Topic: Is bitcoin protected by the USConstitution under the 'right to contract' clause? (Read 6571 times)

If you say so. It addresses a problem that doesn't exist. This law will not affect Bitcoin in any way.

Agreed, it does come down to the legality of alternative currencies. My original question regarding the contract clause is a less effective approach given the Lochner case as mentioned earlier in the thread. As Dr. Vieira points out clearly alternative currencies certainly are legal in the US. In the video he mentions several efforts at the state level, including Utah. It seems like they just recently passed a new law very much along the lines of what was discussed in the video;

Utah Now Accepts Gold and Silver
http://www.insidefutures.com/article/596887/Utah%20Now%20Accepts%20Gold%20and%20Silver%20.html

Pretty big news actually.

It is technically trade, but that's all currencies are as well and there's no law against alternative currencies anyways.

Just stop calling it a currency. Now it is a "resource". There. Technically it's just bartering now and no law is broken.

Interesting find.

By his argument, a state could adopt Bitcoin without making it legal tender.  That's not controversial.  Even in this economy, states (even small states*) control vast discretionary funds.  So even if you ignore his suggestion to collect taxes in an alternative currency, this could be huge.  I've been suggesting for almost a year now that this is exactly what Bitcoin needs -- local economy.  And it's clear that in the very near future, states may be in dire need of an alternative like Bitcoin.

Right now, though, a small state without a large dependence on the Federal Reserve System could generate local economic growth merely by paying some percentage of contracts and salaries in Bitcoins.  Even if the Bitcoins don't remain and circulate in the local economy, the effect of rescuing a small part of the local economy from the FED's money-printing, and attaching it to an alternative currency instead would be extremely beneficial.

The problem with this plan, unfortunately, is that Bitcoin is not the best choice.  Bitcoin requires some investment in transaction processing equipment to be a good local alternative.  His suggestion of centralized gold-backed accounts is easier to implement at the moment, though still not without it's own issues.  An electronic state currency system based on mag-stripe cards would have all of the fraud-risk of a credit card, with none of the economies of scale.  Smart cards would be more expensive, and would necessitate investment in point-of-sale readers.  But the benefits of bridging that hurdle could be huge, and would open the door to Bitcoin as well.

*New Hampshire, for instance, in 2006 generated annual revenue at the state level of 3.7 billion dollars.

Ok, after doing a little more research I came across exactly the sort of detail I was looking for. At first I thought I would start poring through case histories but decided I would likely be reinventing the wheel. What I realized was that it would be great if I could find a respected constitutional expert discussing the relevant points versus having to examine 200 plus years of court history. So I started thinking who that expert might be and for me there's one person who stands above the rest, Dr. Edwin Vieira Jr. Within a half an hour of having this thought I was watching this video, uploaded on the 9th of April:

http://www.youtube.com/watch?v=1mI8Lek60_w&feature=relmfu

Here are some specific points he makes relative to this discussion;

2:44 "the plan is basically an attempt to create an alternative competitive currency so that you will have federal reserve currency continuing to circulate to the extent that it will, but on the other hand people can use an alternative"

3:15 "on the other hand an average person could certainly use an alternative currency because in the united stated federal reserve notes are not required to be used as money"

3:50 "most people don't however (use alternative currencies) because there's a lack of knowledge of the existence of that alternative"

4:00 "the third (Congress being the first, the people being the second) alternative is the middle level which is the state government"

10:05 "in point of fact federal reserve notes do not have to be accepted if you've made your contract payable in some other medium of exchange. And in fact the federal title 31 of the United States code that you just mentioned has a provision section 5118 dii which specifies that"

12:29 "so if the state chooses to use some alternative currency for those purposes (state collections) the supreme court has already said that's protected by the constitution"

34:39 "the state has the constitutional power to do it (adopt alternative currencies), the state has the duty to perform this function"


So, for me the issue is well settled. There IS a right to use bitcoin in the US both at the individual and state levels. Dr. Vieira suggests an emphasis on the state level approach because he feels there is no mechanism to implement it at the individual level. I think he may be unaware of bitcoin as it does provide this individual mechanism. Taking that additional detail into account I'm going to agree with everything he says but add that while approaching the issue at the state level is a good approach that we could augment our efforts with bitcoin at the personal level. Both if these working together will increase the chance of adoption. If anyone disagrees with his assessment you'll have to take it up with him and the court of public opinion. Thanks again for all the input.

tl; dr

Right to contract is low on the list vis-a-vis bitcoin. Much higher on the list, IMO:

1st Am. Free Speech

4th Am. 5th Am. 6th Am. Information Privacy

Let's just say this.  You have an unlimited, individual right to contract.  Okay.  You can sign yourself into slavery if you'd like.  But your right to enforce a contract is limited by the rights of the co-party.  And the right to liberty is more fundamental than the right to slavery contracts.  So your slavery contract can be broken.

And this is completely aside from any "law impairing the obligation of contracts."  It is a matter of rights, which supercede both law and contracts, even the Constitution.

As a side note, I think it is useful to consider the distinction between commerce and trade in framing the limits to the right to contract, especially with regard to Bitcoin.

