Bitcoin is not Base Money

According to a recent SEC ruling, Bitcoins are securities. This means that Bitcoin is not some kind of base money, as advertised, but something different entirely. Securities do not circulate in the economy the way money circulates. Transactions are rarely made with securities. We don't buy bread with securities. We buy it with money.

Securities are heavily regulated financial instruments. This is hardly what Bitcoin was designed to be.

The value of Bitcoin is derived from its perceived ease of use. Now that Bitcoin is going to be regulated as if it were some kind of debt instrument, it will surely fail in its promise to be a convenient payment method.

As an asset, Bitcoin holds no value. There is nothing that a Bitcoin can be used for outside of transactions. Once stripped of its function as a convenient way to pay for stuff, it looses all value.

The SEC ruling is not good news for Bitcoin. It's terrible news. With its ability to facilitate trade greatly reduced, there's now that much less value in owning Bitcoin.

An asset with no practical use outside transactions

By Steve Jurvetson - https://secure.flickr.com/photos/jurvetson/8410385932/in/photostream/, CC BY 2.0, Link