I came across this paper because conza posted this on X:
I fit the description: I have been opining that the CAT constitutes theft or confiscation (#1321462) and I had not read the suggested work.
Therefore I spent some time yesterday reading it.
The paper is very well-grounded in theory, I am not.The paper is very well-grounded in theory, I am not.
The most important point of the paper, to my simple mind, is this:
Which is extended to:
I'm pretty happy with this conclusion: it doesn't matter who owns bitcoin. It matters who has the keys. This has been famously summarized as: not your keys, not your coins.
Theory strikes againTheory strikes again
Unfortunately, Graf does not feel that the matter can be allowed to rest as this level and presents the following perhaps:
Perhaps what we have defined as physics-measurability, which brings together property classes based on materiality, measurable location, and electromagnetic spectrum, does indeed after all need to be among the criteria for legal ownability...That said, the active Bitcoin network can e described in physics-measurable terms as a specific set of interconnected computers (and their linking infrastructures) running the Bitcoin protocol...Nevertheless, as noted, bitcoin traders deal in bitcoin units themselves and do not seek shares in a Bitcoin cooperative. From an action-theory point of view, the units traded are the primary goods to be considered and these units as such lack physics-measurable properties.
It seems to me that these last few paragraphs of the paper can be taken to mean: perhaps bitcoins are not ownable.
The point of Bitcoin is that it can break the lawThe point of Bitcoin is that it can break the law
As I said, I have a simple mind, so it is likely that I do not understand the philosophical approach here. It seems to me far more concerned with laws and state-enforcement than with Bitcoin. To me, Bitcoin is completely orthogonal to any legal system so far created. It is a software program designed to let humans cooperate without recourse to or being subject to traditional laws. As such, I find no use in the theoretical speculation of how laws apply to Bitcoin.
Graf says this earlier in the paper:
I think this pretty much nails it. Any system that can be affected by questions of ownership as opposed to possession is not Bitcoin, and attempts to introduce such affects are attempts to break Bitcoin just as much as attempts to reverse transactions that are part of the heaviest chain or arbitrarily revoke possession of UTXOs or limit the ability of previously valid transactions to be included in valid blocks are contrary to Bitcoin.
Is cash ownable?
I think my best answer is that it is owned by the issuer. Although, other real bearer assets like gold coins seem like they are owned by their possessors. Of course, the jurisdiction in which one lives may disagree and then you only own them as much as you can hide them.
This was something that I found frustrating with this paper: If someone stole my bitcoin I'd use every tool at my disposal to get it back, including whatever legal system seemed expedient. But also I wouldn't be very hopeful. Because all bitcoin sees is if you can make a valid signature.
And even further, it seems like the Bitcoin network is the best system humans have thus far discovered for protecting the abilities of a person who can make such a valid signature.
So, unlike gold coins or cash, bitcoin is optimized for giving power to the possessor.
I don't think legal ownership has much to do with it (though the state may disagree and may choose to use all manner of violence to demonstrate it).
Oh this is good, hadn't thought of that.
No, but neither cash - or bearer bonds - have any intrinsic title carrying mechanism, and I think that is why people like these and why people like Bitcoin. But in the latter case it is a feature, not bug. I feel (somewhat strongly but I try not getting emotional, lol) that the paper is a bit of a set-up, and can/will be abused as a call for KYC.
I know Bitcoiners from way back that went full-on "solarpunk" [1] and started championing total on-chain KYC - it's very hard for me to argue with them because they construct narratives with papers like this "backing up" their case that it's all for the best to embrace the overlords. "How else are you going to get your coin back bro?"
Now, say I steal your cash. The burden of proof that I stole your cash is on you. You also don't have the luxury of bank accounts in that case. How do you prove that you had the cash (answer: receipts) and how do you prove that I stole it (answer: through external evidence such as cameras, my whereabouts, and so on)? Nothing changes with Bitcoin except that my defense lawyer will try all the tricks to make the courts doubt that you ever owned it, but there is ample precedent because people have been convicted of stealing Bitcoin. If you cannot own Bitcoin, then all the convictions of crooks will have to be reversed.
The chain is agnostic to legal systems, but this isn't mutual.
