Why bitcoin is not money?

Nov 13, 2017 Posted /  6902 Views

Why bitcoin is not money?

In reality, it misled ourselves and others. Bitcoin isn’t actually money.

The mistake, as Bitcoin advocates, was that in excitement over an early, popular use of one facet of the technology, we allowed that specific facet to become its defining property, the expression of which we repeated and highlighted to all who would listen. This was understandable but premature.

Parenthetically, a precedent-setting Florida event has made a declaration - “Bitcoin isn’t money” following government definitions and prudent legal restraint. A great job has been done by the foundation of Economic Education - analyzing the context of that decision.

Simultaneously, it is also true that a legal case doesn’t conclude - something true or false. There is more fundamental reason behind the concept: Bitcoin isn’t money is actually - standing regardless of that opinion.

With extensive experience in the Bitcoin experiment, the time has come to challenge and re-examine a claim - people made and took for granted.

Misconception with Bitcoin

In order to make sure, Bitcoin, or more specifically “bitcoins” as scarce and discernible units. It can be traded simply under certain conditions, however, these elements will not signal or cast the broad system, especially as extensive as the Bitcoin blockchain itself - as money. No doubt, a lot of things can be “easily traded” but, we can quickly accept a definition of those things as money.

More specifically, here’s the problem.

As Bitcoin is not money - In the same way and for the matching reason that an internal combustion engine is not transportation. The difference is significant. For sure, the former can be used for the latter - but they are not similar and their categorization may synonymously lead to error – as one is a specific application of the other. But, money is a specific application, it is a sub-purpose of Bitcoin, similarly as transportation is a specific application, a sub-purpose, of an engine.

Here, we see the inaccuracy of claiming “combustion engines are transportation.” Similarly, we can recognize the inaccuracy of claiming “bitcoins are money.”

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In order to deliver clarity and justification for this difference: let’s compare Bitcoin to something

Until now, we consider money (both legally and in popular impression): fiat paper (cash). Reconsider the statement, “Bitcoin is not money, though used as money.” This is a reasonable statement, but the same statement falls separately for cash: “cash is not considerably money, but it can be used as money.”

Cash is only money: This doesn’t really make sense but defining it as such might be. Because there is no other application of it that exist. Not even, cash can be used in some other way, in any meaningful sense.

Hence, the thing (cash) and the application of the thing (money) are one and the same, as joined at the hip. Therefore, it can be reasonably define one as the other.

At the same side of the coin, the thing (Bitcoin) and the application of the thing (money) are not one and the same. Not only, they are separable, but it should be comprehended separately (by default). Eventually, define one as the other seems to be unreasonable.

It would be foolish to follow - a legal or practical definition, or categorize all paper to be money - as money is indeed one specific application of the underlying technology of paper.

Further, being imprecise may lead to ridiculous and impractical outcomes in the form of an inventory of printer stock unexpectedly requiring a money transmission license to ship across state lines.

Similarly, money is certainly one specific application of another underlying technology i.e. Bitcoin (or blockchains, generally). And yet it seems to be foolishness, as considering a legal or practical definition and categorizing Bitcoin to be money, for it would lead to ridiculous and impractical outcomes, such as an inventory of Bitcoins demanding a money transmission license to ship across state lines.

Understand the issue?

This misconception currently taking place with Bitcoin. Again, this is largely our own fault, which we ought to correct.

If Not Money, then what?

Beyond its prototypical use case, the technology Bitcoin, is finding an increasing quantity of applications. A lot of these applications include the inscription and communication of blockchain messages - that shows all “Bitcoin transaction” are actually: communication.

Including Bitcoin’s, some applications of blockchains that are explicitly “non-money”:

  • Demonstration of creditworthiness/collateral
  • Access keys
  • Voting
  • Title tracking
  • Content hosting and dissemination (see LBRY)
  • Information anchoring and “truth proving”
  • Meta-token creation (itself a nearly limitless subcategory)
  • Identity formulation and demonstration
  • Secure messaging
  • Video game assets
  • Intellectual property

Here, only an unimaginative observer can reason the applications of this technology are imperfect to the above concepts. Remember the initial days of the internet, and how few of today’s popular applications were measured.

Blockchains and the tokens built upon them could be considered as a diverse suite of specific technologies, with many different types of unspecific applications built upon them.

Money: is one of those applications, which perhaps used by people and recognized in the blockchain early years. But, before striving too hard to narrowly define it - it is significant to let an innovation blossom. As Bitcoin and other blockchains have evolved, it has been elucidated that money is one narrow application of many - for which they excel. Same as transportation is one narrow application of combustion engines.

Between humans - Bitcoin and other blockchains are essential communication tools: A Mechanism for Speech. A little contribution is made by Blockchains to convey messages of various forms, in a highly secure, decentralized, transparent, and honest form. Seems like, a profoundly advantageous for society.

Similar to printing press and the internet, the blockchain is considerably a human tool useful for speech and communication. And if categorization is required, it should be categorized as such.

Being an efficient tool for speech, blockchain communication be worthy of the same sanctity as World Wide Web communication, or phone communication, or written communication is.

Similar to a message over the web, a blockchain message is. Indeed, it is a message over the web. Hence, a blockchain message occurred does not validate the “money” until the internet packet validates the “file sharing” to be successful.

Perhaps specific applications of these communication tools involves categorization, narrow definition, and legal treatment. But, the general inscription of bitcoin message: it should not - by any reasonable person and be categorized automatically as “money” anymore because the overall inscription of an FTP message should be categorized as “file sharing,” though both the categories of activity befall on those platforms.

Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .

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Tags: bitcoin Bitcoin as money Bitcoin experiment blockchains

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