Writing a law journal paper about Bitcoin and I need some practical, non-legal opinions. If Bitcoin is/were property, where is it? How would you determine the location of a particular bitcoin wallet? #bitcoin #law #property
Discussion
## Bitcoin and bitcoin.
- Bitcoin (capitalized) is a network of computers that store, validate, and append to the Bitcoin Blockchain.
- bitcoin (lowercase) is the asset accounted for by the Blockchain.
The Blockchain is a public good, in this regard, because it is held by everyone who runs a full Bitcoin node.
## Private Keys and Public Keys
- Private Keys are used to sign transactions on the Blockchain. They can authorize the movement of bitcoin from a Public Key generated from the Private Key to any other Public Key on the network.
- Public Keys, or addresses, are generated from Private Keys and are used to identify the inputs and outputs of a transaction.
The Private Key, when kept secret by its holder, grants the holder sole authority to transact any bitcoin that has been sent to any Public Keys generated by it. In this sense, in "shared objective reality" (a term coined by the Softwar thesis) the holder of a Private Key "owns" the bitcoin it has the authority to transact.
Ownership of bitcoin, the asset, is therefore the authority to transact it on the Bitcoin network. Hence the phrase, "Not your keys. Not your coins." If someone else has your private key, they share ownership of your bitcoin because they have the ability to sign transactions to move your bitcoin on the Bitcoin Blockchain.
expanding on this... (I think, correct me if I'm wrong Jay)
if the seed phrase is on one of those metal plate thingies and person A has possession of the thingy and person B knows what the seed phrase is by memorization, then both know the private key to the Bitcoin and thus the "location" of the Bitcoin is within the knowledge of both parties, not just the metal plate.
I threw the plate in there to add a layer of physicality. As in there is no tangible, physical "location" for Bitcoins.
Yeah, that's right. It's like asking, where is the location of a password you use to log into an online account?
It could be stored in your brain, as ink on paper, stamped in steel, as a file on your computer, or as a record in a password manager database. These are all physical locations where a Bitcoin private key can exist as well. But where is the "wallet"?
The truth is, there isn't one. So it's the wrong question to ask. Bitcoin ownership is the potential for action. It's like a threat: "I can transact from the UTXOs I can sign as inputs. But it's up to me when or whether I will."
Software that allows you to make good on that threat are typically called "wallets" because they have the functionality of a real life one.
Thanks for your responses! This is the conundrum I find myself in. I think a bitcoin wallet takes some of the characteristics of an intangible as well as a tangible. Part of my argument rests on treating it like a tangible because:
(1) it can be exclusively possessed, as you pointed out ("I can transact from the UTXOs I can sign as inputs. But it's up to me when or whether I will"),
(2) ownership of it expresses a property right in it of itself, and
(3) it is alienable.
A typical intangible would be a stock certificate or a contract right. The contract and the stock certificate are physical, but they rely on the legal system to give them effect. The certificate and the contract are not the valuable part, just representations of ownership in something else.
The private key = password is analogous for the most part, but one key attribute is that the password gets you into account controlled by someone else. Social media account, bank acct, etc. They have intermediaries. The private key can be used to deprive all others of control over the wallet, making it capable of true exclusive possession.
Additionally, I could throw my key away or write it down and leave it somewhere, making it alienable. The wallet does not have to be tethered to someone.
Would love to hear your thoughts on this. Does this make sense to you? Is there a more common sense approach?
I think you're on the right track. I don't really have much to add, so I'll just leave you with some articles. And also, I'm in the process of recording an audiobook reading of Softwar by Jason Lowery. I recommend checking out my bio for links to the recordings and a pdf. It's a remarkable thesis that goes into extreme depth about the idea of power projection as the only means of determining ownership.
that tracks. good luck with your paper 🤓
Softwar links. Most of it may seem irrelevant to anyone reading it, but that's the point.
Audiobook (currently through chapter 3): https://fountain.fm/show/dqYmpfWuMQ10OXOsNvyv
Pdf: https://mega.nz/file/D0hzgCpb#qo07-vUqP-0YkjUKt92ioPNzo08ayEu3RwvWfsXRH8w
IMO it is a currency-type liability (a la the bank deposits from which it is dervied) not a property-type liability (bailment)
Who is the bank? Where is it deposited?
Where are your checking account balances located?
Again, it's not a bailment
I think it is more similar to a bailment because it is capable of exclusive possession and alienable.
This is true of deposits also. The difference is that in a bailment a specific piece of real property must be returned, while in a deposit it is a designated amount of property.
If Bitcoins are fungible, then the ledger entry is equivalent to deposit rather than bailment. If Bitcoins are not fungible, they are not money.
The "bank" is the issuer of the currency, of course: Satoshi Nakamoto.
Just like this:
