Is Bitcoin Money?: Implications for Bitcoin Derivatives Regulation and Security Interest Treatment of Bitcoins Under Article 9 of the Uniform Commercial Code

Abstract

This paper explores legal and economic issues related to a fascinating new technology called the blockchain protocol. The most popular and important blockchain commodity is currently bitcoin (Part I). Bitcoin is intuitively understood as a “virtual currency.” However, it is possible that bitcoin fails to meet an economist’s definition of money (Part II). In Part III, I survey the academic literature and conduct an empirical study of my own that compares bitcoin prices and other assets from July 12, 2013 until December 16, 2014. Ultimately, I conclude that bitcoin is not money and does not behave like money. Later, I analyze two potential legal questions connected to the question of whether bitcoin is money: how will bitcoin derivatives be regulated? (Part IV), and whether transferred bitcoins are free of security interests under Article 9 of the Uniform Commercial Code (Part V).