Bitcoin is the best known, and most widely used in a long line of digital currencies. Its basic premise is that it establish a medium of exchange based on immutable mathematics, thus putting the currency beyond the control or manipulation of any government. Bitcoin and other digital currencies are based on “block chain” technology. Initially, a person’s wealth might have been represented in certain beads or special rocks. Next came smelted copper and eventually gold and silver. Then there was the problem of storage for this wealth inventory. So here came banks and coins minted by governments, followed by the age of paper or fiat money, checks and credit cards.
Today, instead of masses of paper moving through the banking system, all this transfer of wealth—debiting and crediting—takes place electronically. We are already in the digital currency era. You can pay for your coffee at Starbuck’s by holding up your smart phone to the clerk’s card reader. Bitcoin and other digital currencies are based on “block chain” technology. That technology is being studied by major banks for adoption for internal controls. But there are problems. Bitcoin founder “Satoshi Nakamoto’s” introduction to “his” white paper states:
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party. Transactions that are computationally impractical to reverse would protect sellers from fraud… The system is secure as long as honest nodes collectively control more CPU power than any cooperating group of attacker nodes.”
What Nakamoto could not address at the time was Bitcoin’s legal status in the currency and taxation worlds. What exactly is Bitcoin for legal purposes? This is a critical question, because Bitcoin’s legal characterization makes a difference as to whether it is regulated, how it is regulated, and who regulates it.
Martin Mushkin, noted counsel on business litigation and corporate transactions, will discuss this new currency. Mr. Mushkin runs the firm MushikinLaw.com with offices in NY, NY, Stamford, CT and Petaluma, CA. His corporate law practice covers a wide variety of domestic and international organizational, financial, labor related, property rights, and litigation issues. He is a mediator for the U.S. District Court for the Southern District of New York.
Mr. Mushkin received his B.B.A. degree from the University of Wisconsin with a major in accounting, and his J.D. degree from Harvard Law School. He served as a Judge Advocate General officer in the U.S. Air Force before entering civilian practice. He was a Senior Trial Attorney with the Securities and Exchange Commission. He has an A-V rating from Martindale-Hubbell, the oldest and largest attorney rating service in the United States: the highest rating that they award. Mr. Mushkin has been an expeditionary mountaineer, having made four first ascents and a significant second ascent in Alaska. He is a member of the American Alpine Club and a member of the Greenwich Connecticut Town Democratic Committee