A reader of The Switch, the technology and policy blog on WashingtonPost.com, sparked an insightful comment thread as to whether Bitcoin is a real currency.
Said user bannedagain5446: “It’s a scrip payment, or a speculation, or a form of discontinued paper, but the one thing that it ISN’T is currency.”
The comment came after federal regulators in Washington heard from Bitcoin supporters, who sought to explain to officials how exactly the digital currency works.
What followed was an online discussion that parsed the differences between currency, legal tender and barter. Officials in Washington were having the same issues with Bitcoin, so the discussion ended up being quite relevant.
User Tom O’Hern responded by defining a currency as simply “a medium of exchange,” and said that even national currencies such as the yen and the dollar are speculated on, yet this does not disqualify them as currencies. He also said that scrip payments may not be accepted as legal tender but could still qualify as currency.
Subsequent users supported the argument that bannedagain5446 confused the terms currency and legal tender.
Legal tender is, by definition, coins or banknotes that must be accepted if offered in payment of debt. Certainly, Bitcoin is not mandatorily accepted for any creditors, and the crypto-currency likely will not meet most definitions for “coins or banknotes.” A currency, however, just refers to a circulated medium of exchange.
Bitcoin, most should agree, thus qualifies as a currency. That it operates on a peer-to-peer basis without central authority or the ability for anyone to intermediate does not disqualify it from that designation.
User bb541 commented that arguing semantics was not useful and said “you can call bitcoin ‘pineapples’ as long as it keeps the elements and capabilities that are so groundbreaking that it has today.”