You said your partner was into that so I will now pitch you this from Rose O'Leary (but we really need to pull this back into Bitcoin some day - there's a case to be made and there are plenty of high-powered Bitcoiners that would subscribe to this if it weren't narrated as cRyPtO.) ↩
Ownership’s purpose is to unambiguously determine who has the right to use a particular rivalrous resource.
Digital things are often considered not ownable because they are not rivalrous.
Since bitcoin is rivalrous, it seems that we should think of it in ownership terms.
I don't have the background in this kind of theory to make a cohesive argument (nor do I really think it's useful), but I believe the point of the paper is that even though bitcoins have the qualities of rivalrous goods, the fact that they lack "physics-measurability" creates so many qualifications and limitations to how ownership works in the case of bitcoin that we might as well say ownership doesn't matter.
I've replied to Conza with this post, so hopefully either Conza or Graf will be kind enough to write something up here and explain the concepts more authoritatively.
Physics-measurability is not the relevant criteria of property rights. The purpose of property rights is to allow for peaceful dispute resolution so we need to know, or be able to assess, who the rightful user is of each rivalrous good.
I think that Graf uses some examples to flesh out the reason he thinks physics-measurability is relevant:
1. brain wallet theft Imagine a scenario where I create a brain wallet with insufficient entropy (I just really wanted to use a quote from my favorite book...) and someone steal the bitcoin I send to this wallet. On the one hand, it is theft. They were my bitcoin and someone took them. On the other hand I didn't secure them very well. In the case of a house or real estate, if I don't put a fence up around my property and someone comes to try to live in on it, I mostly have the right to tell them to leave, because I own the property even if I don't protect it with a fence (I'm probably getting a bit of this wrong, not being a lawyer). So what is the difference between bitcoin secured with low entropy and a lot without a fence?
I have changed Graf's example a bit, and I believe he does a better job of setting it up (except it takes him 3 or 4 chapters of groundwork). But I think I'm close to the spirit of it.
From a legal standpoint, I’m not aware of any arguments that require particular levels of security. All that matters is whether you obtained the property legitimately (homesteading or voluntary transfer).
We know how homesteading works (mining), so that shouldn’t matter. If you check in on a low entropy wallet and find money there, you know those weren’t intended for you. Is that more like finding loose cash on the street (abandoned) or seeing loose cash in someone’s unlocked car (not abandoned)?
An interesting case could be where multiple people independently use the same seed phrase and are not aware that they are not the intended recipient of a transfer.
Ah, but mostly the way Bitcoin works is that if you screw up when you send coins somewhere (either to a low entropy address or the wrong address) there ain't much you can do to get 'em back.
I think Graf is saying that for Bitcoin the distinction between cash abandoned on the street and cash left in an unlocked car is non-existent -- and that there are many such cases -- which leads him to say that there's something different about ownership when it comes to bitcoin. Maybe even it isn't possible.
Difficulty of recovery doesn’t matter in principle.
The issue is that the only evidence of ownership is knowing the seed phrase but multiple people can know it and you can’t make anyone stop knowing it.
Ok, so I’m realizing that homesteading of wallets is where the conceptual thorns are. I’ll need to read the arguments more thoroughly for myself.
Something something 9/10 of the law...
I haven't read the full post yet, but I will say, before I do so, that this reminds me of the conversation I just had with my realtor about how property is never truly owned because we lease it from the government.
At first, I thought the question is just navel gazing, but it might be more important than I immediately perceived.
Because your conclusion, "Any system that can be affected by questions of ownership as opposed to possession is not Bitcoin", seems to presuppose a strong philosophical concepts of possession as well.
For example, if one day miners and nodes stop relaying or mining certain transactions, can't you say that the holder of the private key still "possesses" the UTXO, they can just no longer spend it? Your concept of possession seems to import a notion of useability that puts requirements upon people other than the possessor (you impose requirements on the miners and the nodes).
If all miners and all nodes quite bitcoin today, a person could buy themselves an ASIC or two (hopefully at a steep discount due to the recent events) and begin to mine blocks. They could move spend their bitcoin when they mine a block. (Although spending at this time would equal sending to another address that they control or burning the coins).
I'm sure there's some philosophical exercises to be had here, but I'm not too interested in them.
Bitcoin is a permissionless system. Therefore it cannot rely on other people doing anything. When Satoshi mined the first few blocks, he was using bitcoin and possessing it, even though no one else was on the network.
https://twiiit.com/Conza/status/2001110156306997748