Bitcoin is Legally Not Money - And That Makes it Stronger Than Ever
Bitcoin has long occupied a strange, ethereal spot in the realm of global currency. Is it legal tender or isn’t it? A Florida judge has ruled that, no, it isn’t. Weirdly enough, that doesn’t mean Bitcoin will be without value. In fact, this ruling may make it stronger than ever…
This is because Judge Teresa Pooler’s ruling means that you no longer need any kind of money transmitting license to buy and sell bitcoins. As it is not considered a currency, bitcoin can instead be seen as a commodity, and traded as such.
As for the reasoning behind the decision, Judge Pooler made the call on the 22nd of July during a case against Michel Espinoza, who was charged with money laundering and other criminal charges. He was attempting to sell $1,500 worth of bitcoins to an undercover agent who intended to use the virtual currency to buy stolen credit card numbers.
“This court is unwilling to punish a man for selling his property to another, when his actions fall under a statue that is so vaguely written that even legal professionals have difficulty finding a singular meaning.” Said Judge Pooler.
“This court is not an expert in economics, [but bitcoin] has a long way to go before it is the equivalent of money.” She added.
And indeed, she is right. Bitcoin, a wholly virtual currency created in 2009, is not backed by any government. This makes its value difficult to determine. Though according to some advocates, that’s exactly what makes it so appealing.
As a currency not tied to a government, bitcoin is not subject to things like inflation – which is when a government devalues its own currency in order to cover debts generated by interest to the banks. (Monetary economy is a joke, look it up).
This immunity from inflation makes bitcoin a highly sought-after currency in countries with high inflation like Argentina and Venezuela. However, that does not mean bitcoin is, itself, stable. The value of bitcoin regularly fluctuates wildly, upwards of 10-20% in either direction over a given week. That, it should come as no surprise, is a bit much.
So, what does this mean for the future of bitcoin? As stated above, bitcoin can now be considered a commodity. It can store value and hedge against inflation.
“It can be used as an exchange” says Charles Evans, professor of finance at Barry University. Much like gold, Bitcoin may well become something of a global standard. A way to barter goods and ensure both parties get good value, despite the relative strengths of their respective currencies.
Of course, it’s hard to say for sure how this will turn out. With bitcoin itself still being so ill-defined by the law, it could easily slip away from the realm of the legitimate and become the domain of the criminal. Though, Evans hopes that such risks do not end up stigmatizing the virtual currency, stating: “people who are engaged in illegal activities will continue to do what they are going to do because they are criminals.”
And it’s a fair point. People get up to shady business with real money all the time. No reason a few massive cyber-crimes here or there should hurt the legitimacy of Bitcoin, which stands to occupy a very interesting space in the global market.
Of course, monetary economy in general is a shambles which our society and mother earth cannot bear for much longer, and we desperately need to move to a resource-based economy before we price ourselves into extinction.
But until then, keep an eye on bitcoin.