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Bitcoin is a commodity

By Craig Wright | 12 Dec 2018 | Bitcoin & Blockchain Tech

Ledger space in a sound, immutable ledger is a commodity. It has value. The trouble is that many think they can create something new, that Bitcoin is a new form of money. It is not.

 

Money exists as two things and two things only.

  1. Commodity money based on specie or some other valued exchange item.
  2. Fiat, that is legal tender — that which is decreed by the state.

Bitcoin is not legal tender. It is not decreed to be a means of payment that must be accepted within a territory, and nor shall it be. The result is that Bitcoin is either commodity money or a pure Ponzi.

The commodity that defines Bitcoin is the transaction ledger space and computation.

We do not care about the exchanges and day traders, as we will have use; that is, businesses wanting to save data and contracts in a manner that allows them to be covered under many of the US SOX provisions and many of the global laws of document retention.

 

Teranode

Our answer is simple: With SV, we are scaling Bitcoin to handle over 4 million transactions a second in the period between now and 2021. At a cost of $0.0025 a transaction on average, miners will earn over $10,000 a block as we scale to such a level, and there are businesses wanting this already. For us, Bitcoin is business friendly. There is no spam on the blockchain that is paid for.

A service bureau is a company that provides business services for a fee. The term has been extensively used to describe technology-based services to financial services companies, particularly banks.

It is something that Silk Road stopped. E-Cash was used by Deutsche Bank. In 2013, we had relationships with the Commonwealth Bank in Australia. We had partnerships with Teminos and others. The publicity from Silk Road stopped all of this, and created the false belief that Bitcoin is for dark-web uses.

If it was not for Silk Road, Bitcoin would be mainstream today. It would be used by major banks today. If not for Silk Road, Bitcoin would be 100,000 times larger, today.

We plan to go back to what Bitcoin is. It is money. It is a ledger, and it is commodity money based on use.

“Money”

In Travelex Limited v Commissioner of Taxation [2008] FCA 1961 (Travelex), Emmett J made observations regarding “money” (including the subsets “currency” and “legal tender” — refer to discussion below).

With respect to the term “money”, Emmett J wrote that (at paragraph 25):

Money is any generally accepted medium of exchange for goods and services and for the payment of debts (see Butterworth’s Australian Legal Dictionary at 759). Currency and legal tender are examples of money. However, a thing can be money and can operate as a generally accepted medium and means of exchange, without being legal tender. Thus, bank notes have historically been treated as money, notwithstanding that they were not legal tender. It is common consent and conduct that gives a thing the character of money (see Miller v Race (1758) 1 Burrow 452 at 457). Money is that which passes freely from hand to hand throughout the community in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or apply it to any other use than in turn to tender it to others in discharge of debts or payment for commodities (see Moss v Hancock [1899] 2 QB 111 at 116).

Emmett J’s views in Travelex regarding “money” were not overturned on appeal to the Full Federal Court and the High Court.

The Macquarie dictionary contains a similar definition of “money”:

1. gold, silver, or other metal in pieces of convenient form stamped by public authority and issued as a medium of exchange and measure of value.

2. current coin.

3. coin or certificate (as banknotes, etc.) generally accepted in payment of debts and current transactions.

4. any article or substance similarly used.

5. a particular form or denomination of currency.

6. a money of account.

7. property considered with reference to its pecuniary value.

8. an amount or sum of money.

9. wealth reckoned in terms of money.

10. (plural) Law pecuniary sums.

11. pecuniary profit…

Thus, from the above, it can be ascertained that “money” within the ordinary meaning:

  • is any generally accepted medium and means of exchange for goods and services, and payment of debts (i.e. an accepted proxy to facilitate the exchange of goods and services);
  • may be distinct from “currency” and “legal tender”, and does not have to be either to have the character of “money”; and
  • is given its character by common consent and conduct (i.e. by general acceptance, as a medium of exchange and measure of value).

It is also clear that there is no need for “money” within the ordinary meaning to be tangible property (e.g. coins and notes). Rather, “money” is an abstract concept determined by reference to its use as a medium of exchange, and common consent and conduct. For example, funds — held to the credit of a person in a bank account — being transferred to another person would clearly be considered to be a transfer of “money”.

Another feature of “money” to be noted is the “negotiability” (i.e. the ability to transfer ownership or property in money by delivery) of “money.”

Bitcoin as “money”

Based on Emmett J’s observations in Travelex and the definition in the Macquarie Dictionary, it would seem that Bitcoin falls within the ordinary meaning of “money”. That is, and as evident from the discussion at section 2.3 above:

  • bitcoins are used as a generally accepted medium of exchange in real-world transactions, and are being increasingly accepted by businesses;
  • Bitcoin does not need to be “currency” issued by a country nor “legal tender” to be “money”;
  • Bitcoin has the character of money by common consent and conduct of businesses and consumers.

Bitcoin also has the quality of negotiability of “money”, and in a broader sense, “currency”, in that “ownership” in Bitcoin value is transferred through a transfer of bitcoin from one Bitcoin wallet to another in a transaction. It is also clear that ownership of Bitcoin value is valuable in real-world currency terms.

The quality of negotiability possessed by Bitcoin also makes it clear that Bitcoin is a form of intangible personal property. As observed by Dr Rhys Bollen, Bitcoin:

…involves the circulation of valuable rights but not rights to cash as such. The valuable rights are a form of intangible property, transferred irrevocably and immediately (albeit with delayed confirmation) by electronic order.[1]

Further, the developments in Germany, Switzerland, and the UK as discussed at 2.3(a) above indicate that Bitcoin — it seems inevitable — will be formally accepted as “currency” (i.e. foreign currency) by governments around the world, if indeed it is not already considered to be so.

There is also United States jurisprudence indicating that Bitcoin falls within the ordinary meaning of “money” and perhaps “currency” in Securities and Exchange Commission v Trendon T. Shavers and Bitcoin Savings and Trust, case №4:13-CV-416 (E.D. Tex)[2] (SEC v Shavers). SEC v Shavers concerned charges made by the U.S. Securities and Exchange Commission (SEC) against Mr. Trendon Shavers, accusing Mr. Shavers of using Bitcoin to run a Ponzi scheme. Mr Shavers sought to dismiss the charges on the basis that the Bitcoin investments offered by his business were not securities within the meaning of U.S. federal securities law as Bitcoin was not money.

In his decision finding in favour of the SEC, Magistrate Judge Amos Mazzant explained:

The term “security” is defined as “any note, stock, treasury stock, security future, security-based swap, bond…[or] investment contract…” 15 U.S.C. § 77b. An investment contract is any contract, transaction, or scheme involving (1) an investment of money, (2) in a common enterprise, (3) with the expectation that profits will be derived from the efforts of the promoter or a third party. SEC v. W.J. Howey & Co., 328 U.S. 293, 298–99 (1946); Long v. Shultz Cattle Co, 881 F.2d 129, 132 (1989). First, the Court must determine whether the BTCST investments constitute an investment of money. It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan. Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.

(emphasis added)

Accordingly, it is submitted that Bitcoin is “money” within the ordinary meaning.

[1] Note 6, above at 283

[2] Available at http://ia800904.us.archive.org/35/items/gov.uscourts.txed.146063/gov.uscourts.txed.146063.23.0.pdf, accessed 14 January 2014.