There is a lot of debate swirling of how we should all be classifying bitcoin and other crypto currencies.
The head of South Korea’s central bank has ruled out classifying bitcoin as a currency, arguing that cryptocurrencies are a form of commodity instead.
According to Seoul-Yonhap News, Bank of Korea governor Lee Ju-yeol rejected the idea when asked on Monday whether it’s possible to accept cryptocurrencies as legal fiat. The declaration is the latest official assessment on the tech following a ban on initial coin offerings, reports Coindesk.
“Regulation (for virtual currencies) is appropriate because it is regarded as a commodity, not at the level of legal currency,” Lee said during an audit of the government by the National Assembly, the country’s legislative body.
“It is not a situation for the Bank of Korea to take such an action at the present,” he added.
Others have a completely opposite look on the cryptos.
Aswath Damodaran, a professor of finance at the NYU’s Stern School of Business, has expressed his belief that bitcoin is a currency rather than an asset in a new blog post.
Often referred to as Wall Street’s “Dean of Valuation,” Damodaran asserted in the post: “I don’t believe cryptocurrencies are now or ever will be an asset class,” or that they will change the “fundamental truths of risk, investing and management.”
“Bitcoin is not an asset, but a currency, and as such, you cannot value it or invest in it. You can only price it and trade it.”
Grouping all investments into four categories, – assets, commodities, currencies and collectibles – the finance expert substantiated his statement by saying that bitcoin does not the “generate cash flows” required to be categorized as an asset, nor it is a “raw material” that would class it as a commodity, reports Coindesk.
“The choice then becomes whether it is a currency or a collectible,” he said.
Can Bitcoin become the currency of the future? In its current form…No. There are two big problems with bitcoin as a currency: its value is unstable and its transaction processing is too slow. What say you?