P: I add this. It seems to me that a bitcoin is a newly-produced commodity or good.
***No more than accounting entries moving from paper to computer was a newly produced commodity or good.***
P: In the same way, those persons who discovered a rock and got gold out of it produced a new good or commodity by extracting the gold.
***Bad analogy...***
P: Marketability is a quality of a good that is subjectively assessed by those in the market. It seems that bitcoins possess it.
***True... necessary, but not sufficient to be money.***
P: People can recognize it and transport it at almost zero cost.
***False, 1. Bitcoins, being computer based thing, can easily be counterfeited, so it is hard to recognize.
Would you know one if you saw it? Gold is almost impossible to counterfeit, and with the insouciance gold dealers buy and sell gold coins and material, I suspect it is extremely rare. Second, it takes a trillion dollar infrastructure to make bitcoins possible, that system can go down leaving not a trace of bitcoins. Gold moves along and infrastructure that cannot go down all at once, and even so, like the Twin Towers on 9-11, every ounce of gold is still there, and recovered, after the annihilation.***
P: They can exchange it very easily.
***Again, necessary, but not sufficient.***
P: The supply process of the bitcoin is also apparently known, but what is not known (at least to me) is the entry of future close substitutes. I'm leery of that. But gold had the same problem. How did early users of gold know that vast supplies would not be discovered?
*** Categorical error. Gold (and silver and any other money) move from rock to medium of exchange, until the price drops to the point where it is converted to plate, jewelry and decoration, maintaining a fairly steady price of gold as money (following Spooner). A huge discovery would simply mean churchs got gilded, but gold as money would remain fairly steady, not fall in buying power (an ounce of gold bought a fine suit in Caesar's time, in 1500 and today.) Spain saw a huge unanticipated influx of gold from its colonies... Spain got gilded. When gold as money rises in buying power, plate, jewelry and decoration gets melted down into money, again keeping things steady.***
P: I'd also like to mention that money CAN be accounting entries, if the process that creates those entries keeps the supply limited. In fact, accounting entries have certain advantages over hand-to-hand forms.
***Money can't be an accounting entry if that is not the definition. Limited supply is necessary, but not sufficient. I think you are defining money as fiat currency here.***
P: Liability claims that are used as money need the assurance that the claims are "good" and will be or can be paid off in things of value.
***Too strict... the agreement is paid in money, gold... both parties know what they are doing. Gold recipient is quite aware of the nature of this money.***
P: That is why some may be looking for a "backing" to bitcoins. But bitcoins are not a liability claim at all. They are a manufactured thing, and so they are a good or an asset.
***But not money...***
P: Their value would be conceivably very low if they were not well designed. If I introduced bitsand, which was a digital entry for a grain of sand, it would be worthless. The value of the bitcoin is apparently being driven by certain uses that allow anonymity in transacting. That's my guess.
***This comment reminds me my nephew has done well buying and selling online property associated with online games. There are people making several hundred thousand dollars per year selling digital "objects" among online game participants. Kids pay real money to dress up digital dolls online, dolls they bought for real money. It is truly ephemeral. Perhaps bitcoins is simply another online game.***
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