10.26.2017

Currency, collectible, commodity, or asset: what is the difference between a currency and a collectible?

These 4 things: currency, commodity, collectible, and cash generating asset; the 4 C's are said to make up every form of property.

How do we differentiate between them?  Well there have been good definitions for asset and commodity but not for currency and collectible yet.  First I will quickly summarize the first two and then propose new definitions for the last 2.

An asset is known as something that you can own whose value derives insomuch from either value it, in and of itself, generates over time or saves you money over time.  Stocks are one since you are benefitting from peoples daily work.  Land is another one, you can use it to make money or save you money from renting.  A slave would also be this.  Your social security number is your proof of ownership to the slave master.    An asset must do actual work or it must insomuch as produce.  A digital asset would be a computer program that performs useful work or a botnet that you control to mine cryptocurrencies.

A commodity is something insomuch that it has a demand (and therefore value) by its usefulness to directly provide for biological type necessities.  Energy (food), solvents (water), and protection (shelter).  I believe I am the first to require that commodities must be linked to the 3 basic necessities.  An example of a digital commodity would be prime numbers (they can be used to create protection; cryptographic keys.  They are also used to create protection in the physical world by certain species like cicaida's)

Now for the last two which I feel don't have good definitions yet.

Currency.  

Currency is an infinitely divisible theoretical system of accounting.  The dollar.  The yen.  They aren't the paper they are printed on, they are the theoretical system that underlies the physical representation.  The "dollar" would still exist even if temporarily all the physical bills were destroyed in a fire.  Currencies can be private (binding between two people only) or widely adopted (legal tender), or anywhere in between.  Some currencies (private ones like IOU's) are protected from regulation under Common Law.

Collectible.

Collectibles have been hard for many people to differentiate from currencies.  The reason for this is because the physical representation of currencies are actually not a currency at all, but rather a collectible.  A collectible is anything who's value derives from it being not infinitely divisible by nature.  Why does infinite divisibility matter?  A collectible is desired for it's degree of completeness.  A barbie doll new in the box is worth more than the sum of its parts if you were to break off all its limbs and sell them separately.  As a counter example lets say barbie arms were more valuable than the NIB barbie themselves?  Well then the collectible would be the arms themselves then wouldn't it?  The same thing applies to a dollar bill or to a quarter.  If you shred a dollar bill it is worth less than the sum of it's parts.  Same with a coin.  Now it makes sense how some people collect things that seem like currencies.  By definition you cannot collect currencies (it would be called hoarding instead) but you can collect any non infinitely divisible representation of it; be it digital, physical, or otherwise.  An example of a digital collectible is a digital code or password that when someone enters in the code online they are rewarded with something be it a form of property or just a temporary sensory display like a "congratulations!" page.  Entering in half of the code would not work.  The full code is required and therefore the code is collectable.  Another example of a digital collectible are files, think songs or pictures.  

These classifications matter for regulators (slave masters) and people wishing to avoid regulation (unwilling slaves).  Regulators have been held in check by common law (the "ants" as opposed to "grasshoppers"...when the people believe in something enough the regulators can't stop them like how a grasshopper though bigger and stronger than ants can't stop the ants if they want something) to not regulate certain forms of property.  Typically commodities and collectibles are the least regulatable property.  Assets are the next least regulated, and currencies are the most regulated with the exception of IOU's.  Decentralization or discentralization of currencies is a current push to minimize regulatability of currencies.

So when we are thinking about or creating digital property we should mind the above definitions so we can be informed on how exactly to create them in a way that keeps them the type of property and therefore the regulatability that we intended.

No comments:

Post a Comment

Thank you for your feedback! Sharing your experience and thoughts not only helps other customers but also helps me to improve what I do!