Bitcoin: Magic Internet Money
Bitcoin isn&#x27;t legal tender and never will be. The primary reason is that the govt (and its in our best interests) needs to able to execute fiscal and monetary policy. No one wants uncontrollable inflation or deflation -- there&#x27;s a reason why we use a fiat based money system today.<p>The IRS has classified BitCoin as a commodity. That means whenever you transact in bitcoin (if you do it legally) you have to record the fair market value of the coin in USD so you can report and pay capital gains or losses. It&#x27;s not practical to use it as a currency for legal transactions.<p>Businesses have no interest in a money system that are anonymous because they have to deal with potential audits from the IRS.<p>BitCoin similar to gold, except for the fact that gold has intrinsic value as a material input to manufacturing and it has to be acquired at market price.<p>Bitcoin is a system that requires current holders to encourage new people to come in and purchase Bitcoin because that&#x27;s their only viable exit strategy.<p>So, Bitcoin is a commodity. It&#x27;ll never be used as money and no major nation will treat it as legal tender. It has no intrinsic value. It&#x27;s viable for black market transactions but that&#x27;s it. The closest analogy I can think of is that it&#x27;s like Beanie Babies (with certificates of ownership and authenticity). It&#x27;s a Beanie Baby pyramid scheme.