Bitcoin appears in the headlines on a regular basis, but few of us actually know what it is. (This video is a great primer if you have 15 minutes to spare.)
In fact, even the people who purport to understand Bitcoin are at odds over some pretty basic qualities of the so-called digital currency. Perhaps most notably, they can’t agree on whether or not it is in fact…money.
This is one of the central questions being debated in a Florida money laundering case involving Bitcoin—because if Bitcoin is not money, well, it can’t be used for money laundering.
The case involves a man charged with illegally selling $1,500 worth of Bitcoin to undercover police, who told him they would use the currency to buy stolen credit card data, according to the Miami Herald.
But in the eyes of Miami-Dade Circuit Judge Teresa Mary Pooler, Bitcoin fails the standard of what “money” is, having no “tangible wealth,” making it just a case of one guy selling stuff to another guy.
Other parts of the government would like the IRS to see Bitcoin and other virtual currencies as property that can be bartered, not as currency, and Pooler’s court seems to take that side of the case. She wrote in an order that “even to someone with limited knowledge in the area, the Bitcoin has a long way to go before it is the equivalent of money,” the Herald reports.
Explaining her reasoning, Judge Pooler further notes that no central bank backs Bitcoin; that it’s not legal tender anywhere; and that its value fluctuates dramatically. One defense witness, an expert in virtual currency, equated it to a “poker chip.”
The anonymity of using Bitcoin, payments of which can’t easily be traced back to a source, has made it a currency of choice for black markets like the notorious Silk Road. That association, plus a handful of high-profile crashes in the value of Bitcoin, have generally kept the currency out of the hands of mainstream consumers and investors.
According to the Herald, the Florida case is being closely watched “in tech, financial and legal circles” because it is thought to be the first money laundering prosecution involving Bitcoin.