.  &gt; Lee acknowledged bitcoin&amp;#039;s volatility in his report, noting that annualized bitcoin volatility is 75 percent, &amp;quot;Substantially higher than gold&amp;#039;s 10%. But as noted, gold&amp;#039;s volatility approached 90% from 1971 to 1980 as the U.S. abandoned the gold standard - hence, we expect this to improve over time.""   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6lved5/first_major_wall_street_strategist_weighs_in_on/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~161687 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **bitcoin**^#1 **Lee**^#2 **currency**^#3 **digital**^#4 **gold**^#5" "Alright, so this is all out of the way.  As a further note, I have a degree in computer science so I'm not oblivious to the technical aspects of bitcoin.  I reject the idea that banning bitcoin is akin to banning the internet - in fact, I reject the notion that bitcoin is anywhere as revolutionary as ""the internet"" was (which itself, as a construct, is far older than most people let on).    I've always acknowledged that there are many innovative technical aspects to bitcoin which are likely to find their way into our current system of money and transactions.    The reality, however, goes back to my original contentions - that bitcoin is difficult (if not nearly impossible) to track, and thus serves as a black-market vehicle for those who wish to transact outside the power of the government.  Whether or not you see this as ""good"" or ""bad"" doesn't matter; ""the government"" within any defined national border is the plenary power - period - and thus (for lack of a better phrase) ""resistance is mostly futile.""" There are forums online (Wall Street Oasis, Poets and Quants) that cover what you need to know for a Wall Street interview. That's the most efficient way.  But it's also important to research the company that you're interviewing for. Do they invest in equity or debt? Are they in a specialized industry (e.g., real estate, oil &amp; gas)? A model for a equity research firm is going to have different priorities from a LBO model for a private equity firm or a cash flow model for a bank/lending company.