How Bitcoin is a New Form of Property (5 minute read)

What is Property, and What is Ownership?

Some things are property — like real estate, televi­sions, cars, sandwiches, and chairs.

Some things aren’t — like the weather, the English language, math, and the planet Jupiter.

Property can be owned, and to own something means to be able to deter­mine how it is used, consumed or disposed of. 

Enforcement of Property Ownership

Gener­ally speaking, owner­ship of property is something that is enforced, either through force or the threat of it. A televi­sion is yours because anyone who attempts to use it without your permis­sion will be forced to surrender their use of it by law enforce­ment agencies.  They are discour­aged from stealing your tv because of the threat that they will be forced to return it and punished for having taken it.

We have laws that prescribe how you come to own property, and how the govern­ment will enforce your owner­ship of it. 

Some forms of property, like houses and cars, come with built-in technolo­gies to make it hard for people to try to take them from you in the first place, like keys and locks. But in the end, you must rely on the authority and force of law enforce­ment to protect your owner­ship. And you must rely on the justice system to protect your property rights if they are violated.

Bitcoin Ownership is Unique

1. Unseizable Property

Like other property, bitcoin is something whose use can only be deter­mined by its owner. But bitcoin has a unique feature that no prior form of property has ever had. Your owner­ship of bitcoin does not rely on local laws or law enforce­ment agencies. Bitcoin has built-in technology that makes it impos­sible for anyone to take it from you by force – even law enforce­ment agencies cannot seize it.  Bitcoin is the first unseiz­able property in history – unseiz­able by law-breakers or by law enforcers.

2. Perfectly Portable Property

Bitcoin is global: it can be used as property anywhere on Earth. Even where there is no law enforce­ment, or where govern­ments themselves violate property owner­ship, bitcoin can be owned as property with its use solely decided upon by its rightful owner. 

This means that bitcoin is not just unseiz­able, but completely portable. You can send it to anyone in the world, and you can take it with you anywhere in the world. You can go anywhere and cross any border without having to ‘carry’ your bitcoin with you, and you can retrieve it for spending wherever you are, whenever you want.

3. Indestructible Property

Bitcoin is also property that can be backed up and kept in multiple places. Unlike your house, which will be gone if a fire burns it down, if you kept your keys for your bitcoin in your house, you could also keep spare copies of them elsewhere.  Retrieving those keys from any of those places, even if your house burns down, gives you the ability to spend those coins. 
Bitcoins are essen­tially indestruc­tible property. This is because all the bitcoins themselves exist in tens of thousands of locations all over the world, but the right to spend them is granted only to a person in posses­sion of the keys.

4. Perfectly Scarce and Easily Authenticatable Property

Finally, as a result of how bitcoins come into existence, the number of bitcoins in circu­la­tion is perfectly knowable at any point in time, and it is also certain that there will never be more than 21 million bitcoins – the supply is knowably, certainly, provably scarce. 

Also, the authen­ticity of bitcoins is easy to deter­mine. You cannot pass off fake bitcoins, unlike a fake bill or coin, without easily, and automat­i­cally, being caught in the attempt to pass it off. 

While there are other purely scarce things, and even those that are one-of-a-kind, those things are not indestruc­tible, unseize­able, easily verified for authen­ticity, or perfectly portable.  

5. Property that is Ideal as Money

Bitcoin’s scarcity and easy verifi­a­bility, when combined with these other features makes it a type of property very well suited to be used as money. 

Bitcoin is perfect for exchanging for other things. And money, after all, is not property you consume, but property you exchange for other property that you intend to use in some fashion.

6. Responsibilities of Owning Bitcoin

Now, because of all of the above, owning this unique form of property comes with two special responsibilities. 

First, an owner of bitcoins must not lose their keys. If keys are lost, while the bitcoins themselves remain, they cannot ever be spent. No govern­ment or law enforce­ment agency can inter­vene to help. Lost keys cannot be recreated.

Second, an owner of bitcoins must not let anyone else make a copy of the keys needed to spend their coins. If someone gets your keys then they own your coins and they can spend them. Once spent, coins cannot be unspent. There are no take-backs in Bitcoin. Bitcoin trans­ac­tions are irreversible.  

It is possible to hire a company to look after your bitcoins for you. Many people do. But, if someone else is holding your bitcoins for you, it is they who really own the bitcoins according to Bitcoin’s unique rules. What you own in that case is a legal contract with that company — a contract enforce­able by the law enforce­ment system of the juris­dic­tion in which they operate. This then, as far as you’re concerned, is like all other forms of property owner­ship and you don’t benefit from nor do you take on the respon­si­bil­i­ties unique to bitcoin as property. 

Holding bitcoin directly is a trust­less form of property owner­ship, but it comes with respon­si­bility.

There are also firms that make ‘partial’ custody avail­able where under certain condi­tions they can produce one or several keys neces­sary to aid in moving your coins or all the neces­sary keys neces­sary to move your coins in case you pass away and want your heirs to be given the keys.

Conclusion

Bitcoin is property, but it has unique, powerful and respon­si­bility-requiring charac­ter­is­tics that no other form of property on Earth has. 

Use it wisely. 

Enjoy it responsibly.