"The judge said it is evident bitcoins do not possess the properties of tangible entities and acknowledged that they also do not offer exclusive control because transactions between users are structured in such a way that calls for the involvement of a third party."
I found this an interesting view of property but I suspect it may need a shift in definition over the next few decades.
I'll follow you;) In the law, copyrighted materials are defined as the product of the human mind, including imagination. If the blockchain contained a few characters typed by a human, then each bitcoins could be copyrighted. That would be funny.
How do financial instruments (bonds, mutual funds, sporting bets) compare? Surely these would have protection from theft, even electronic versions. But calling Bitcoin a 'Financial Instrument' might open additional problems (regulation?)
The way I see it, you can't have a decentralised, unregulated currency as well as protection from theft from a government / legal system - the two are mutually exclusive. If you want your money to have some protection, use a regular currency with a regular bank - even if that bank goes out of business and its owners go to trial for embezzlement, you'll still get at least part of your money back.
If you have a chair in your front yard, and I walk off with it, that's theft. You wouldn't say "chairs are decentralised and unregulated, you can't expect protection from the government". If I burn it, you wouldn't say "I should have bought regular, fireproof furniture." I can't give it back to you, but I should still compensate you.
You're welcome to take it up with the Japanese Diet, but in 2015, 有形固定資産 ("tangible real property") is a thing which you can demand a bankrupt entity surrender to you if you can demonstrate ownership of it. The court held, sensibly, that BTC is not tangible real property.
You will probably not find wonderful reporting on this subject because the generalist press routinely does not understand complicated specialist subjects (as is readily apparent to technically inclined people any time they stumble their way through our world). "有形固定資産 and 資産権 actually describe two different things" is a bit beyond most reporters trying to work their way through this story, including for the obvious reason.
Japan has extensive protection of non-tangible property rights! In addition to Arcanite Reapers and Bitcoin we have, you know, things that actually matter, too, like copyrights and and fishing rights and mineral rights and all the sorts of things you would expect a highly developed first world nation to recognize! Newspapers suggesting that a distinction between tangible and intangible assets means intangible assets cannot be owned should run this conclusion by their local attorney!
And software licenses must be protected in some way even though they strike me as intangible and 'mingled' with a third party system. Unless the actual sticker with a bar code is material enough. Interesting.
It's an absurd view of property in this day and age.
I mean, can I not pay for electricity in Japan because I can't handle it, and it can be shared?
Can I steal a few ¥bn worth of electronic bonds, credit swaps, options, futures from a Japanese company then stick them the finger because they didn't really own them as they're all intangible?
Can I not pay for my cell phone service because I can't handle the RF waves?
Can I republish books by Japanese authors abroad and trample copyright, because the words aren't tangible?
I assume media piracy is legal too? No? Shock horror.
I don't know about the tort system in Japan, but if it's anything like most legal systems, this judgment reinforces the law and re-asserts that if you can't physically touch it, you're welcome to steal it.
Oh right, this is actually just the Japanese legal system doing what they do best, and going "corporate entity must be right, be deferential, be deferential!".
You can't point to a specific Bitcoin and say, "That's my Bitcoin.". You can say that you are owed X amount of BTC, but you cannot say that you are owed a specific coin. Thus, it's like cash.
I am confused: If BC is not subject to ownership claims, how can anyone be harmed by the bankruptcy, etc? No one has "lost" anything through mismanagement, blah blah.
If I'm understanding correctly, the court found that he couldn't claim ownership of a particular, tangible set of bitcoins out of Mt Gox's holdings, but he's still a creditor of Mt Gox because they did owe him a specific number bitcoins.
That doesn't make any sense though unless bitcoins can be owned. If you could claim as a creditor for something that was of worth but couldn't be owned then one could say something like "I told Mt.Gox employees a joke, therefore I claim financial remuneration for the value of that experience I gave them.".
As I understand it, the distinction is not whether or not you can own bitcoins. The distinction is whether or not you can own _particular_ bitcoins.
If, say, a "sell it on ebay" store went bankrupt, I could say, "those are my Air Jordans", and I would get those particular shoes back. On the other hand, if a bank goes bankrupt, I can't say "I deposited those particular bills with those serial numbers". The court has ruled that bitcoins follow the latter principle, so if each depositor gets back 50% of the deposited bitcoins, I can't get back 100% by pointing to the particular bitcoins I deposited.
