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Bitcoin: An extraordinary asset class defying traditional labels

Discover how Bitcoin challenges traditional asset classes and reshapes the financial landscape with its unique attributes.

Bitcoin, the pioneering digital currency that emerged in 2009, has created a revolution in the world of finance. This innovative form of value has posed a challenge for lawmakers and regulators, who attempt to categorize it within existing frameworks. 

However, Bitcoin transcends conventional definitions and represents a new, extraordinary asset class. Let’s have a look at why Bitcoin doesn’t fall into existing asset class categories as well as what makes it so valuable.

Commodity, security, or cryptocurrency?

The debate surrounding Bitcoin’s classification is centered around whether it should be considered a commodity, security, or an entirely new category – cryptocurrency. While for some people, it’s obvious, regulators along with lawmakers try to name it as a security or a commodity even after 14 years of Bitcoin’s existence.

Also read: Here’s how can you earn crypto while learning

The latest relevant event was the lawsuit by New York Attorney General, who sued the KuCoin exchange. They said KuCoin didn’t register as a securities and commodities broker-dealer, falsely representing itself as an exchange. 

Moreover, they identified Ethereum as a security in the lawsuit. So what exactly is Bitcoin or Ethereum? Before delving into the unique nature of Bitcoin, let’s look at the definitions of commodities and securities.

Commodities vs cryptocurrencies

A commodity is a basic, tangible good that is typically interchangeable with others of its kind. Examples include agricultural products, metals, and energy resources. The primary feature of a commodity is that it serves as a building block for more complex goods or services.

Is cryptocurrency in any way tangible? Or is it a good? No, no way. It definitely doesn’t fall into the category of commodities. Let’s move forward.

Securities vs cryptocurrencies

Security, on the other hand, is a financial instrument that represents ownership in a company or a contractual right to receive or repay funds. Common types of securities include stocks and bonds. 

Securities are typically traded in regulated markets while being a subject to various laws and regulations. There is no way Bitcoin is a bond, but is Bitcoin stock? Stocks represent ownership rights in the company. Cryptocurrencies, in general, do not represent any kind of ownership in the project. 

Crypto owners may trade, transfer, stake, or lend their tokens. However, owning them doesn’t offer the same features as stocks. More importantly, cryptocurrencies run on blockchains while stocks are simply issued and then traded from one person to another. 

Cryptocurrency definition

Cryptocurrency is a digital or virtual form of currency that utilizes cryptography for security purposes. Crypto operates on decentralized blockchains, which enables peer-to-peer (P2P) transactions without intermediaries. 

Bitcoin’s features, source:

Cryptocurrencies are not issued or regulated by central authorities, making them fundamentally different from traditional currencies. That might be one of the largest forces behind crypto adoption as people are sick of the never-ending devaluation of their currencies.

Bitcoin defies traditional classifications

Bitcoin, as a cryptocurrency, exhibits unique characteristics that set it apart from both commodities and securities. These distinctions make it challenging for regulators to apply traditional asset classifications to this novel form of value.


Unlike commodities or securities, Bitcoin is not controlled by any central authority or organization. Its decentralized nature results from its underlying blockchain technology, which records transactions in a public, distributed ledger. 

Read more: Top crypto memes that everyone should know (part II.)

This lack of centralized control differentiates Bitcoin from traditional asset classes. That’s what people really like about Bitcoin, however, governments not so much. That is why they created CBDCs, which may look similar to crypto, but function differently. 

Digital scarcity

Bitcoin’s protocol ensures a limited supply of 21 million coins, thus creating digital scarcity. This is unlike most commodities, which have a variable supply depending on market conditions. Securities, on the other hand, can be created or destroyed by issuing entities. 

Bitcoin’s scarcity is a core aspect of its value proposition, attracting investors seeking a store of value or hedge against inflation as central banks print trillions of dollars and devalue fiat currencies. 


Like commodities, Bitcoin is fungible, meaning one unit is interchangeable with another. However, its digital nature sets it apart from traditional commodities, which are physical goods. 

This characteristic makes Bitcoin more akin to digital gold, occupying a unique space between commodities and currencies. It is truly an asset class like no other as there are many more advantages compared to gold.

Gold vs Bitcoin, source:


Bitcoin’s programmability also enables the creation of smart contracts, digital agreements that execute automatically based on predetermined conditions. Ethereum is the most popular cryptocurrency known for smart contracts (or even NFTs and dApps), but it is possible on Bitcoin as well. 

The Lightning Network (LN) makes smart contracts on Bitcoin a reality. This feature is absent in both commodities and securities, making Bitcoin a versatile as well as innovative financial instrument. But more importantly, LN makes Bitcoin transactions faster than any other cryptocurrency or possibly even any other financial instrument.

Censorship resistance

One of Bitcoin’s primary selling points is its supposed immunity to censorship. The core premise is that no government, company, or other entity can restrict users’ ability to buy, sell, or store cryptocurrency on the network.

With censorship resistance, the rules of the network are established in advance and cannot be changed to suit a particular purpose. Bitcoin is decentralized because no single entity controls the network, in contrast to traditional financial institutions, which are in the hands of the middlemen.

Embracing the cryptocurrency phenomenon

As Bitcoin continues to gain widespread adoption, it becomes increasingly clear that traditional asset classifications are insufficient to capture its essence. Lawmakers along with regulators must acknowledge the unique nature of cryptocurrencies and develop new frameworks to address the challenges as well as the opportunities they present.

Also interesting topic: Seven simple investment strategies to make steady returns

After all, some countries even banned crypto, but it is still here. Bitcoin survived many market crashes, bear markets, wars, higher inflation, or even the collapse of the biggest crypto miners in the world. It is useless trying to ban it. 

Bottom line

Bitcoin represents a groundbreaking development in the world of finance, defying traditional asset class definitions. Its unique characteristics, such as decentralization, digital scarcity, fungibility, and programmability, set it apart from both commodities and securities. 

It is time for regulators to embrace the cryptocurrency phenomenon and develop appropriate frameworks for this extraordinary new asset class. 

I got into financial markets by accident in 2012 and started with Forex trading. Later in 2017, I started investing in stocks in cryptocurrencies and began writing articles profess...


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