118 As Judge Mazzant acknowledged, bitcoins are not yet widely used as a medium of exchange. 119 Perhaps bitcoins can be classified as money only in the particular circles that take them as payment and in circumstances such as Shavers’ Ponzi scheme. More importantly, it is not quite clear why bitcoins are a store of value. The economist, Paul Krugman argues that a reliable store of value is a currency that is either backed by a central authority, like the dollar, which is backed by the US Treasury, or has some form of intrinsic value, such as gold being made into jewelry. 120 Krugman has expressed skepticism that a currency that is neither backed by a central authority nor holds intrinsic value will retain its value over time. 121 Bitcoin also does not make interest payments and no investment interest is denominated in Bitcoin at the moment, which also seems to suggest that its role as a store of value is somewhat limited. 122 Furthermore, there are those who have argued that Bitcoin should not be considered a currency. To be a currency, Bitcoin must be a store of value and a means of exchange. 123 Commodities historically backed most currencies (commodity-currency) but now state 118. One could argue that Bitcoin in and of itself does not satisfy the requisite elements for a security classification. See infra notes 133 – 38 and accompanying text. 119. Shavers , 2013 WL 4028182, at *2. 120. Paul Krugman, Op-Ed., Bitcoin Is Evil , N.Y. T IMES (Dec. 28, 2013), . blogs.nytimes.com/2013/12/28/bitcoin-is-evil/?_r=0. 121 . Id.; but see Adrianne Jeffries, Why Don ’ t Economists Like Bitcoin? , T HE V ERGE (Dec. 31, 2013), “ If Bitcoin is successful, it could prove that money doesn ’ t need to function as a stable store of value . . . . Its success could also prove that use as a medium of exchange can be the basis for believing a currency is a store of value. If people believe that they will be able to buy things with Bitcoin and exchange it for other currencies indefinitely, that could convince them to use it as a store of value.” 122. Woo et al., infra note 214, at 8 (“F rom this point of view, as a store of value, its closest cousins are probably precious metals or cash . . . in our view. ” ). 123. John Authers, Time to Take the Bitcoin Bubble Seriously , F IN . T IMES (Dec. 11, 2013), . Washington University Open Scholarship
194 Journal of Law & Policy [Vol. 47:175 governments almost exclusively back currencies (fiat currency). 124 The Supreme Court of the United States has recognized that currency is defined as “ the coin and currency of the United States or of any other country, which circulate in and are customarily used and accepted as money in the country in which issued. ” 125 Opponents of Bitcoin as a currency reason that it is not backed or issued by any government, unlike the US Dollar, which is backed by the US Treasury’s ‘full faith and credit’, and no one is legally required to accept Bitcoin.
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