Legal difference between bitcoin and MS Points?
What is the regulatory/legal difference between Bitcoin and Microsoft Points?
BitCoins are not sold. They are traded and generated. There is nothing physical backing them up. There are companies facilitating trades, but those companies neither issue nor value the currency. They only facilitate exchange of hands. The BitCoin network is what issues coinage, yet the network is an agreement between all clients, and thus nobody "owns" it and thus nobody is responsible for the issuing of it.
MS Points/Points sold by companies are backed by a physical entity. MS is liable for each individual coin. BitCoins are not owned or backed by anyone, only the changing of hands. Nobody is legally liable for each individual coin.
With the exception of a federal law that specifically mentions using metals as currency, Bitcoin and Liberty dollars are direct legal analogues.
I think the real difference is the usage intent. Microsoft points are simply gift cards that can only be used for the companies own products, Microsoft is not trying to have microsoft points replace dollars for exchanges between two arbitrary parties unlike bitcoins and liberty dollars.
1. Backed by a physical entity? In this context I always thought backed by a physical entity meant backed by gold/silver/wampum.
2. I appreciate the "something from a company" versus p2p however this seems like a conceptual difference. I am interested in the legal ramifications of this conceptual difference.
3. MS points are traded on secondary markets (10th prestige lobby anyone?).
4. In regards to trading/selling what is the difference between buying a 2000 ms point card on amazon and buying 10 btc on mtgox/tradehill/ruxum/campbx?
Microsoft points are traded and I still do not understand what the legal ramifications are if something is or is not "traded." What is your definition of traded?
(q) "Payment instrument" means a check, draft, money order, traveler's check, or other instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include a credit card voucher, letter of credit, or any instrument that is redeemable by the issuer for goods or services provided by the issuer or its affiliate.
(v) "Stored value" means monetary value representing a claim against the issuer that is stored on an electronic or digital medium and evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. The term does not include a credit card voucher, letter of credit, or any stored value that is only redeemable by the issuer for goods or services provided by the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.
(n) "Money" means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.
-- http://www.dfi.ca.gov/licensees/moneytransmitters/
In essence, "MS Points" are exempt, because they are "only redeemable by the issuer for goods or services provided by the issuer or its affiliate".
Also, definitions similar to this are generally accepted. I happened to know where in Calofornia's legal code I could go to get a firm definition that clearly laid out the "gift card" exception, but frankly the answers other people already have been giving should have been sufficient: I was mearly providing evidence for "gift cards are normally exempt".
Grinberg, Reuben, Bitcoin: An Innovative Alternative Digital Currency (April 21, 2011). Available at SSRN: http://ssrn.com/abstract=1817857
But I do not think it answers this question very well and I have some other problems with using it as a creditable reference work on the matter.