Judge Shoots Down ‘Bitcoin Isn’t Money’ Argument in Silk Road Trial
wired.com
wired.com
-Bad: Do nothing
-Better: Object to everything and you might win the lottery
-Best: Object reasonably that they may be taken seriously
-Beyond amazing: Admit everything in such a sympathetic way to minimize guilt*
*Gerry Spence(i) coin or currency of the United States or of any other country, travelers’ checks, personal checks, bank checks, and money orders,
or
(ii) investment securities or negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery;
If you could convince a judge that Bitcoin wasn't currency, it would still qualify as an investment security / negotiable instrument by just about any definition.
If that isn't money, is ANYTHING money? Could one not just as well argue that dollars are just ink on paper, and therefore not money?
One thing Bitcoin is not is a unit of account; it is nobodies liability the way that dollars, treasuries or reserves are a liability of the issuer. When I think money, I think balance sheet; and by that criterion, Bitcoin is not money. It's a currency and an asset.
Edit: Wikipedia gives the following requirements for "unit of account":
To function as a 'unit of account', whatever is being used as money must be:
Divisible into smaller units without loss of value; precious metals can be coined from bars, or melted down into bars again.
Fungible: that is, one unit or piece must be perceived as equivalent to any other, which is why diamonds, works of art or real estate are not suitable as money.
A specific weight, or measure, or size to be verifiably countable. For instance, coins are often milled with a reeded edge, so that any removal of material from the coin (lowering its commodity value) will be easy to detect.
Except for having a specific weight, Bitcoin has these: 1 Bitcoin is the same as any other, and it can be broken into 0.5, 0.1 and even 0.0001 Bitcoins.
This goes into a much larger point about the nature of money and how it evolved from ad-hoc credit arrangements.
http://www.youtube.com/watch?v=9Tks7oJkFRg http://www.youtube.com/watch?v=0zEbo8PIPSc
The exact origins of Bitcoin do not change its utility, which is as a unit of exchange, which is what money is in its most general and flexible definition.
As long as B wishes to denominate their accounts in bitcoins this is quite reasonable.
Or am I missing something ?
(Interestingly the Indian mathematician who invented negative numbers did so using accounts and debt as an example (bhagravita? 500AD)
Banking.
If you have a contract to provide 100 BTC, then that contract would be money, denominated in BTC (not the BTC themselves). It would exist on one balance sheet as an asset, and on another as a liability (at the same time).
Aren't there people who argue exactly that? The sovereign citizen types, and folks who insist on paying their parking tickets in gold bullion.
If Bitcoin is a negotiable interest, who is the counterparty?
Bitcoin is neither of those things. It's currency, but not the currency of any country.
You mean the lawmakers did not predict the future and write the law to cover crypto-currencies?
Mind-boggling. Totally.
A negotiable instrument can be but is not limited to debt instruments; the counterparty is simply whoever you transact with. Private municipal currency, for example, is not currency under the statute but is a monetary instrument because it is a negotiable instrument.
What happened to the murder-for-hire charges? Those seemed pretty damning...
"Funds" typically denotes cash or an asset that is highly liquid, not just anything which can be purchased or sold. Black's Law Dictionary defines "fund" as a "sum of money or other liquid assets established for a specific purpose."
Bitcoins, at this stage, are accepted almost nowhere, recognized by few people as currency, and represent a tiny, highly volatile and risky niche compared to other markets. It's much easier to convert a used iPhone (the top search on eBay) into cash, sell concert tickets on craigslist, or trade collectibles, than it is to convert bitcoins into legal tender, but no one would mistake those goods for "funds." The law isn't intended to cover anything which can be exchanged for cash. In fact, it specifically enumerates the following types of property separately when defining the scope of "financial transaction": "real property, vehicle, vessel, or aircraft." [1]
Because currency is accepted nearly everywhere as payment, the government considers it difficult to police and subject to special penalties when used for criminal ends. Goods like collectibles or bitcoins don't operate at that scale, since they're accepted by relatively few businesses and specialized experts as payment. If a tiny (in comparison to the economy at large) experiment like bitcoin is "funds", then almost any object bought or sold in a zillion stores and marketplaces can be construed as "funds". Any quid-pro-quo could be considered laundering, which broadens the law beyond its intended scope.
The ruling says:
"Ulbricht's alleged conduct is more akin to a builder who designs a house complete with secret entrances and exits and specially designed traps to stash drugs and money; this is not an ordinary dwelling, but a drug dealer's 'dream house.'" [2]
It's not illegal to build a house with secret entrances and compartments. Such a house could be used by anyone who wanted to hide their own possessions on their own property. The fact that someone might use it for illicit purposes doesn't implicate the owner or builder. It must be proved separately that the owner or builder knowingly entered into some kind of agreement with another conspirator to facilitate a crime [3]. Merely hosting a chat room isn't a conspiracy.
Unfortunately, this is just a perpetuation of the same pointless drug war. The prosecution's position is wildly overblown. The alleged activities are akin to operating a motel where a victimless offense might have been committed by a third party.
Drug prohibition is ineffective and is on the way out in favor of treatment and social programs that are more effective.
[1] http://www.law.cornell.edu/uscode/text/18/1956
(4) the term “financial transaction” means
(A) a transaction which in any way or degree affects interstate or foreign commerce
(i) involving the movement of funds by wire or other means or
(ii) involving one or more monetary instruments, or
(iii) involving the transfer of title to any real property, vehicle, vessel, or aircraft, or
(B) a transaction involving the use of a financial institution which is engaged in, or the activities of which affect, interstate or foreign commerce in any way or degree;
[...]
[2] http://www.scribd.com/doc/233234104/Forrest-Denial-of-Defens...
[3] http://conspiracy.uslegal.com/elements-of-the-crime/intent/
Really? What about all the services like Bitstamp? I am fairly sure that bitcoin is more liquid than used iPhones.
Stocks, which most people don't understand and can't be sold without contacting a broker are considered liquid.
Jewelry & stamp collections are not considered liquid assets, yet everyone understands what these are and where to purchase them.
The actual problem is that the entire concept of trying to separate currency from commodities is defective. Forget about used iPhones. You can walk into any pawn shop and exchange a bar of silver for goods or cash. Does that mean silver is a currency? What about copper? Or gasoline? Try to buy something on Craigslist and offer to pay with a gas card. More likely to succeed than offering bitcoin.
Well ok, the ruling was really "no, there is no way you are snidely gettin off Scott free because the law forgot to think of crypto-currency"
I quote:
(5) the term “monetary instruments” means
(i) coin or currency of the United States or of any other country, travelers’ checks, personal checks, bank checks, and money orders, or
(ii) investment securities or negotiable instruments, in bearer form or otherwise in such form that title thereto passes upon delivery;
Bitcoin has been referred to as a 'cryptocurrency' since its inception, and much as I treasure my own copy of Black's Law Dictionary, its definitions are not legally binding. You might as well say 'my clients large collection of unfinished diamonds and gold nuggets don't amount to a hoard of wealth - have you ever tried to buy groceries with an unfinished diamond? I rest my case!'
No one has experienced security.