The nature of the form: Legal and regulatory issues surrounding the bitcoin digital currency system

Louisiana Law Review

Volumn 73, Issue 4, 2013, Pages 1119-1153

  Doguet, Joshua J ^a  

^a LOUISIANA STATE UNIVERSITY   (United States)

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EID: 84883061850     PISSN: 00246859     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Review

References (132)

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52. (citing Thomas P. Vartanian et. al, Echoes of the Past with Implications for the Future: The Stamp Payments Act of 1862 and Electronic Commerce, 67 BANKING REP. (BNA) 464, 464 (1996)).
53. 18 U. S. C. §336 (2006).
54. See United States v. Roussopulous, 95 F. 977 (D. Minn. 1899).
55. United States v. Van Auken, 96 U. S. 366 (1877).
56. United States v. Monongahela Bridge Co., 26 F. Cas. 1292, 1292-93 (W. D. Pa. 1863)
57. Roussopulous, 95 F. at 978
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60. (citing Ellen Graham, Community Groups Print Local (and Legal) Currencies, WALL STREET J., Jun. 27, 1996, at B1).
61. U. S. C. § 336 (2006).
62. U. S. C. § 336 (2006).
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64. U. S. C. § 336.
65. U. S. C. § 336.
66. U. S. C. § 336.
67. See United States v. Van Auken, 96 U. S. 366, 367 (1877)
68. United States v. Monongahela Bridge Co., 26 F. Cas. 1292, 1292 (W. D. Pa. 1863) (item was a paper ticket for one trip across the Monongahela Bridge);
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89. See, e.g., Keir Thomas, Could the Wikileaks Scandal Lead to New Virtual Currency, PC WORLD (Dec. 10, 2010), http://www.pcworld.com/businesscenter/ article213230/could-me-wikileaks-scandanead-to-new-virtual-currency.html;
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93. See, e.g., Presentation, Dan Kaminsky, Some Thoughts on Bitcoin, SLIDESHARE, available at http://www.slideshare.net/dakami/bitcoin-8776098 (last visited Oct. 4, 2011).
94. Adrianne Jeffries, My Bitcoin. com Is Back: A Week After Vanishing with at Least $250 K. Worth of BTC, Site Claims It Was Hacked, BETABEAT (Aug. 5, 2011, 7:03 AM), http://www.betabeat.com/2011/08/05/mybitcoin-disappeared- with-bitcoins.
95. Bitcoin Version 0.4.0 Released, BLTCOIN. ORG (Sept. 23, 2011), http://bitcoin.org/releases/2011/09/23/v0.4.0.html.
96. Mike Young, Should Bitcoins Become Illegal Digital Currency?, ATTORNEY MLKE YOUNG'S INTERNET LAW FIRM, http://mikeyounglaw.com/bitcoin-digital- currency/ (last visited Oct. 25, 2011).
97. Bob Tedeschi, E-Commerce Report: Seller of Online Currency May Have Been Victim of Fraud, N. Y. TIMES (Aug. 27, 2001), http://www.nytimes.com/2001/08/27/ business/e-commerce-report-seller-of-online-currency-may-havebeen-victim-of- fraud.html.
98. fonestar, Comment to Guest Post: What Every Libertarian Should Know About Bitcoin, ZERO HEDGE (Apr. 1, 2013, 8:45 PM), http://www.zerohedge.com/news/ 2013-04-01/guest-post-what-every-libertarian-should-know-aboutbitcoin;
99. John Perry Barlow, A Declaration of the Independence of Cyberspace (1996), available at https://projects.eff.org/~barlow/Declaration-Final.html (asserting that no government exercises sovereign authority over the Internet).
100. David R. Johnson & David Post, Law and Borders-The Rise of Law in Cyberspace, 48 STAN. L. REV. 1367, 1367 (1996).
101. LAWRENCE LESSIG, CODE: VERSION 2.0, 73 (2006).
102. Jay P. Kesan & Andres A. Gallo, Optimizing Regulation of Electronic Commerce, 72 U. CLN. LREV. 1497, 1500-01 (2004).
103. Vitalik Buterin, Webs of Trust and How to Decentralize Them, BITCOIN WEEKLY (May 20, 2011), http://bitcoinweekly.com/articles/webs-of-trust-andhow- to-decentralize-them.
104. see DOUGLAS W. ALLEN & DEAN LUECK, THE NATURE OF THE FARM: CONTRACTS, RISK, AND ORGANIZATION IN AGRICULTURE 37 (2002).
105. MrTiggr, Comment to Welcome to BitcoinPolice.org, BITCOIN POLICE FORUM (Nov. 16, 2012, 2:01 PM), http://bitcoinpolice.org/t29-Welcome-BitcoinPolice. org.html.
106. Richard Jones, Cybercrime and Internet Security: A Criminological Introduction, in LAW AND THE INTERNET 610 (Lilian Edwards & Charlotte Waelde eds., 3rd ed. 2009). In a general sense, autonomous agents interact with the data they encounter and perform certain tasks upon it; they may even be capable of learning as they go along. Id.