How about the analogy of robbing a bank vault versus robbing safe deposit boxes?
If half the money is stolen from the bank vault, everyone at the bank has lost half their money (ignoring insurance, etc). If the contents of half the safe deposit boxes are stolen, you don't distribute the remaining safe deposit boxes among all the customers; half lost everything and half lost nothing.
They didn't even say that you can't own particular bitcoins, just that in the specific case of MtGox you don't own particular bitcoins.
To make the analogy to real money, if you put a stack of bills in a security deposit box in a bank, and the bank goes bankrupt, you can get the contents of the box back, because you still own those specific bills. On the other hand, if you write down the serial numbers of the bills and deposit them in a bank account, then the bank goes bankrupt, you can't go into the bank's vault and pick out the bills that match your list of serial numbers. You have to get in line with the other people who have money deposited in the bank, because you don't own those specific bills anymore.
So, basically they just decided that MtGox operates more like a bank account for bitcoins than like a security deposit box for bitcoins.
If I put a valuable antique coin in a bank's safety deposit box and the bank closes due to bankruptcy, I could sue to get my specific coin back because (a) the value is in a tangible item that, (b) the expectation is that bank is storing an item that is still specifically owned by me.
If the bank was merely holding my money in an account balance, then I could not sue in this manner since I would be treated like any other debtor in the bankruptcy proceeding.
Someone tried to sue MTGox to get their money back as if they were in the first situation. The court correctly ruled that the plaintiff was actually in the latter situation and they would have to be treated like a debtor.
The bill with a known serial number quits being tangible when you deposit it into an account because you are only owed a bill not that bill. If you had put the bill with a known serial number in your safety deposit box, for instance if it was your first dollar ever earned you could sue for that bill the same way the coin is sued for by stating its serial number, since the bank was storing it as a tangible good, and not simply as a product of its value.
While other people have correctly stated this point elsewhere in this topic. I think you have phrased it in a very simple and easy to understand way, which I feel anyone not able to understand would not be someone worth having a conversation on this topic with. Thank you for what I believe to be a correct and extremely dumbed down way of expressing the absurdity of anyone getting upset about this ruling. I will be stealing your analogy, as close to verbatim as I can remember, should I encounter a conversation on this topic in the future as it is much easier than trying to explain it in more abstract terms.
No, they'll be owed what they had on deposit in fiat. However, if someone converted deposited money to Bitcoin, that's gone. (in the same sense as if I bought Reddit gold, or if I buy credits in an in-app purchase on my phone)
Proponentes of cryptocurrencies highlight the fact that it is not controlled/manipulated by governments and banks, but when something goes wrong they go running to daddy government for help.
Either I'm misunderstanding this or other people are, because I'm seeing other people interpret this as saying Japanese law doesn't allow ownership of intangible things, which of course it does. My take on it is that this is specifically about a provision of bankruptcy law.
Suppose you lend (not give or sell) your car to a company that then goes bankrupt with the vehicle in its possession, and you go along to reclaim it.
The officials handling the case might say "Okay, let's check the blue book value of the car and you'll get your pro rata percentage of that money when everything is settled."
To which you can reply "No, you don't understand. I'm not saying the company owes me money. I'm saying that's my car, license number such and such, it doesn't belong to the company at all, so it's not part of the bankruptcy proceedings, it belongs to me and I want it back right now." And assuming you have the documentation to prove it, the law will support your case.
In this case the court has ruled that you can't point to a particular bitcoin and say that's my bitcoin, because bitcoin has the properties of money rather than of particular tangible objects, so all you can say is you are owed a certain amount of bitcoins. And so the owner of such will get his pro rata percentage after everything is settled, instead of getting the whole lot right now.
As far as I can see, yes, you are understanding it correctly.
This discussion seems full of misinterpreting a term of art as something closer to colloquial meaning, and then drawing inferences from that. Such inferences by nature will usually be deeply flawed.
Your second to last paragraph; that is an interesting concept! Imagine if the court orders this beast to pay back the victims in Bitcoins with the exact amount of bitcoins they had lost rather than the dollar value. Since he will be paying them back in Bitcoins that have lost 75% or more of their value when he exits jail, he may still own 6-figures in "cash" worth of Bitcoins.
I don't think a bankruptcy court would accept settlement
in bitcoins; since bankruptcy settlements are based on a
share of the remaining asset value in the bankrupt entity.
