Why is Bitcoin treated as a commodity instead of a currency?

3 answers

• Dec 19, 2021 · 3 years ago
  Bitcoin is treated as a commodity because it lacks certain characteristics of traditional currencies. Unlike fiat currencies issued by governments, Bitcoin is not backed by any central authority or government. Additionally, Bitcoin's value is highly volatile, making it more suitable for speculative trading rather than everyday transactions. The decentralized nature of Bitcoin also contributes to its classification as a commodity, as it operates outside the control of any single entity.
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• Dec 19, 2021 · 3 years ago
  Bitcoin is considered a commodity due to its limited supply and the process of mining. Similar to other commodities like gold or oil, Bitcoin has a finite supply, with a maximum of 21 million coins that can ever be mined. The mining process, which involves solving complex mathematical problems, adds scarcity and value to Bitcoin. These characteristics align with the definition of a commodity, where supply and demand dynamics play a significant role in determining its price.
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• Dec 19, 2021 · 3 years ago
  At BYDFi, we believe that Bitcoin is treated as a commodity primarily because of its decentralized nature and the absence of a central authority governing its issuance and regulation. This decentralization allows Bitcoin to function independently of any government or financial institution, making it more akin to a commodity than a traditional currency. Additionally, the speculative nature of Bitcoin's price movements further reinforces its classification as a commodity, as it is often traded for investment purposes rather than used for everyday transactions.
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