

Legal difference between bitcoin and MS Points? - dfc

What is the regulatory/legal difference between Bitcoin and Microsoft Points?
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dlikhten
First point is that MS Points or any "points" is something from a company. The
company sold you those points and thus are liable for business ethics and so
on if brought up.

BitCoins are not sold. They are traded and generated. There is nothing
physical backing them up. There are companies facilitating trades, but those
companies neither issue nor value the currency. They only facilitate exchange
of hands. The BitCoin network is what issues coinage, yet the network is an
agreement between all clients, and thus nobody "owns" it and thus nobody is
responsible for the issuing of it.

MS Points/Points sold by companies are backed by a physical entity. MS is
liable for each individual coin. BitCoins are not owned or backed by anyone,
only the changing of hands. Nobody is legally liable for each individual coin.

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dfc
I appreciate your response but I'm not really sure it made anything clearer
for me. It just created four more questions:)

1\. Backed by a physical entity? In this context I always thought backed by a
physical entity meant backed by gold/silver/wampum.

2\. I appreciate the "something from a company" versus p2p however this seems
like a conceptual difference. I am interested in the legal ramifications of
this conceptual difference.

3\. MS points are traded on secondary markets (10th prestige lobby anyone?).

4\. In regards to trading/selling what is the difference between buying a 2000
ms point card on amazon and buying 10 btc on mtgox/tradehill/ruxum/campbx?

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inportb
I suppose bitcoin is supposed to be a currency rather than commodity; so you
would not _buy_ 10 btc, but you'd trade other forms of currency for it, or
buy/sell goods using it. I think it's only a conceptual difference, because
it's all just trade.

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trevoro
The major difference is between scripts which are representative of value and
_not_ traded vs an attempted representation of real, tradable currency.

~~~
dfc
Between "scripts?"

Microsoft points are traded and I still do not understand what the legal
ramifications are if something is or is not "traded." What is your definition
of traded?

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saurik
(o) "Money transmission" means any of the following: (1) Selling or issuing
payment instruments. (2) Selling or issuing stored value. (3) Receiving money
for transmission.

(q) "Payment instrument" means a check, draft, money order, traveler's check,
or other instrument for the transmission or payment of money or monetary
value, whether or not negotiable. The term does not include a credit card
voucher, letter of credit, or any instrument that is redeemable by the issuer
for goods or services provided by the issuer or its affiliate.

(v) "Stored value" means monetary value representing a claim against the
issuer that is stored on an electronic or digital medium and evidenced by an
electronic or digital record, and that is intended and accepted for use as a
means of redemption for money or monetary value or payment for goods or
services. The term does not include a credit card voucher, letter of credit,
or any stored value that is only redeemable by the issuer for goods or
services provided by the issuer or its affiliate, except to the extent
required by applicable law to be redeemable in cash for its cash value.

(n) "Money" means a medium of exchange that is authorized or adopted by the
United States or a foreign government. The term includes a monetary unit of
account established by an intergovernmental organization or by agreement
between two or more governments.

\-- <http://www.dfi.ca.gov/licensees/moneytransmitters/>

In essence, "MS Points" are exempt, because they are "only redeemable by the
issuer for goods or services provided by the issuer or its affiliate".

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dfc
So which one is bitcoin? (I am assuming these definitions relate to a
california legal world only?

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saurik
I believe bitcoin to be a "payment instrument", but I could see an argument
that it doesn't fit intk any of these definitions as it is really designed by
someone as a competitor for "momey", so we would really need to look at laws
for currency exchange or something, but that just underscores that bitcoin is
fundamentally then unlike MS points, which are pretty much a gift card.

Also, definitions similar to this are generally accepted. I happened to know
where in Calofornia's legal code I could go to get a firm definition that
clearly laid out the "gift card" exception, but frankly the answers other
people already have been giving should have been sufficient: I was mearly
providing evidence for "gift cards are normally exempt".

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dfc
FWIW I am aware of:

Grinberg, Reuben, Bitcoin: An Innovative Alternative Digital Currency (April
21, 2011). Available at SSRN: <http://ssrn.com/abstract=1817857>

But I do not think it answers this question very well and I have some other
problems with using it as a creditable reference work on the matter.

~~~
dfc
I would love to know why my comment above was downvoted. A link to a law
review article about bitcoin seems to be pretty apropos to the discussion.