This is the most substantial input yet I think. Thanks for the info. I'm going to be reviewing the case you mentioned and try to get a better context of how we got to the current interpretation. A cursory glance at society will tell you things are out of balance from the original intent so I guess we should be asking ourselves how a restoration can be brought about. One quick comment on the issue of the commerce clause as was pointed out by BTC_Bear;

The courts have said that the constitution can't contradict itself. This means that if something is added that is in conflict with something that was already there then the last thing to be added is invalid. This is why the income tax is 'voluntary'. Otherwise it would be in conflict with the right to contract clause. The authors of the income tax openly discussed this point and had to put in the voluntary thing even though they preferred it to be compulsory. If it's voluntary then an individual can 'choose' to engage in the contract or not. In the case of the commerce clause it is unreasonable to think that it would have been intended to remove the individual right to contract as enumerated in article 1 section 10. Furthermore there is ample historical evidence that it was intended to regulate disputes between the states only, no effect on the individual right to contract.

An important point I want to make before I sign off; I'm aware that the pure interpretations may not jive with the reality of today. I am still focused on the moral fundamentals as the basis of law and would like to see things restored to the point that govt protects the rights of the individual instead of plundering everything under color of law. The first step in knowing where you are going is to know where you stand.

Thanks to everyone that has commented, all input is valuable. I'm going to take a break from responding for a while so I can do some more digging. I'll be back once I have more information that is useful.

"I would have to rephrase the question then:

Is there a natural right to an enforceable contract under law?"

Answer: No, the primal right to contract is buyer beware/vendor beware. It's also a logical impossibility since the natural right exists before the law, hence there can be no right to protection of the law. I think it's important not to confuse rights with privileges.

"Such limits upon the right to contract, if possible would have to take place at the state level

Even in the complete absence of a state, natural rights can be limited.  Your right to reproduce, for instance, has some limits.
"
Comment: Here I mean states as opposed to the fedgov, not the generic 'state' as in nation-state.

"I disagree that the right to contract is not an individual right.
Are you saying the right to contract is a collective right?

Are you in the habit of contracting with yourself?"

The idea of collective rights is a pure fiction. There is no such thing. There are collective privileges but a natural right can not possibly be collective as to remove the individual from the society would be to remove the so-called collective right. The very definition of unalienable (aka natural) rights is a right which can not be removed from the individual. Therefore, if a right can be removed from an individual by removing them from society it is not unalienable. Hence, it is logically impossible for collective rights to exist. It has long been considered by the courts (and recently acknowledged by the Supreme Court) that all rights are inherently individual. The idea of collective rights is a dishonest attempt to enslave most people for the benefits of a few. I challenge you to show me ONE piece of evidence from the US constitution to support your idea that rights are collective.

You are engaging in a logical fallacy to say that because you can't contract with yourself that the right to contract MUST be a collective right. First of all, you can and often do contract with yourself. A new year's eve resolution is just one example. Second, if you apply your thinking to the first amendment does the fact that you generally need someone else to carry on a conversation mean that the right to free speech is a collective right? Obviously not and we also talk to ourselves sometimes, yes?

Generally:

The contract clause and the reading of a natural right of freedom to contract into the constitution has been all but done away with since the 'Lochner era' (http://www.amazon.com/Rehabilitating-Lochner-Defending-Individual-Progressive/dp/0226043533). This is an unfortunate set of circumstances. However, all indications are that this court is not interested in reviving it (nor will it likely have the opportunity to do so) in the near future.

There are many other legal concepts that have more immediate impacts on Bitcoin.

Edit: Lochner and ACA (http://volokh.com/2012/04/09/the-washington-post-on-lochner-and-the-aca/)

Even in the complete absence of a state, natural rights can be limited.  Your right to reproduce, for instance, has some limits.


Are you in the habit of contracting with yourself?

1) Is there a natural right to contract?

I would have to rephrase the question then:

Is there a natural right to an enforceable contract under law?

This would then bring in the question of legalities of the contract. Yes two people can agree to something, but that agreement may not be enforceable. Hence, if BTC is determined illegal, it will be like 'drug dealing contracts'.

The first question is:

Is BTC legal to trade for other items?

I find this a ridiculous proposition. If people want to trade dirt, who am I to disagree. If they want to trade and abstract item, then again, who am I to disagree. The government cares because taking 30% of the Dirt Pile is a problem. Taking 30% of an abstract item is even more of a problem.

However, the Interstate Commerce Clause will be used to the greatest detriment for BTC. The problem being enforcement. This is why development needs to be watched very closely. This is where the attack to the system will come from in my opinion.

If BTC becomes a threat, I do believe the government will try to take it over. It is imperative that these systems remain as decentralized as possible.

In the end, I see governments world wide switching to a sales tax on real world items. It will be tiered from raw material to the final product purchase.

Legal implies an enforceable concept. If a concept is not enforceable, legality becomes moot.

For me the important questions are:

1) Is there a natural right to contract?
2) Is bitcoin protected by the USConstitution under the 'right to contract' clause?

