Treating bitcoin as a “commodity”

Since bitcoin has neither the characteristics of a traditional security nor those of
a currency, it is sometimes classified as a commodity. The analogy seems to
make sense, as bitcoin, just like metal, is mined in bitcoin farms and the mining
process requires considerable hardware investments and electricity.

The small supply of bitcoin also points to similarities with commodities. Supporters of this
approach compare bitcoin to precious metals or simply call it “digital gold”.
However, in contrast to bitcoin, gold and precious metals are used both for
jewellery and in manufacturing. Gold, as a scarce resource, has a minimum
value that is equivalent to mining production costs. In addition, gold does not
weather and can be reused time and again.

While production costs for cryptocurrencies are high as well, they are set artificially by the bitcoin protocol.
Outside this reference framework, bitcoin is actually worthless; it is just a
sequence of digital zeros and ones. It has no intrinsic value. For this reason, it
does not really make sense to call bitcoin “digital gold” or treat it as a
commodity.