Knut Karnapp posed this very interesting question over on Twitter. His answer: To me you own a part of the Bitcoin UTXO set uniquely assigned to you, and only you — by virtue of the corresponding private key. With this comes great responsibility. If you lose your private key, you lose your bitcoins. If your private key…
RT @prestonjbyrne: 2/2 ...and my reply looking at it from a _de jure_ perspective comparing the differing approaches to the question, "what, legally, is a Bitcoin?" employed by England and the United States.
2/2 ...and my reply looking at it from a _de jure_ perspective comparing the differing approaches to the question, "what, legally, is a Bitcoin?" employed by England and the United States.
> Unlike physical goods which can only exist in one place at one time, it is conceivable that with a powerful enough computer, the solution could be found entirely honestly by a third party simply doing some math and stumbling upon the answer at random, or by asking the right questions and exploiting some as-yet-undiscovered weakness in the implementation.
This really isn't hypothetical - a multitude of poorly designed and implemented key generation algorithms (brain wallets being one of the worst examples) have made it computationally feasible to find private keys. I have the private key for 13Yk7NTC64VEfrBL9KE2NNHDrorcJ3SQbz, which currently holds a few thousand dollars worth of Bitcoin (and various forks). I found it by using an algorithm to generate many candidate keys and checking whether they'd been used. I've previously found much more substantial amounts, and in some cases have been able to track down the rightful owner.
As far as I'm concerned, finding a key through clever use of computing power does not entitle one to use it from an ethical standpoint. Legally... well, I've talked to quite a few lawyers about it. There is no agreement on the answer, and as the article mentions, it's unclear who would have jurisdiction.
I had to do a lot of research to understand this in a technical sense. (I haven't read the article OP linked.)
I found the answer really interesting: with bitcoin, what you actually own in a technical sense is the cryptographic signature of an output of a previous transaction on the blockchain. "Owning 10 bitcoin" is intrinsically identical to "owning the cryptographic keys to a previous transaction whose value was 10 bitcoin, proving you were the recipient and can therefore initiate a new transaction with the previous transaction's output as an input, thus paying 10 bitcoin to someone else."
>Unlike physical goods which can only exist in one place at one time, it is conceivable that with a powerful enough computer, the solution could be found entirely honestly by a third party simply doing some math and stumbling upon the answer at random, or by asking the right questions and exploiting some as-yet-undiscovered weakness in the implementation.
This seems fanciful, but there are in fact UTXOs which could be "owned" by multiple people without explicitly sharing the key. For example, Peter Todd created an UTXO that you spend by proving that a sha1 collision (any collision) exists . Two parties could thus acquire ownership independently.
This looks a lot like bearer-bonds to me. Anyone knowing ("bearing") the key and having the means to use it is effectively the owner, except that ownership can be copied because digital. Pretty dangerous...
Perhaps the legal response here should be dismissal.
The best analogy for cryptocurrency is combination locks.
Imagine an anonymous public box, locked by a combination lock. This is the "address". The owner just has exclusive knowledge of correct combination("security by obscurity") but he doesn't have anything else to prove ownership.
Bitcoin in essence is not digital. If we could remember as good as hard-drivers, calculate as fast and consistently as CPUs, and perhaps communicate as efficiently as bits travel over the internet, Bitcoin would run in our minds only. And it would run for real.
Therefore, the only actually physical attachment it must have is ourselves, our minds, and (any) communication channels.
Bitcoin being mental before digital (I see digitization as just making it more practical), we surround the "owning question": do we own other peoples bodys or minds? Nope, we don't.
So Bitcoin is not, even remotely, private property.
It seems over thought. Blockchain is essentially a ledger (don’t even worry about the distributed part), and the bitcoin associated with a public address (wallet) is accessible to the holder(s) of the private key of the address. In my mind there is digital access to a digital account, while in theory the account is immutable and transactions on the ledger are immutable (ie no need to worry about double spend in this system) access can be lost or stolen.
That’s it! Ownership, like its suggested by the lawyer...well like all things in law: “it depends” and what it depends on are the facts as applied to ownership laws of local jurisdiction
What hasn’t happened yet, and what invariably will happen as more and more cases hit the courts, is that someone will ask the question, “what property classification do we apply to Bitcoin – WTF is it that Bob actually owns?”
Well - this question has been asked for taxation purposes. In particular it was answered by a Polish court in http://orzeczenia.nsa.gov.pl/doc/C8296DC8B9 - and the courts answer is that it is a 'prawo majątkowe' (google translate suggests "property law" - but I am not a lawyer - and it probably is not just 'property'), and that it is not money nor financial instrument.
One section of this article is fairly accurate - a custodial holder of an asset (e.g. a bitcoin exchange) doesn't "own" the asset.
They have a contractual liability to the actual owner completely irrespective of any on-chain activity. It's not really even a "Bitcoin". The customer doesn't care whether they get the same Bitcoin back - they just want A Bitcoin and a legal agreement was specifically entered in to for safekeeping.
Outside of that, the majority of the article seems like someone external to a system trying to muscle their way in and exert authority over the participants in that system.
There already exists a mechanism to determine ownership in Bitcoin (e.g. "physical" Bitcoin, the cryptographic system).
A UTXO requires a puzzle to be solved in order for it to be released. This puzzle may or may not require the input of multiple parties.
The participants in that system accept this basis.
A court _cannot_ force a Bitcoin holder to give up their key except in specific cases with naive/bad key management. It is actually impossible to seize. Cooperation is required.
People can be locked in boxes, but a sole owner of a private key is the owner a priori because no legal title is required in order for them to maintain sole use.
It's literally the entire point of the system - if you revert to Men With Guns as the dispute mechanism then you may as well scrap the whole thing and use traditional banking.
What does "Is that legal" actually _mean_ in this context?
It's clearly not _illegal_ for me to own a private key.
Bitcoin users generally accept that if they lose sole access to their keys, they lose sole access to their funds. It's an opt-in system.
The fact that such opt-in systems may be rendered impossible due to the application of force is a tremendous flaw in the legal system; it's not otherwise an interesting question.
If I post this comment and claim it's public domain, and some legalistic construct pops through a side channel and claims that in my jurisdiction public domain doesn't exist; clearly my personal attribution takes precedence.