I just finished listening to a podcast featuring Stephan Kinsella. He basically reiterated his argument concluding that bitcoin is information, and therefore it cannot be owned. The following thought experiment occurred to me:
Say I use a telescope to watch you type your password into your bitcoin wallet. I then use that password to transfer the entire balance from your wallet to someone else. You later come into possession of a video showing me doing this, and network logs corroborating that I am the one who transferred your bitcoin to someone else. When you confront me, I admit that I am the one who executed this transaction. If you take this dispute to a fair arbitrator, and none of the facts are in dispute, will the arbitrator decide that I have taken nothing from you and owe you no restitution?
Are bitcoins scarce/rivalrous? I can’t double spend the same bitcoin. If I have one bitcoin associated with a specific private key, I can’t use the same private key to transfer one bitcoin to each of several different new “owners”/controllers/private keys. If I attempt this, and the bitcoin mining network behaves as designed, only one of these transactions will be completed. I can make as many copies of my key, of my wallet or of the ledger as I like, but the use of the key and the ledger to transfer that amount can only happen once. The architecture of the software and the network (we hope) prevents double spending. It creates artificial scarcity.
So is it scarcity that enables ownership, or physicality? Something else?
Because of the way the bitcoin network is designed to protect identity, it does not include a way to prove or establish title except to demonstrate that one has knowledge of the private key associated with a ledger entry. But that is no different from demonstrating possession. There is no separate means to demonstrate justified possession, that is not a concept implemented by this system. Bottom line is, it would be very unusual and difficult to find convincing evidence regarding who actually carried out a transaction with a particular private key. It could’ve been the “rightful owner“, the person the owner is accusing of theft, or anyone else, the bitcoin network doesn’t know or care. Ordinarily, the person who received stolen goods could provide evidence regarding the identity of the source, but not in the case of a bitcoin transaction.
Ownership is a social layer built on top of possession that distinguishes between justified and unjustified possession. While bitcoin eliminates much of the paper trail that helps establish ownership for ordinary items, its status as artificially scarce makes it capable of being owned. In this odd case, however, most potential owners of bitcoin prefer simply to possess it anonymously. While we could probably create a variant of bitcoin that allowed possessors to establish title to their bitcoin, or perhaps could use some separate mechanism to allow owners to establish and transfer title to their bitcoin, that would defeat the purpose. The transparency required would undermine the anonymity that gives bitcoin much of its appeal.
So, perhaps we could own bitcoin, but we don’t want to.
