While it’s easy to think of Bitcoin as a “currency” things become complicated when approaching the issue from a legal (though, Italian) perspective.? Under Italian law, Bitcoin neither is a “currency”, nor the equivalent of check or a credit card. Is “just” a good that people freely chose to put some value into, like an old camera or a classic car whose intrinsic value is close to nil, while the trading value skyrockets.
To better explain my point, let’s start with some economics.
Currency, in itself, has no intrinsic value. We do accept a piece of paper because we trust that somebody else, on the receiving side, will do the same, otherwise we don’t. This is what happened during the Cold War, when in the Eastern Block countries western currencies – officially not allowed – were traded on the black market, while in the West nobody would ever accepted Roubles. For the records, the root of this “psychological” way to create value dates back to the breaking of the Bretton-Woods Agreements.? So, as odd as it may seems, we may safely assume that money is just a creation of the mind. The “currency power” is a prerogative of a sovereign State. In other words, to be acknowledged as “currency” a currency must come from the Power-that-be. Thus, whatever doesn’t fit this requirement can’t be called “currency” or “money” (this is true within the EU, but not in some parts of the USA where the “private currency” is currently allowed.) It comes from this definition that Bitcoin is not a “currency”.
Is, then, Bitcoin something like a check or a promissory note? No, because under Italian law these things are regulated by specific laws.
Furthermore, is Bitcoin similar to a credit-card? Again, no, because there is no third-party who guarantee for use of the plastic-money.
One possible solution, at least under the Italian legal system, is to treat a Bitcoin as an immaterial good that can be traded as a quid-pro-quo either with other Bitcoins or different things. Simple as that.
Of course, I’m aware of the issues raised by the use of Bitcoins that – if you think for a while – aren’t different by those related to the use of cash or other valuable assets. Gold, diamonds and other precious things can be used for legitimate purposes or to fund illegal activities. But this doesn’t make a brick of gold illegal “ex se”. The same approach should work for Bitcoins (whathever its legal status.) It is the misuse that should be punished and not the Bitcoin in itself. Unfortunately, as always happens when technology is involved, the “Fear Spreading Professionals” are playing loud their “warning” instead of trying to understand how to gain advantage from a brilliant mathematical application.