The rise and fall of Bitcoin

[Lord Zentei]

Excuse me. Why is it significant if a currency is "commodity-based?"

As far as the discussion here is concerned, it doesn't. The question was whether Bitcoin qualifies as one.

[Simon_Jester]

So even if Bitcoin is commodity-based, this might have no effect on the currency since it's a purely arbitrary 'commodity' whose price can easily range from zero to infinity with no limits?

Is this more than a rhetorical dispute?

[Lord Zentei]

So even if Bitcoin is commodity-based, this might have no effect on the currency since it's a purely arbitrary 'commodity' whose price can easily range from zero to infinity with no limits?

Is this more than a rhetorical dispute?

It's a definition based dispute. Nor is it one that I particularly care about. My initial post was this:

I've never heard of this before.

How can software-based goods possibly replace physical goods as a base for commodity money? It's not as if some data lying around on your hard drive has value in its own right in the same sense as a piece of gold does, if it was designed for the sole purpose of being a virtual coin. It doesn't make any sense.

Apparently, this was enough to cause people to jump into line and challenge it with all kinds of bullshit.

[Stormin]

Over on Tor all of the sites that sell drugs and arrange sales use Bitcoins. Unless the anonymity of the currency is broken Bitcoins are going to maintain some level of value. Anything that can't (yet) be counterfeited and is extremely hard to trace the trading of makes a very ideal currency for illegal dealing.

[BrooklynRedLeg]

Over on Tor all of the sites that sell drugs and arrange sales use Bitcoins. Unless the anonymity of the currency is broken Bitcoins are going to maintain some level of value. Anything that can't (yet) be counterfeited and is extremely hard to trace the trading of makes a very ideal currency for illegal dealing.

Exactly. Its an 'easy' way to give the middle finger to law enforcement and other snoops when dealing with vice and general contraband.

[Skgoa]

"Only criminals use it" is not that good as a long term strategy, though.

[Stormin]

But a guaranteed userbase exists unless something happens to change Bitcoins itself such as being counterfeited or becoming traceable (right now many people offer bit coin washing services to screw with anyone trying to track a particular coin's use through trade history). That means that it is possible to convert the coins to real money even though it won't be at the crazy rate that speculation drove the value to.

I expect until one of the two conditions above happen bit coins will remain an active niche currency, even if the bulk of the use is illegal dealings and by people who don't want anyone seeing what they are buying.

[BrooklynRedLeg]

"Only criminals use it" is not that good as a long term strategy, though.

I suppose that depends upon your point of view.

[Simon_Jester]

A currency that is overwhelmingly used by criminals creates a powerful incentive for law enforcement to work out how to track, counterfeit, and accumulate the currency, so that they can use it to trace down criminals.

Which places the currency's long term stability for legitimate users in doubt.