Bitcoin poses new questions to judges and legal system

How Should Judges Deal with Bitcoin?


Bitcoin hasn’t been classified technically as property, but the courts have treated it as if it is an alienable thing The way Bitcoin is like property is that it has a way of being controlled and isolated into a single person’s hand

The way you control Bitcoin is something called a “private key,” and this private key is just a series of numbers and letters But, if you know what those numbers and letters are, you have the ability to control those Bitcoins, you have the ability to send those Bitcoins to someone else So whoever owns the private key, whoever has possession of the private key, has possession of the Bitcoins So, a court can say: “Well, we have this safety deposit box, and it’s filled with, uh, this private key, so we have the ability to control this Bitcoin And we can attach it to litigation, or we can do all sorts of things with it that is part of the usual remedies and the usual procedures of a civil litigation in this country

” There hasn’t been many cases involving Bitcoin A lot of them have been criminal actions involving money laundering or involving Ponzi schemes One of the things about Bitcoin is that because it’s not completely anonymous, you’re able to tie a series of numbers and letters to each transaction, and so it makes it very easy for the FBI to track it; much, much easier than cash They’re able to isolate and take ownership over that Bitcoin It’s essentially treated as a tangible, just like gold, or just like apples, for instance

If the Bitcoin, er, is in a particular jurisdiction, a court can exercise all kinds of, uh, control over it, just like it can exercise control over a house So, courts have classified Bitcoin as money, but money in the same way that gold is money The difference between tangible and intangible property is that a tangible thing has value on its own and doesn’t need any third-party validation to give it value So, for instance, a gold bar: whoever is holding that gold bar, that gold bar is worth something Now, compare that with shares of a company

If I have a contract that says: “Max owns 50 % of, uh, X, Y, Z Corporation” and somehow, someone else gets their hand on that piece of paper, that piece of paper doesn’t give them the ownership to 50% of the company The ownership is an intangible thing It’s something that I have by virtue of being me, and by virtue of a court and a judicial system and a financial system giving me that right Someone could say that Bitcoin is intangible property and could be dealt with by courts in the same way we deal with shares of a company, for instance, But the difficulty is, a court can say: “You no longer own these shares of a company- you no longer have that, and you can no longer sell it to other people

” With Bitcoin, a person actually has those Bitcoin, because it acts very much like gold You can apply many of the same rules, and so, one of the ideas is that you don’t need a complex new system of regulations or a complex new law to be able to govern Bitcoin You can go with the same old property rules and the same old procedure rules, uh, that govern other forms of property Many like Professor Lessig, uh, want to create a new jurisprudence for the Internet Many like Judge Easterbrook adopt the approach that says: “New innovation doesn’t necessitate new legal regimes,” and that the old system of common law, the old system of rules that we have governing property are perfectly capable of dealing with, uh, innovations

Source: Youtube

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