When a limited company goes bankrupt all the company's assets are auctioned off and the resulting money is put into a big pile; and all the people the company owes money (or produce) send in evidence of how much they're owed and these liabilities are put into another big pile.
The receivers, who are hired to administer this process, take their pay straight off the top of the money pile. The remaining money pile is divided up among the creditors, depending on how much they've shown they're owed. There isn't enough money to go around (if there was, the company wouldn't be bankrupt) so everyone gets less than they're owed.
When this process is complete the company is gone, and nobody owes anyone anything. This is what "limited liability" means - none of the investors or owners of the company is liable for anything beyond their initial investment.
So if you sold the company a $1000 widget and gave them 90 days to pay, and they go bankrupt in those 90 days, you might only get $10 or $100 back from the receivers.
Just because someone has lost $1000 worth of bitcoins, doesn't mean they'll ever see them again or anyone is legally liable to pay them back - in cash or in bitcoins.
I'm no expert on bitcoin, but as I understand it, the answer is not really: bitcoin works by numbers, but they are not equivalent to the serial numbers on dollar bills, more like rough equivalents of bank account numbers, login passwords and balances.
No. Every transaction has a corresponding hash (similar to a car's license plate number), but bitcoins themselves are consolidated into inputs and resultant outputs. The chain of ownership is established through the transactions recorded in the ledger[1].
Here's an example 10BTC transaction assuming no intermediate fees:
A(2) + B(8) ==> X(5) + Y(5)
You can't tell how many of A's bitcoins were sent to X or Y, but you can trace the transactions all the way to the originally mined blocks that each contained 50BTC.
With the way Bitcoin works, if you can point to a Bitcoin and say "that's my Bitcoin", you don't need the court's help to get it back. You could just issue your own transaction.
Bitcoin are inherently bearer instruments. If you can spend the Bitcoin, you own it; if you can't, you don't. MtGOX owned all those Bitcoins, because it had to in order to do anything with them, and its customers owned promises made by MtGOX.
I think the court could have made that a bit more clear in its ruling, but I think there may have been an explicit effort to avoid comparing Bitcoin to banknotes. It doesn't matter if it's tangible or intangible. What matters is that there is no possible evidence of ownership that could be presented to the court to restore the property.
MtGOX customers spent their Bitcoins to MtGOX, and received promises in exchange. It was a nice attempt, but the straws eluded their grasp. They wait and get their pro rata share, just like all the other creditors.
47 comments
[ 2.7 ms ] story [ 171 ms ] threadI found this an interesting view of property but I suspect it may need a shift in definition over the next few decades.
How do financial instruments (bonds, mutual funds, sporting bets) compare? Surely these would have protection from theft, even electronic versions. But calling Bitcoin a 'Financial Instrument' might open additional problems (regulation?)
See earlier layman's explanation here for more detail, if you're curious: https://news.ycombinator.com/item?id=10018631
You will probably not find wonderful reporting on this subject because the generalist press routinely does not understand complicated specialist subjects (as is readily apparent to technically inclined people any time they stumble their way through our world). "有形固定資産 and 資産権 actually describe two different things" is a bit beyond most reporters trying to work their way through this story, including for the obvious reason.
I mean, can I not pay for electricity in Japan because I can't handle it, and it can be shared?
Can I steal a few ¥bn worth of electronic bonds, credit swaps, options, futures from a Japanese company then stick them the finger because they didn't really own them as they're all intangible?
Can I not pay for my cell phone service because I can't handle the RF waves?
Can I republish books by Japanese authors abroad and trample copyright, because the words aren't tangible?
I assume media piracy is legal too? No? Shock horror.
I don't know about the tort system in Japan, but if it's anything like most legal systems, this judgment reinforces the law and re-asserts that if you can't physically touch it, you're welcome to steal it.
Oh right, this is actually just the Japanese legal system doing what they do best, and going "corporate entity must be right, be deferential, be deferential!".
That doesn't make any sense though unless bitcoins can be owned. If you could claim as a creditor for something that was of worth but couldn't be owned then one could say something like "I told Mt.Gox employees a joke, therefore I claim financial remuneration for the value of that experience I gave them.".