As to the document you quoted, that's from the State of Virginia Declaration of Rights, not the US Constitution. Perhaps you meant the US Declaration of Independence? Only the Constitution has legal force. The Declaration of Independence and the state constitutions are relevant only in regards to historical context, understanding the intent of the law giver, language of the day, etc. In order to keep the issue limited to the questions above I'm going to try and research a very narrow line of reasoning. I already feel that the answers to both of my questions are yes. I think it's a good idea to do a lot more digging into relevant past cases. When the authorities tried to shut down bittorent, napster, etc. they used a legal basis involving copyright law. This gave them a supposed reason to pursue legal action. In the case of bitcoin what would their legal case be? If I'm right then they would have no legal basis. If there ever is a court case they must declare why the fedgov is arbitrarily denying citizens their rights on a massive scale and it just wouldn't fly. This is not the 1910's any more. There's much more scrutiny now and the old tricks no longer work. This time they will be met by multitudes of everyday people calling them out on their BS.

Right now the question is:

Is trading a Mathematical formula legal?  A place holder in a shared abstract world.

The best that any deterrers could do is make it difficult to do, illegal or not.

But if it is against the constitution, I would make it under the: Life, liberty and the pursuit of happiness clause.



Particularly under: acquiring and possessing property - because if stoping a person from acquiring an abstract piece of property is legal, then the 'state' controls our thoughts and ideas.

And:

obtaining happiness and safety - 'safety' of ones monetary wealth is a right. If not, then people transferring to Gold from fiat is also illegal as it is also a form of monetary safety to protect ones wealth.

Such limits upon the right to contract, if possible would have to take place at the state level as there's no federal authority but they (the states) are clearly prohibited from doing so. The feds MUST be able to point to where in the constitution they derive the authority for any legislation. The burden of proof is on the fedgov, not the people. I disagree that the right to contract is not an individual right. Are you saying the right to contract is a collective right? I'm wondering how you took the court ruling which says 'individual may stand upon....right to contract is unlimited' and turned that around to it being a limited collective right which in fact is the exact opposite of what it says?

Lawyers don't opine.  They follow the law.  The US is a common law jurisdiction.  We make the laws ourselves.


That's a good quote.  I simply meant that one's right to contract, while unlimited in the ideal sense, is practically limited.  There are plenty of limits regarding, eg. implied contracts, contracts with minors, interpretation, consensus and enforcement, etc.  Contracting is not an individual right.  So it is limited in that sense.

These are important points for sure. Here's where for me it starts to get really interesting. Ask yourself how is it that this pattern of government over-reach has emerged? How did it (the state) become this leviathan extending it's tentacles into every aspect of your life? The answer is simple, control of the monetary system to allow fiat currency (petro-dollar). Thus it seems simple to me that to take that away would remove the ability for deficit spending and reign in foreign imperialism and usher in a new age of personal liberty. Do I need to elaborate on the positive effects globally if we didn't have to deal with a state of permanent war? I believe bitcoin has emerged as a spontaneously ordered system essentially as a rejection of the old order in favor of the 'new order' much as you described. The history of controversy over central banking goes all the way back to the start of the country and I feel bitcoin has just become the next chapter in the total history of monetary systems. The difference this time is that the technical means to deny arbitrary and imposed controls over the individual control of your money exists. That's the truly unique aspect of bitcoin. It's the first to actually achieve (so far) technical independence of the old order. So I think any attempts to go after bitcoin in the US will run afoul of the principles I'm talking about here. If people know it's not illegal it changes the equation when they think about using it in their daily lives. The question of legality is important in that regard. One thing I know for sure is that generally in life you are solely responsible for the defense of your rights. You certainly don't want to wait for a banker to do it for you. If bitcoin is attacked in a legal arena it would behoove the community to have some thoughts on the matter.

While understanding that what the law actually says and what happens in the real world may be different, I do not believe in abandoning a morally and legally sound position due to threat of force. This is coercion. If you have a right and someone conspires to deny or disparage that right it is they who are in the wrong. It is a fools bargain to think that by allowing yourself to be run over roughshod by any bandits that come along that they will show you mercy and give you a position of elevated privilege. So, I want to first establish the legal reasoning so that when the time comes that bandits ride in to plunder under color of law we are not caught with blank stares.

Your point is well made. Now try to stop the US Government from simply ignoring the US Constitution as they do so frequently. My ad hominem is not directed at you, but to the entire legal industry that produces greedy, socially bankrupt attorneys.

My intent with this thread was to explore the questions:

1) Is bitcoin protected by the US Constitution under the 'right to contract' clause?

2) What are the implications of the answer to question 1 relative to bitcoin

Your response does not address these questions and is highly subjective. It is also factually incorrect as evidenced by the letter sent from the Justice Department to the Federal courts recently regarding the authority of the courts relative to the executive branch. Were you aware that the constitution also provides for a series of bloodless revolutions? You espouse reason and then dismiss my premise by ad hominem attack. I challenge you to demonstrate your understanding of reason by refuting any of the points I've made with an actual rebuttal.