The below is a direct excerpt from Marty’s Bent Issue #1243: “Is bitcoin the emergence of a new type of property in the eyes of the law?” Subscribe to the newsletter here.
Preston Byrne makes a strong argument that bitcoin will eventually be labeled as a new type of property and its understanding might be different in the US and England.
It’s very interesting blog post in which Preston Byrne expands on an idea he has been publishing since 2018: Bitcoin represents a new type of property and this will eventually be recognized by a court at some point in the future. If you’re looking for something to do during this bear market, your Uncle Marty thinks it’s a very challenging exercise in trying to figure out how bitcoin is and probably should be considered by the courts.
As you can see above, bitcoin is truly unique as a property type due to the fact that it does not physically exist anywhere due to the fact that the ledger is maintained in an extremely distributed fashion and that does not match. perfectly into any definition of property that has been established to date. In addition to this, the nature of control over a UTXO is determined by a private key, which can be signed by the person who created it, someone who gained access to it through malicious means, or someone who used a very powerful computer to guess it. . When combined, these factors make it pretty clear – as Preston points out – that we’re dealing with a particular beast.
I’m not sure how things like taxes will change if and when a court in the US or England sets a precedent that designates bitcoin as a new type of property, but I’m inclined to agree that it makes sense bitcoin to set a new precedent. Never before has humanity interacted with an asset like this. Treating it the same as real estate, a precious metal, or other types of physical assets never made sense to me, intuitively. To be clear, I think this is a positive thing for bitcoin. The fact that UTXOs really don’t exist in one place but in a globally distributed ledger and that you can store private keys in your head has always led me to believe that bitcoin is just information, especially speech.
If bitcoin is referred to as a discourse that is exercised not in any specific place but everywhere at once, I imagine that might reduce the ease with which any individual court within a relatively honest legal system in a particular jurisdiction could try to claim bitcoin as taxable within their borders. By defining this new type of ownership as something that someone owns but not in a specific location, plausible deniability increases dramatically, making it much more difficult to enforce local bitcoin ownership laws.