The first problem to be addressed concerns the nature of lawful money. In the United States, the Stamp Payments Act of 1862 was enacted to stop the circulation of private tokens that were in competition with federal postage stamps. It has been argued that the language of the statute may apply to electronic transactions extending the derivation of “note, check, memorandum, token” as money. Even the notion of Bitcoin as an obligation comes into question as we need to define the concept of a third-party issuer. The peer-to-peer nature of the currency means that obligations are derived in a manner unlike that of other monetary sources.
Bitcoin is a form of currency. The statement in itself is heavily contested. A key part of the problems surrounding this classification comes from the polymorphic nature of the system. It is not that Bitcoin is currency, a security or a token, it is that the multifariousness of the system allows it to be used as any of these at any time. As commodity monies such as gold could be utilised in exchange or alternative uses including electronics and jewellery have many use cases, we can also apply this to bitcoin. The difficulty is not in determining whether bitcoin has value but rather implementing a framework that captures the particular transaction and allows this to be successfully classified.
In this series of posts, questions of the security regulation challenges posed by bitcoin will be investigated. This will extend to investigating the consumer and investor protections that are associated with traditional financial exchanges and researching their effectiveness when applied to virtual currencies.
A particular concern within the thesis presented will be the focus of cross-jurisdictional challenges. The use of bitcoin over the Internet increases opportunities for money-laundering and many fraudulent activities. Contrary to widely held beliefs, bitcoin and other cryptocurrencies do not mitigate opportunities for fraud, but transform many old frauds opening up global prospects that are associated with traditional financial scams and Ponzi’s.
 18 U.S.C. Section 336
 For an exposition of the genesis, legislative history, and analysis of the Stamp Payments Act see Thomas P. Vartanian, Robert H. Ledig, and Yolanda Demianczuk, Echoes of the Past with Implications for the Future: The Stamp Payments Act of 1862 and Electronic Commerce, 67 BNA’s Banking Report (September 23, 1996).
 Griswold v. Hepburn, 2 Duv. (Ky.) 33; Leonard v. State, 115 Ala. SO, 22 South. 504; Insurance Co. v. Keirou, 27 111. 505; Insurance Co. v. Ivupfer, 2S 111. 332, 81 Am. Dec. 284; Lackey v. Miller, 01 N. O. 20
 Bollen, Rhys, “The Legal Status of Online Currencies: Are Bitcoin the Future?”, (2013) 24 JBFLP 272 at 275.
 Application of the Definition of Money Transmitter to Brokers and Dealers in Currency and other Commodities, FIN-2008-G008, Sept. 10, 2008. The guidance also notes that the definition of money transmitter excludes any person, such as a futures commission merchant, that is “registered with, and regulated or examined by…the Commodity Futures Trading Commission.”
 European Central Bank, Virtual Currency Schemes, October 2012
(http://www.ecb.europa.eu/pub/pdf/other/virtualcurrencyschemes201210en.pdf, accessed 12 January 2014)
 Dr Russell Smith of the Australian Institute of Criminology stated in 2000 that:
“The perpetrators of many on-line scams … are often not large corporations. They are able to close-down their operations quickly and easily, move assets to secure locations and use digital technologies to conceal their identities and disguise evidence. In such cases there is little likelihood of success whether civil or criminal proceedings are taken.”
Dr Smith noted that fraud may be committed both electronically and in paper based payment systems by individuals opening accounts with false identification details. These individuals may then exceed credit balances or alter instruments or messages used to authorise transactions. On the Internet, traditional methods of fraud and criminal activity have been updated such that they use this new technology capably. However, there are dilemmas other then fraud on the Internet. It is necessary to understand the relationship between the various parties on the Internet and how they interact if we are to gain an understanding of the issues facing Internet intermediaries.
Smith, 2000 “Confronting Fraud in the Digital Age”
 The term “cryptocurrency” refers to a digital currency that relies on the principles of cryptography to process and validate transfers