12: Commodity vs. Security

As promised in “8: Bitcoin’s Intrinsic Value,” this post will outline the Commodity vs. Security conversation.

Let’s first define them:

• Commodity: a useful/valuable thing; a raw material or primary agricultural product that can be bought & sold; often finite 

  • Ex: Oil, Gold, Silver, Copper, Wheat

• Security: tradable financial asset

  • Stocks, bonds, mutual funds, exchange-traded funds, other types of investments you can buy/sell

Now, why does this distinction even matter? Largely, due to regulation. Also, as we will show, it connects to the “decentralization” vertex on the triangle depicting the Blockchain Trilemma (as we discussed in “3: The Blockchain Trilemma”).

In my (and many bitcoiners opinions), bitcoin is a commodity and every other cryptocurrency is a security. The next post will explain why.