Is Bitcoin a Currency or a Commodity?


This is the question being hashed out in court in a dispute between bankrupt Bitcoin miner manufacturer Hashfast and a person the company employed to promote their products by writing blog posts and posting on forums.

The crux of the dispute comes down to the fact that Hashfast wasn�t able to ship as promised (a common story at the time) and was eventually forced out of business. Two company executives have since been convicted of fraud.

The promoter, Marc Lowe, received 3,000 bitcoins from Hashfast. The trustee for the bankrupt company is trying to recoup these coins, claiming that Lowe was given preferential treatment by the company in getting refunds for miners when other customers never received anything back.

Right now the trustee, Michael Kasolas, is claiming that Bitcoin is a commodity and as such Lowe needs to return the property he received from Hashfast � 3,000 coins.

Lowe, for his part, is claiming that Bitcoin is a currency and that he need only return the cash equivalent of what he received in September 2013.

If Lowe wins and Bitcoin is determined to be a currency, he will walk away with two-thirds of what he got in actual value. If Hashfast wins, they will get that windfall.

Whatever the court decides, it won�t finally speak to the actual nature of Bitcoin. Bitcoin, like gold, has properties that make it act as both a commodity and a currency. Eventually, I suspect that the currency nature of Bitcoin will win out and we will be using it, or a version of it sitting on top of the Bitcoin blockchain. In the short-term, I think that commodity is the right way to view it.

In order for Bitcoin to become a global currency, it needs to grow in value, in use, and in infrastructure. All of these things are happening, but it will take years before Bitcoin really grows up. Until that point, it is more of a speculative asset than a spendable currency � so it�s more of a commodity than a currency.

The case between Lowe and Hashfast will be settled on legal technicalities. But Bitcoin is both a commodity and a currency.