Topic: [2014-03-13] Is UCC Article 9 Going to Kill the Use of Bitcoin by US Businesses? (Read 2324 times)

Here's an excellent article why many economists are acting the way they are.

http://www.coindesk.com/bitcoin-changing-everything/

By their old-school economic mindset, bitcoin cannot exist. Should not exist. Must not exist.

But it does.... and it's growing.

Here's an excellent article why many economists are acting the way they are.

http://www.coindesk.com/bitcoin-changing-everything/

By their old-school economic mindset, bitcoin cannot exist. Should not exist. Must not exist.

But it does.... and it's growing.

Quite a few econ journalists have reacted the same way.  Militant Keynesians, I guess, offended by something that calls into question their entire life's work and beliefs.

But I can't for the life of me figure out why she seems so negative on the idea.  It's like she is searching and searching for reasons why it won't work, rather than ever asking how it could work and make the world a better place too.

From her replies to the comments you could say that Yves Smith the author is an arrogant muttonhead with deluded pretensions of authority. She has no interest in learning how Bitcoin works and then shouts down arguments against her article by just saying "FinCEN said so". Yves Smith is in the same camp of deranged journalists as Leah McGrath Goodman. Journalism is in a sad sad situation.  

You are really behind on this issue. Go read our summary of FinCEN’s and the IRS’s position on this.

http://www.nakedcapitalism.com/2014/03/bitcoin-currency.html

The fact that people will trade goods with tangible value for Bitcoin means it is NOT just messages. It has been ascribed value, like collectable baseball cards, and hence is property. You can call it whatever you want, but don’t expect courts and the tax man to follow your views. There’s a well established legal and regulatory framework for commercial transactions, and it’s not as hard as you think to slot where Bitcoin fits in.

FinCEN, and the IRS is pretty sure to follow, regards Bitcoin as tradeable property. You don’t have a vote in this.

You clearly did not bother to read the post, so I don’t see why I should keep spoon feeding some who chooses to be obtuse. And your “literally just messages” is a further illustration. I could just as easily say, “An ebook is just messages” but people ascribe value to them, pay for them, hence they are property.

This was in the post:

Further, the security interest will remain with the bitcoins through subsequent transfers (UCC § 9-325). A remote transferee of the bitcoins will take the bitcoins subject to the bank’s security interest. Assuming the bank has taken the easy steps to perfect its security interest, which it almost always will have, the bank can seize the bitcoins as collateral if the bakery’s debt goes unpaid. The possibility of another party with superior property interest in a bitcoin would seem to substantially dampen their utility as a medium of exchange….

…consider the example of the bakery and the supplier. After the bank calls the bakery’s loan and gets a judgment against the bakery, it conducts discovery to see where the bakery’s bitcoins went. The bakery will be compelled to testify as to the identity of the supplier. Then the supplier will be compelled to testify as to the present contents of the supplier’s bitcoin account. If the supplier fraudulently transfers the coins before the bank can seize them, the supplier is liable to the bank — in real dollars

There's been some misunderstanding here when it comes to bitcoins and property. Bitcoins are not property, they're cryptographically signed messages.

Suppose a bakery decides to accept bitcoins from a customer. The baker generates a private key and from that produces a bitcoin address. The customer scans the address and then sends a message to the Bitcoin network signed by one of his private keys saying that he wants to transact with the bakers address. The Bitcoin network verifies the message and the transaction is complete. 

Next lets say that the baker decides to pay a supplier using bitcoins. The baker sends a message signed by his private key to the Bitcoin network saying that he'd like to transact with the suppliers bitcoin address. The Bitcoin network verifies the message and the transaction is complete.

The private key which the baker generated to facilitate the transaction is still in his possession after paying the supplier. The private key is his property and the bank can make a lien on that if they want. They can't make a lien on the supplier because the private key used by the supplier to facilitate the trade was never the baker's property.

If anyone takes Bitcoins from a business that has a blanket lien (and you as someone dealing with that business won't know the state of their finances) and that business gets in trouble, the bank can go after any current holder of Bitcoins that have passed through that business' accounts