How Bitcoin is a New Form of Property (5 Minute Read)

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. 

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.

Like other properties, 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.

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. You can retrieve it for spending wherever you are, whenever you want.

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 home, you could also keep spare copies of them elsewhere. Retrieving those keys from any of those places, even if your house burns down, allows you 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.

Finally, as a result of how Bitcoins come into existence, the number of Bitcoins in circu­la­tion is perfectly knowable at any point in time. 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.  

When combined with these other features, Bitcoin’s scarcity and easy verifi­a­bility make 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 the property you consume but the property you exchange for other property you intend to use in some fashion.

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 remain, they can never 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, they 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.

Some firms 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.

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.