Should bitcoin be considered money? It is a question which banks, government, regulators and financial institutions around the world have been grappling with for years, but now the question could finally be answered in a ground-breaking court case, the result of which could have significant impact on the cryptocurrency market all over the world.
Michell Espinoza, a 32-year-old computer programmer, was arrested for attempted money-laundering in 2014 when he sold $1,500 worth of bitcoin to undercover FBI agents who said they were going to use them to buy stolen credit cards. Now in a Florida courtroom, Espinoza and his lawyers are trying to get the charges dismissed on the grounds that bitcoin, under Florida law, should not be defined as actual money.
This is thought to be the first case of its kind and the ruling by Miami-Dade Circuit Judge Teresa Mary Pooler will be watched with great interest not only in the U.S., but around the world. “This is the most fascinating thing I’ve heard in this courtroom in a long time,” Pooler said on Friday. A ruling is not expected for several weeks yet.
On Friday, economics professor Charles Evans gave evidence on behalf of the defense and told the court that in his opinion bitcoin is not money. “Basically, it’s poker chips that people are willing to buy from you,” Evans said, according to a report by the Miami Herald, comparing it to the value collectors assign to comic books or baseball cards.
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Evans is an associate professor of economics and finance at Barry University in Miami who has been involved with digital currencies for more than two decades, stretching back to eGold, which was used as a micropayment system in the mid 1990s.
Evans, who says he is the first expert witness in a U.S. court case to have his fee paid in bitcoin, told the court that because no central bank or government backs bitcoin, regulation around the cryptocurrency remains messy; and the IRS believes bitcoin transactions are akin to barter.
Prosecutor Tom Haggerty argued that because there are numerous places where people can now use bitcoins to pay for products or services — such as shops, restaurants and even cosmetic surgery clinics — it should be considered the same as cash. “You don’t purchase a hamburger with a comic book,” Haggerty said. “You usually purchase it with cash, or in this case, a bitcoin.”
Bitcoin is the world’s most valuable cryptocurrency with a market capitalization of over $70 billion. It was created by an anonymous person or persons known as Satoshi Nakamoto. It is a decentralized and anonymous payment method which allows transactions to happen almost instantly and doesn’t require a third-party to verify those transactions — making it a much cheaper way of sending money around the world.
The reputation of bitcoin has, however, been tarnished with links to criminal activity with the anonymous nature of the currency making it appealing to those seeking to buy and sell drugs, guns and other illegal items. On Friday, as the court was hearing evidence, the cryptocurrency was experiencing a surge in its price, passing the $500 for the first time in almost two years.