Is Bitcoin Money?

Frightening stories appeared in The New Yorker . The publication talks about a couple from Texas who was heading to Louisiana across the border in order to buy a used car. They took with them all their savings in cash. They were stopped by the police that found money in a tiny pipe. The case ended with the arrest of both.

But then everything worked out for the couple - state robbers made a deal with people - the couple left the prison without any problems in exchange for money. Although their children could remain without parents and be left either in an orphanage or given into foster homes, their fate did not concern state criminals. Moreover, it is legal! Under US civil law, a state has the right to confiscate assets. In fact, this law has become a huge source of income for the government (the Ministry of Justice raised $ 4.2 billion in 2012 through such a robbery).

However, consider a different scenario. The couple was stopped, but they did not have cash. At all. Instead, they owned different cryptocurrencies lying on one of the smartphones. And when people got to their destination, they cashed out their money without problems by buying a used car.

And so the question arises: is Bitcoin a possible defense against looting by the state?

Consider another case. Agrentina. In this country, which now has an extreme level of capital controls, price controls, huge inflation, cryptocurrency saves many. Perhaps Argentina is the first country on the planet with the highest Bitcoin spread rate. Everything, including rent and land prices, is currently exchanged for Bitcoin. Cryptocurrencies are bought to circumvent legislative legal barriers in order to later use them in transactions.

In other words, cryptocurrency is used as money. This is a new problem for regulators. Most dollar deals have gone digital.

Cryptocurrency, on the other hand, is computer code. It has an advantage over the dollar, because it is part of mathematics. But the problem is much deeper for understanding and perceiving many cryptocurrencies as money.

Cryptocurrencies pose real problems for government regulators. Bitcoin boosts economic relationships and the use of cryptocurrencies is expanding every day. This is strongly encouraged by businessmen. The government can ignore this state of affairs, or pretend that Bitcoin does not consider it for new money. This is the path of negation. The state, of course, without evidence, is convinced that only the government can create and make money, and all other attempts are illegal.

This trend is quite dangerous for officials, since the growth of the use of cryptocurrencies cannot be stopped.

Another way is to recognize the fact that it is money that is currently used as money. At the very least, regulators and the government may try to maintain their role as overseers. But such a path is dangerous, since the circulation and use of the monetary properties of Bitcoin offers the creation of new paths of legal legitimacy. And attempts to ban cryptocurrencies will result in new incentives for the further implementation and use of cryptocurrencies.

It was this problem that a federal judge faced in a well-known case with a scam of the Bitcoin Investing and Loans company. In 11-12 years, Trendon Shavers took hundreds of thousands of Bitcoin cryptocurrency coins, promising 7% profit. However, it is hard to believe, but he could spend all the money. (It is hard to imagine that a huge sum was entrusted to a person with the nickname “pirateat40.)

In any case, Shavers claimed in his defense that the Bitcoin cryptocurrency was not really money. He just got the codes and nothing more. Therefore, he cannot be punished for fraud in securities trading or fraud on exchanges, or be punished by tax laws and other regulators. The federal judge did not agree, and stated that Bitcoin has all the signs of money.

Judge announced your verdict:

Bitcoin was designed to reduce transaction costs that allow users to conduct exchange transactions by creating open protocols. Bitcoin can be used to purchase goods on the Internet, in addition, some retailers have begun to accept Bitcoin in exchange for gift cards or other purchases. The value of a Bitcoin coin varies, ranging from $ 2 per coin to more than $ 260 ...

“Clearly, Bitcoin is used as money. Different goods and services are bought for coins, as well as the defendant himself stated. The only limitation is that Bitcoin is not universally accepted as a currency. However, the currency can also be exchanged for other currencies, such as the US dollar, euro, yen and yuan. Therefore, Bitcoin is a currency - a new monetary form that investors use for savings. »The

federal judge made it clear that he considers cryptocurrencies money, the use of which is a reality, which was not expected in the recent past. Cryptocurrency has the ideal properties that are characteristic of money. It has value, like fiat money, which arose gradually since 2009.

There was something else interesting, and, in a certain sense, funny in the words of the judge. The judge writes: “Bitcoin is an electronic form of currencies unsecured by real assets, but with signs of precious coins or metals.”

Interestingly, we are talking about the dollar - word for word.

Every time I tell people about the problem of cryptocurrencies, people convince me that the government will certainly destroy cryptocurrencies due to its power, taxation, and the like. But let's make some differences. Of course, the government can regulate the exchange between the government and the Bitcoin currency. It is already doing this. It is only that regulation can be strengthened. The government can certainly also try to regulate Bitcoin revenues, as it does in finance in other areas. The government may also oversee contracts and rules for securities transactions in Bitcoin.

Nevertheless, the Bitcoin system is cryptographically protected and protects all exchange transactions that are decentralized, i.e. distributed throughout the server model. And this is not a private company. Not stocks. Not a product. Cryptocurrency is not someone else's subject that someone owns and disposes of. In this sense, it is impossible to destroy Bitcoin. Neither government officials, nor anyone else. This is akin to trying to destroy algebra. That's why officials have a huge interest in cryptocurrency. She is a threat to them, a threat to her future. Conferences are being convened. At them, officials discuss the legal and economic consequences for themselves.

And precisely for this reason, many people associated with the Bitcoin cryptocurrency are not afraid of government intervention. People are sure that the statements made by the federal judge above, as well as the activation of officials with their exchange rules, etc., are actually signs that Bitcoin has long been recognized as money. Their essence is invulnerability. All the hope of the government is only for its participation in all processes by controlling the source code of the cryptocurrency. But it is impossible to control.

Meanwhile, academic economists can continue to discuss what Bitcoin is called. The market has already solved this problem. People in black gowns just explained that cryptocurrencies have become a new reality in the economic life of people in the era of digital technology.

Article by Jeffrey Tucker .
Translation of the article is mine.