Lessons from Case Study of Secured Transactions with Bitcoin

There has been some discussion about the flaws in using secured transactions law, Article 9 of the Uniform Commercial Code (U.C.C.), to govern commercial transactions involving Bitcoins as collateral. Flaws necessitate the urgency of immediately fixing of the existing law. In the case of Bitcoins there is still much to learn about the marketplace for secured transactions with Bitcoins as collateral. The rapid change in technology, the speed of new ideas proposed, the constant announcements of adoption and adaptation of smart contracts in transactions, the volatility in cryptocurrency value, the endless reports of scams, and the rise of dark pools and shadow banking all suggest that we should not touch Article 9 for now. The Article 9 system is adequate to accommodate cryptocurrencies-full of imperfection and uncertainty- at the present time. Haste will yield waste. Instead, we should study the lending market with cryptocurrencies as collateral and observe how law and technology have been utilized in fostering the development in the market. Case study is most appropriate, and lessons can be drawn in monitoring and evaluating whether change in Article 9 law is necessary. This article begins with an observation of the responses from the U.S. Securities and Exchange Commission (SEC), the Chicago Board Options Exchange (CBOE), the Chicago Mercantile Exchange (CME), the U.S. Internal Revenue Service (IRS), and the National Conference of Commissioners on Uniform State Laws (NCCUSL) relating to Bitcoins. These responses together will pave the way for the lending market with Bitcoins as collateral. Part II examines the market for lending with Bitcoin through three different case studies: direct lending, L2B platform, and invoice financing for small and medium sized businesses. Part II will explain how Unchained Capital, Secured Automated Lending Technology (SALT) Lending, and the HIVE Project are conducting their lending business model. Part III then focuses on how lenders have crafted creative solutions rooted in technology to capture the market and address legal concerns. Part IV offers some final thoughts on the current state of law and technology in crypto lending

Collection of Cryptocurrency Customer-Information: Tax Enforcement Mechanism or Invasion of Privacy?

After granting permission to the Internal Revenue Service to serve a digital exchange company a summons for user information, the Federal District Court for the Northern District of California created some uncertainty regarding the privacy of cryptocurrencies. The IRS views this information gathering as necessary for monitoring compliance with Notice 2014-21, which classifies cryptocurrencies as property for tax purposes. Cryptocurrency users, however, view the attempt for information as an infringement on their privacy rights and are seeking legal protection. This Issue Brief investigates the future tax implications of Notice 2014-21 and considers possible routes the cryptocurrency market can take to avoid the burden of capital gains taxes. Further, this Issue Brief attempts to uncover the validity of the privacy claims made against the customer information summons and will recommend alternative actions for the IRS to take regardless of whether it succeeds in obtaining the information

Collection of Cryptocurrency Customer-Information: Tax Enforcement Mechanism or Invasion of Privacy?

After granting permission to the Internal Revenue Service to serve a digital exchange company a summons for user information, the Federal District Court for the Northern District of California created some uncertainty regarding the privacy of cryptocurrencies. The IRS views this information gathering as necessary for monitoring compliance with Notice 2014-21, which classifies cryptocurrencies as property for tax purposes. Cryptocurrency users, however, view the attempt for information as an infringement on their privacy rights and are seeking legal protection. This Issue Brief investigates the future tax implications of Notice 2014-21 and considers possible routes the cryptocurrency market can take to avoid the burden of capital gains taxes. Further, this Issue Brief attempts to uncover the validity of the privacy claims made against the customer information summons and will recommend alternative actions for the IRS to take regardless of whether it succeeds in obtaining the information

COPYRIGHT UNCHAINED: HOW BLOCKCHAIN TECHNOLOGY CAN CHANGE THE ADMINISTRATION AND DISTRIBUTION OF COPYRIGHT PROTECTED WORKS

Blockchain technology is mainly discussed in connection with cryptocurrencies such as Bitcoin. However, blockchain is a multipurpose technology with many other potential applications. This article analyzes how blockchain technology can be used in relation to copyright, especially the administration and distribution of copyright protected works. It also examines the questions and challenges that may arise from such use

Using Blockchain for Digital Card Game

In recent years, the popularity of both online card games and blockchain technology have grown exponentially. While combining these two does not immediately seem like an obvious idea, they in fact complement each other nicely. Blockchain allows for players to actually own their cards, in a way that was unheard of in the digital format just a few years ago. It also gives them the freedom to use them in any way they like, just like in real life. In this thesis we will look into how viable this idea really is. We use the Ethereum virtual machine to simulate a publicly available blockchain that implements this concept and evaluate the results. This thesis should show that further work needs to be done, but that the concept is viable

Tokenized: The Law of Non-Fungible Tokens and Unique Digital Property

Markets for unique digital property--digital equivalents of rare artworks, collectible trading cards, and other assets that gain value from scarcity--have exploded in the past few years. At root is the next iteration of blockchain technology, unique digital assets called non-fungible tokens. Unlike bitcoin, where one coin is the same as another, NFTs are unique, each with different attributes. An NFT that represented ownership of Boardwalk would be quite different from one that represented Baltic Avenue. NFTs have grown from a few early breakout successes to a rapidly developing market for unique digital treasures. The attraction to buyers is that, unlike digital assets like e-books or licensed movies, NFTs can be bought, sold, displayed, gifted, or even destroyed just like personal property. Yet law has not kept pace with demand for unique digital property. In particular, the rules designed for the 2000s internet focused on expanding intellectual property licenses and online contracts to the point that consumers are mere users, not owners, of digital assets. This “end of ownership” legal structure stands in stark contrast to the expectations of those who create, buy, sell, and invest in NFTs. This article proposes a clear path for the evolution of the legal underpinnings of NFTs. It argues that NFTs are personal property, not contracts (despite the “smart contracts” popular nomenclature) or pure intellectual property licenses (despite the currently governing law of digital assets like e-books). Because transactions in NFTs are in the form of a sale, the law of sales of personal property should apply. And finally, the article notes that NFTs will serve as a powerful, grounding example of digital personal property, a legal form of ownership that is both sorely needed and has not yet been clearly established online. That example will ground others, and permit law to again characterize those who buy scarce and valuable digital assets as true owners rather than mere users

CryptoKitties and the new ludic economy : how blockchain introduces value, ownership, and scarcity in digital gaming

This article analyzes specific characteristics of value created through digital scarcity and blockchain-proven ownership in cryptogames. Our object of study is CryptoKitties, the first instance of a blockchain-based game that has garnered media recognition and financial interest. The objective of this article is to demonstrate the limits of scarcity in value construction for owners of CryptoKitties tokens, manifested as breedable virtual cats. Our work extends the trends set out by earlier cryptocurrency studies from the perspective of cultural studies. For the purpose of this article, we rely on open blockchain analytics such as DappRadar and Etherscan, as well as player-created analytics, backed by a one-year-long participant observation period in the said game for research material. Combining theoretical cryptocurrency and Bitcoin studies, open data analysis, and virtual ethnography enables a grounded discussion on blockchain-based game design and play.fi=vertaisarvioitu|en=peerReviewed