If, say, a "sell it on ebay" store went bankrupt, I could say, "those are my Air Jordans", and I would get those particular shoes back. On the other hand, if a bank goes bankrupt, I can't say "I deposited those particular bills with those serial numbers". The court has ruled that bitcoins follow the latter principle, so if each depositor gets back 50% of the deposited bitcoins, I can't get back 100% by pointing to the particular bitcoins I deposited.
If half the money is stolen from the bank vault, everyone at the bank has lost half their money (ignoring insurance, etc). If the contents of half the safe deposit boxes are stolen, you don't distribute the remaining safe deposit boxes among all the customers; half lost everything and half lost nothing.
To make the analogy to real money, if you put a stack of bills in a security deposit box in a bank, and the bank goes bankrupt, you can get the contents of the box back, because you still own those specific bills. On the other hand, if you write down the serial numbers of the bills and deposit them in a bank account, then the bank goes bankrupt, you can't go into the bank's vault and pick out the bills that match your list of serial numbers. You have to get in line with the other people who have money deposited in the bank, because you don't own those specific bills anymore.
So, basically they just decided that MtGox operates more like a bank account for bitcoins than like a security deposit box for bitcoins.
If the bank was merely holding my money in an account balance, then I could not sue in this manner since I would be treated like any other debtor in the bankruptcy proceeding.
Someone tried to sue MTGox to get their money back as if they were in the first situation. The court correctly ruled that the plaintiff was actually in the latter situation and they would have to be treated like a debtor.
Suppose you lend (not give or sell) your car to a company that then goes bankrupt with the vehicle in its possession, and you go along to reclaim it.
The officials handling the case might say "Okay, let's check the blue book value of the car and you'll get your pro rata percentage of that money when everything is settled."
To which you can reply "No, you don't understand. I'm not saying the company owes me money. I'm saying that's my car, license number such and such, it doesn't belong to the company at all, so it's not part of the bankruptcy proceedings, it belongs to me and I want it back right now." And assuming you have the documentation to prove it, the law will support your case.
In this case the court has ruled that you can't point to a particular bitcoin and say that's my bitcoin, because bitcoin has the properties of money rather than of particular tangible objects, so all you can say is you are owed a certain amount of bitcoins. And so the owner of such will get his pro rata percentage after everything is settled, instead of getting the whole lot right now.
Am I understanding it correctly?
This discussion seems full of misinterpreting a term of art as something closer to colloquial meaning, and then drawing inferences from that. Such inferences by nature will usually be deeply flawed.
The receivers, who are hired to administer this process, take their pay straight off the top of the money pile. The remaining money pile is divided up among the creditors, depending on how much they've shown they're owed. There isn't enough money to go around (if there was, the company wouldn't be bankrupt) so everyone gets less than they're owed.
When this process is complete the company is gone, and nobody owes anyone anything. This is what "limited liability" means - none of the investors or owners of the company is liable for anything beyond their initial investment.
So if you sold the company a $1000 widget and gave them 90 days to pay, and they go bankrupt in those 90 days, you might only get $10 or $100 back from the receivers.
Just because someone has lost $1000 worth of bitcoins, doesn't mean they'll ever see them again or anyone is legally liable to pay them back - in cash or in bitcoins.
Doesn't every Bitcoin have a serial number, similar to the car's license plate?
Here's an example 10BTC transaction assuming no intermediate fees:
A(2) + B(8) ==> X(5) + Y(5)
You can't tell how many of A's bitcoins were sent to X or Y, but you can trace the transactions all the way to the originally mined blocks that each contained 50BTC.
[1] https://en.bitcoin.it/wiki/Transaction
Bitcoin are inherently bearer instruments. If you can spend the Bitcoin, you own it; if you can't, you don't. MtGOX owned all those Bitcoins, because it had to in order to do anything with them, and its customers owned promises made by MtGOX.
I think the court could have made that a bit more clear in its ruling, but I think there may have been an explicit effort to avoid comparing Bitcoin to banknotes. It doesn't matter if it's tangible or intangible. What matters is that there is no possible evidence of ownership that could be presented to the court to restore the property.
MtGOX customers spent their Bitcoins to MtGOX, and received promises in exchange. It was a nice attempt, but the straws eluded their grasp. They wait and get their pro rata share, just like all the other creditors.
There is a reddit comment that clears it up and is extremely fascinating in its own right:
https://www.reddit.com/r/Bitcoin/comments/3fztzt/tokyo_court...