107. This exchange has "hard-coded additional rules in [its] trading engine to thwart illegitimate usage of the platform." Frequently Asked Questions, CAMPBX, https://campbx.com/faq.php (last visited Oct. 11, 2011) (located in the section labeled "Legal Compliance").
108. Mark A. Lemley, The Law and Economics of Internet Norms, 73 CHI.-KENTL. REV. 1257, 1270 (1998).
109. Vince, Maintaining Anonymity While Using Bitcoin, THE MONETARY FUTURE (Jun. 16, 2011), http://themonetaryfuture.blogspot.com/2011/07/maintaining- anonymity-while-using.html (instructing users on the steps they can take to maintain greater anonymity, beyond that of what Bitcoin provides by default, in the event they plan on using the currency to purchase drugs from Silk Road).
110. Paul Krugman - Golden Cyberfetters [Op-Ed on Bitcoin], BITCOIN MONEY (Sept. 7, 2011), http://www.bitcoinmoney.com/post/9913036774/paulkrugman- bitcoin-op-ed.
111. William Hett, Digital Currencies and the Financing of Terrorism, 15 RICH. J. L. & TECH. 4, 24 (2008). Before the revision, a money transmitter was an entity "who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means...."
112. C. F. R. § 103. 11 (uu) (5) (A) (2010).
113. C. F. R. § 1010. 100 (m) (2011).
114. C. F. R. § 103. 11 (uu) (5) (B) (ii) (2010).
115. C. F. R. § 1010. 100 (ff) (5) (ii) (F) (2011).
116. see also 31 C. F. R. § 1022. 200 (2012).
117. 31 U. S. C. § 5330 (a) (2006);
118. C. F. R. § 1022. 380 (a) (2011).
119. U. S. C. § 1960 (2006).
120. See, e.g., United States v. E-Gold, Ltd., 550 F. Supp. 2d 82 (D. D. C. 2008) (digital currency provider was a "money transmitting business", because the definition was not limited to only businesses that engaged in actual cash transmissions).
121. 31 U. S. C. §5311.
122. C. F. R. § 1022. 210 (2011).
123. 31 U. S. C. §5318 (l);
124. See 17 U. S. C. § 1201 (a) - (b) (2006).
125. Jay P. Kesan & Rajiv C. Shah, Shaping Code, 18 HARV. J. L. & TECH. 319, 328 (2005).
126. Sony Corp. of Am. v. Universal City Studios, 464 U. S. 417 (1984).
127. (quoting Columbia Law School Professor Ronald Mann, who intimates that regulators will likely evaluate what Bitcoin is primarily used for when calculating how they should respond). Bitcoin's architecture could escalate such a finding because experts have stated that the most dangerous features of some digital currencies is not their ability to provide anonymity, but the irrevocable nature of their transactions. That is, criminals are less concerned with the traceability of their actions and seem to care more about frustrating the possibility of funds recovery. Ross Anderson, Closing the Phishing Hole - Fraud, Risk, and Nonbanks, CAMBRIDGE UNIV., 1 (Apr. 8, 2007), http://www.cl.cam.ac.uk/~rjal4/Papers/nonbanks.pdf.
128. See, e.g., Namecoin, an alternative domain name system based on Bitcoin's source code. Namecoin - A DNS Alternative Based on Bitcoin, BLUISH CODER (May 12, 2011), http://www.bluishcoder.co.nz/2011/05/12/namecoin-adns-alternative- based-on-bitcoin.html.
129. RIAA v. The People: Five Years Later, ELECTRONIC FRONTIER FOUNDATION (Sept. 2008), https://www.eff.org/wp/riaa-v-people-years-later.
130. BitTorrent is a peer-to-peer protocol that allows users to share files with one another without the need for a centralized server. BitTorrent, TECHNOPEDIA, http://www.techopedia.eom/definition/l 865/bittorrent (last visited Nov. 7, 2011).
131. Traditionally, the entertainment industry has looked to ISPs as "chokepoints" through which the dissemination of illegally copied files could be throttled. As would be the case with Bitcoin, this task would be accomplished by the use of port scrutiny or deep packet inspection. A governmental mandate to employ such measures, however, would undoubtedly raise substantial privacy concerns. Lilian Edwards, The Fall and Rise of Intermediary Liability Online, in LAW AND THE INTERNET, supra note 199, at 81;
132. Paul Ohm, The Rise and Fall of Invasive ISP Surveillance, 2009 U. ILL. L. REV. 1417, 1492, 1468 (2009).