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Having been created as opposed to found, the initial distribution is produced through a subsidy on recording transactions to the blockchain. Admittedly this isnt ideal, but of the ways to manage the initial distribution without a central authority this is probably the most honest, and provides a security budget for bootstrapping the network until fees alone can fund mining.

It is a ledger system, in that I agree, bitcoins are comprised of the record of transactions that created them, the UTXOs. However, there is an important distinction between this and traditional ledgers in that the total supply and record of transactions is continuously verified by anyone with a node.

Since there is no central issuer, no trusted counterparty, there is a provably scarce supply, and the asset itself can be held in self custody, I would argue its not possible for it to be a security.

As to defining a commodity, I think, and its not a crystalized definition:

-scarce

-uniform

-primary product

-no central issuance/control

-can be used in trade.

Fiat fails in all but the last; cryptos fail in their inability to resist a central issuance/control and scarcity; physical commodities like oil and gold pass for obvious reasons; bitcoin passes all of these too. I dont think I have ever seen a single perfect definition of a commodity, maybe you have one to cite, but classifications that categorically reject things because they dont manifest in the physical world seem logical prior to bitcoin, but with the advent of true digital scarcity its maybe worth revisiting.

a source familiar with the matter 2y ago

Are UTXOs really uniform? Don't they each have a unique and traceable history?

I'm not so sure that fiat fails to meet your definition, or at least that it does a worse job than Bitcoin. Only so many dollars (or Federal reserve notes) have been created to date - this is scarcity. The notes are not uniform but the accounting unit is, and Bitcoin hardware wallets are not uniform. I'm not sure why a commodity cannot have a central issuer, or why the dollar (which is created out of thin air by many banks) should not qualify but Bitcoin (which is created out of thin air by many computers) should.

Moreover I am willing to bet I could find other cryptocurrency that meets these criteria at least as well as Bitcoin. Zero-knowledge-proof privacy coins seem rather more uniform, for example.

As I said, my definition of commodity is uniform material; this is with uniformity being judged by the market so grade A eggs may be seen as a different uniform material than grade B.

Most definitions of commodity say something along the lines of raw material, which I think is slightly inaccurate as gasoline and crude oil are both considered commodities but one is made from the other. I think being material is a key part of what it means for something to be a commodity, which Bitcoiners would have no idea of questioning but for their rejection of fiat currency and embrace of a digital immaterial token.

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Discussion

Geist 2y ago

UTXOs today are as uniform as gold was before the minted coin, before which the gold could have been better traced to origin by its melt and form. Coinjoins and payjoins strip identifiable information out and can provide uniform outputs. Upgrades to the network will bring cross input signature aggregation, allowing these functions to be performed in a very decentralized manner.

You could say that the total supply of fiat is limited at any single moment, but I would argue this does not constitute scarce.

-Scarce would imply a marginal cost of production that fiat does not have, more can be created by political means.

-your definition of scarcity here would imply that nothing is *not* scarce, a jpeg may only have been copied to a million harddrives, but could be copied to 10 million more at essentially zero marginal cost.

Bitcoin on the other hand cannot be created without the marginal cost of production, determined by your computing power (linked to physical cost by your price of electricity) and the total computing power of the network. Further, even taking your arguement at face value, fiat still fails in its centralized issuance and control.

I would be highly skeptical that you could find a crypto that offers these points in better spades than bitcoin. Monero for instance could be said to be more private, but your privacy set, the total number of transactions yours is hidden behind, is limited compared to bitcoin. You would be better off using a coinjoin, a payjoin, or even liquid, compared to using cryptos that lack the economic activity to properly hide amongst the crowd. Further, any additional feature set you find in a crypto will sacrifice a more fundamental feature that bitcoin has, like decentralization, monero would not be able to maintain any sense of decentralization if there transaction volume did go up, because their scaling solution is allowing bigger blocks.