Federal Court Rules That the Bitcoin Is Money

By:  Bob Adelmann
08/12/2013
       
Federal Court Rules That the Bitcoin Is Money

The federal court ruling that bitcoins are money is just one more step toward full and wide acceptance of the digital currency as an alternative to Federal Reserve Notes and other fiat currencies.

When the Securities and Exchange Commission (SEC) charged Trendon Shavers, the founder of Bitcoin Savings and Trust (BTCST) with running a Ponzi scheme, Shavers challenged the agency by claiming that bitcoins didn't fall under their definition of securities and so therefore he and his company were exempt from SEC rules. Federal Judge Amos Mazzant ruled otherwise, which was bad news for Shavers but good news for bitcoin owners who have been using the digital currency as money ever since it was invented in 2009. Said the court:

It is clear that Bitcoin can be used as money. It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses. The only limitation of Bitcoin is that it is limited to those places that accept it as currency. However, it can also be exchanged for conventional currencies, such as the U.S. dollar, Euro, Yen, and Yuan.

Therefore, Bitcoin is a currency or form of money, and investors wishing to invest in BTCST provided an investment of money.

The development of the so-called cryptocurrency caught the attention of freedom lovers and others increasingly nervous about governmental invasions of privacy into their financial transactions and thought that the bitcoin — traded anonymously on the Internet — would circumvent those incursions. It also was outside the realm of central banks around the world and the present fiat currencies being manipulated by them. It would, when fully developed, provide security, privacy and liquidity.

Its history has been bumpy. The value of a bitcoin was first negotiated through online forums and some transactions were compromised by hackers and thieves. Some investors lost thousands — even hundreds of thousands — of dollars. With the passage of time, however, the glitches began to be worked out, and the bitcoin gained credibility and even prominence. By October 2012, one single bitcoin exchange, BitPay, reported having more than 1,000 merchants accepting bitcoins under its processing service. Another processor announced in February 2013 that it processed more than $20 million in transactions in a single month.

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