Ever since Bitcoin burst onto the economic space, there's been an endless debate about its classification as a currency or property or merely a possession. Some argue it to treat as currency, which doesn't fit well due to the fact that no government can regulate it. Others claim that it is a property, like gold or silver but properties are physical goods, and Bitcoin exists only in the virtual world. So, it leaves us with one option that Bitcoin is as possession, neither a currency nor a property.
To validate the claim that Bitcoin is a possession, not a property or currency, we first need to to understand the underlying fundamentals of these concepts one by one.
Bitcoin as A Currency:
"A currency is an instrument which is used to facilitate transactions between parties. It is a medium of exchange meant to help buyers and sellers to find the right price at which transaction can take place. It is at this price that economics says the market has “cleared.” Clearing is important because it helps to bring transparency and predictability to the marketplace, which in turn strengthens social reciprocity and encourages more transactions. However, when a currency cannot be accurately valued, this clearing mechanism does not work anymore (Weimar hyperinflation being the classic example)", says Dr. Dietmar Peetz.
The key for something to be called as currency is the value attached to it and so far Bitcoin has failed in it. The highly volatile nature of Bitcoin is another point where it becomes irrational as currency. Additionally, there is no evidence that Bitcoin is capable of handling transactions. As with Fiat or printed notes in modern era, faith is bound to them for a fixed value that remains unchanged. While Bitcoin can be serving as a medium of exchange at a few places, it's only due to marketing practices and not for replacing traditional payment gateways such as Visa or MasterCard.
Bitcoin As Property:
Leon Wankum says, "Digital "things” do not exist, they are information. Therefore, one can never own the “thing” itself. While one can be in possession of bitcoin and have complete control over it by being in control of the private key or seed that enables the initiation of bitcoin transactions, one can never own bitcoin".
However there are numerous instances where courts have ruled out that Bitcoin and cryptocurrencies fit into the rules regarding property, these decisions have come because there are no seperate rules regarding virtual assets in most jurisdiction.
In the case of Bitcoin the theory of ownership is a bit complicated as Bitcoin is an intangible asset. Also it may be transferred at anytime without the intervention of law, which is, in fact, a necessary obligation for something to be called as property. This omission of law while transferring Bitcoin invalidates the consideration of Bitcoin a s property.
Bitcoin: A Possession
It's worth noting that lawmakers around the globe have made distinction between a possesion and property. A possesion is defined, albeit legally, as control over something.
In the case of Bitcoin, this implies a bit more as multiple parties can own the same amount at the same time. Suppose you have your digital assets on a centralised exchange, these are your assets yet you can't claim to own them. So you don't own them, but you can control them, sell them, transfer them etc. Hence controlling as mentioned earlier is not ownership, it's possession.
Another way round, put your assets in a cold wallet and say you own your assets. But this is a hypothetical situation, where you own a device and a seed phrase by which you can control or possess your assets. Thus you don't own Bitcoin or any Cryptocurrency, you possess them and evidently control them.
The key difference between possession and property comes down to rights. When you possess something, you have temporary custody and control over it. But when you own property, you have certain rights and privileges that come with it.
With Bitcoin, you have complete control over your digital assets. You can buy, sell, trade or hold onto your coins as you see fit. But Bitcoin lacks some of the rights that come with traditional property. For example:
No Legal Recourse
If someone steals your Bitcoin, you have little legal protection or way to recover your losses. Bitcoin exists outside the traditional legal system, so you can't take someone to court over stolen or scammed coins.
No Physical Form
Bitcoin only exists digitally. There's no physical coin or bill you can hold in your hand. This intangible nature makes Bitcoin seem more like a possession than real property.
Vulnerable to Loss
It's easy to lose Bitcoin through cybertheft, scams, lost keys or forgotten passwords. And once it's gone, your coins are gone for good. This vulnerability contrasts with most traditional property, which is more difficult to lose or destroy.
Overall Bitcoin shares some characteristics with property and currency, it lacks many of the rights and protections we've come to expect. Ultimately, Bitcoin occupies a gray area that's part possession and part property. The laws and regulations around digital assets are still evolving, so Bitcoin's status may change in the coming years. But for now, it's best to treat your Bitcoin as a valuable possession that requires safekeeping.
Overall, Bitcoin possession is a thing for its present situation and considering it as either currency or property probably be possible in future.
As Always Thanks For Reading.
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