How is bitcoin a non-commodity currency? If bitcoins have value because they allow you to do things you couldn't otherwise do (my point), it's a commodity.
why is it desirable for a currency to be a non-commodity currency?
Bitcoins do not have value anymore then a paper dollar has value. People are willing to accept it as payment knowing that others will also accept it as payment. You can (and I have) set up your own bitcoin system and get as many as you want. The only difference with that one and the main network is that the main network is bigger, and has a genesis block that people recognize as identifying it as the main bitcoin network.
If everyone changed their programs to recognize my genesis block as the correct one, then all of the main bitcoins will be worthless.
Well, if you don't make the bill unfit to be reissued (or don't intend to), you're in the clear in the US. The law with coins is more lenient; as long as you aren't defacing them fraudulently, it's not illegal.
I was trying to avoid the term "fiat money" to describe bitcoin, because the term has several meanings, and some argue that bitcoin is not a fiat currency because it is decentralized.
What I mean by "commodity currency" is a currency that is (or is backed by) a currency. Gold would be the obvious example.
>why is it desirable for a currency to be a non-commodity currency?
One of the most important tasks of a monetary system is to regulate the money supply. This can be done via various methods. This can be done with monetary policy as in the case of the US dollar. Or it can be done by leveraging a commodity with a (hopefully) predictable market, as with gold. Or it can be done, as with bitcoin, by creating an artificial process which is provably predictable.
But a demand side problem is also possible. Imagine if indium had been our currency, for example. Indium is a rare element and was rather useless until the latter half of the 20th century. The rapidly increasing demand for indium as a useful commodity would have caused severe deflation.
A fiat currency system works on the assumption that there is no market effect of demand for the money outside of its function as money. In the case of American currency, this assumption is mostly true, but there are small exceptions such as coin collection which have a negligible impact on the money supply (a collected quarter is effectively 25 cents taken out of circulation). If the assumption were rendered totally invalid, the Fed could completely lose control of the money supply.
If everyone changed their programs to recognize my genesis block as the correct one, then all of the main bitcoins will be worthless.