You can never be sure that someone won’t come after your assets via the blockchain.
When you realize that almost every square inch of the earth (Antarctica excepted) was stolen at some point, and the same applies to most assets in the modern world.
With Bitcoin and its ilk, there is no statute of limitations:
An interesting little observation by Izzy Kaminska over in the FT about a problem that Bitcoin faces. It’s a legal problem that leads to an economic one. And the problem Bitcoin faces is one that is based upon the very existence of the blockchain itself. There’s a good reason that all functioning economic systems have something akin to a market ouvert rule, or something like squatters’ rights. Note that I say something like, not exactly either of those rules. For example, if you find money in the street then you can’t and shouldn’t just keep it. But if you hand it in to the police, no one then claims if for some period of time, then it does become yours. No, you can’t just move into someone elses’ house and insist that it belongs to you. But move in for long enough (the time period varies) and no one complains or does anything and it becomes yours. You don’t get title when you buy stolen goods. But something you bought in good faith, in an open marketplace, does become yours eventually. Even if it had been stolen some point further down the ownership chain.
The reason for these rules, and yes they vary across places and concerning different specific items, is that at some point we’ve got to give up on historic unfairnesses and or illegalities and just get on with the current allocation of scarce resources. We just don’t want to wall off something that may or may not have been stolen in, say, 1820, from being put to use today. We almost certainly would want to make sure that something stolen yesterday was returned to its rightful owner. But at some point between those two dates we’ve got to have a cut off point.
………
And that’s where Bitcoin has the problem, in that very existence of the blockchain:
The first relates to the ongoing legal recourse rights of Bitfinex victims. Even though they may have lost their right to pursue Bitfinex for compensation, they are still going to be entitled to track the funds across the blockchain to seek recourse from whomsoever receives the bitcoins in their accounts. That’s good news for victims, but mostly likely very bad news for bitcoin’s fungible state and thus its status as a medium of exchange.
Just one successful claim by a victim who tracks his funds to an identifiable third party, and the precedent is set. Any exchanges dealing with bitcoin in a legitimate capacity would from then on be inclined to do much stronger due diligence on whether the bitcoins being deposited in their system were connected to ill-gotten gains. This in turn would open the door to the black-listing of funds that can not prove they were originated honestly via legitimate earnings.
Of course, people should not steal things. And yet for a currency to work it has to be possible to take the currency at its face value. Thus it may well be that the bank robber paid you for his beer with stolen money but you got it fair and square and thus the bank doesn’t get it back as and when they find out. Another way to put this is that the crime dies with the criminal. And yet the blockchain upends all of that. Because every transaction which any one bitcoin has been involved in is traceable.
The problem with cyber currencies and the rest of the internet enabled Libertarian-Utopian is that they believe that computer code developed over a few months can somehow trump contract law and record keeping that has been developed over the past 1000+ years.
Ask yourself, what happens if you have a fruit tree with branches that cross a property line. Who owns the fruit on those branches?
It is very complicated.
In some places, the branches, and fruit, belong to the property owner over whose property it extends.
In others, it belongs to the property owner of the location of the trunk, but the owner of the property can prune branches over their yard and dig up roots under the yard.
In some places, it belongs to one person when it on the branch, and another when the fruit falls.
In some places, a landowner can sue for trespass for branches over their yard.
This is just a fruit tree.
Recording property transactions are far more significant, and potentially far more complex, and we saw what happened when the banks decided to create MERS to “streamline” fraud real estate transactions.
I’m an engineer, not a lawyer, dammit, * but is clear to me that the people behind these efforts have only the vaguest idea of how society works, and how long it took to get society works.
*I love it when I get to go all Dr. McCoy!