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US Court: Bitcoin is a Form of Money
Last week, a US court ruled that bitcoin is a form of money. Not all cryptocurrency, just bitcoin. This is a historic event, because the ruling is in relation to a bitcoin tumbling service. Bitcoin tumblers are used in order to obscure the origin, and thus the future destination of the bitcoins that are “tumbled”. It is for this reason that tumblers are used by money launderers, and those who wish for their identity to remain a secret while using bitcoin. In order to charge this individual with operating an unlicensed money transmitting business, bitcoin had to be seen as money.
What Exactly is a Bitcoin Tumbler?
Contrary to popular belief, bitcoin is not completely anonymous. Yes, when using bitcoin, your name is not attached to your bitcoin address. Your bitcoin address is no more than a series of letters and numbers. That being said, with blockchain forensics, analysts are able to attribute real world identities to the use of bitcoin addresses. This is where tumblers come in. A tumbler, will send a series of transactions to other participants in the tumbler, and make sure you get roughly the same amount in return. The idea is that when you get your bitcoin back, you have your bitcoin in a completely new bitcoin address that is not linked to the old one. If your old bitcoin address has been compromised, then a tumbler can help protect your identity. Tumblers are often used by individuals that want to hide their identity because they are using bitcoin for nefarious purposes.
Implications of Bitcoin as Money
For the folks that are already using, and invested in bitcoin, it is already money or at least an investment. For everyone else, it is a ponzi scheme, a shady internet currency, a joke, or just misunderstood. A lot of people look to the legal authorities (i.e. the courts) for guidance on such matters. Up until now, bitcoin, and cryptocurrency more broadly has sat in a zone of ambiguity. This leaves individuals to make up their mind for themselves on what bitcoin is. The reality of the situation is, that people have lives outside of cryptocurrency, and simply do not have time or interest to ponder the philosophical classification of bitcoin. Now that a court in the District of Columbia has ruled that bitcoin is money, people have somewhere to look for an official legal opinion.
One thing that is significant about this ruling is that bitcoin specifically is considered money by the courts. Other cryptocurrencies were not included in the opinion. This makes bitcoin the first cryptocurrency to receive this sort of ruling by a US court. So what makes bitcoin so special? It could be that it has been around the longest (11 years). Or maybe it is because bitcoin does not have any formal leadership anywhere in the world. Regardless, this is just one more step along the way to having bitcoin become a totally normal money.
