Bitcoin: Commodity or Currency?

In a recent article on Ephlux Insights, the question was raised on Bitcoin‘s validity. The heated discussion on the publication’s Facebook page also sparked some interesting ideas from payments experts like Faisal Khan. A thread on Pakistan start-ups suggested that it is what the wealthy and criminals have always wanted, a currency beyond government control. Many have asserted its value in that it provides currency to conduct criminal acts. “You pay to murder someone in Bitcoin’s. He does the murder. As long as he can buy cocaine with the Bitcoin’s it’s a perfectly good transaction” insisted one of the commentators I spoke to off-record.

But I believe that money is whatever people agree it is. Gold, paper, cowry-shells, cigarettes, beads, all have been used as money. Value is what ever people or markets agree that a particular something is worth. Gold, paper, cowry-shells, cigarettes, beads, have as been deemed as having value. Bitcoin is a form of real money and Bitcoin does have real value, it’s as real as paper currency is which, not too long ago, was castigated for being just paper and for not being backed in correspondingly appropriate amounts of gold, which everyone ‘agrees’ does have real value. Gold itself bounces up and down in value, just the way Bitcoin does.

Bitcoin and other electronic value markers are here to stay, if people decide to believe in them.