Bench & Bar

SEP 2018

The Bench & Bar magazine is published to provide members of the KBA with information that will increase their knowledge of the law, improve the practice of law, and assist in improving the quality of legal services for the citizenry.

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| SEPTEMBER/OCTOBER 2018 8 Bitcoin is growing in popularity and usage and has already made at least one appearance in Kentucky 1 state court. In May 2017, Bitcoin reached a new all-time high at a price of over $1,800 per Bitcoin. In June, it was traded at nearly $3,000. is "cryptocurrency" made international news when computer hackers seized control of hundreds of thousands of computers across the globe and demanded a ransom consisting not of cash, but of Bit- coin. Bitcoin (and cryptocurrencies like it) are undoubtedly the chosen medium of exchange for hackers and online "dark web" contraband. It is also the favorite pet of finance geeks and computer nerds the world over. In December, 2017, Bitcoin became a household name as even moderately-savvy investors were drawn to it as the price sky- rocketed to nearly $20,000. While Bitcoin's market value far exceeded that of an ounce of gold in 2017, Bitcoin's longterm usefulness is less clear than gold's. e usefulness of gold will undoubtedly be familiar to readers. However, the usefulness or value of Bitcoin is probably unclear to most. As Bitcoin grows in popularity and becomes more common, it is important for Kentucky lawyers to be aware of this digital form of money and how it may affect your practice areas. According to the Internal Revenue Service (IRS), Bitcoin is property. According to the Commodity Futures Trad- ing Commission (CF TC), Bitcoin is also a commodity. 2 According to its users, Bitcoin is money or, at least, a store of value like gold. Because of how Bitcoin and other cryp- tocurrencies are commonly used, it is perhaps easiest for the uninitiated to think of Bitcoin as money. Instead of paper notes or metallic coins, Bitcoin is entirely digital—truly a "virtual currency." However, Bitcoin does not enjoy legal tender status in any jurisdiction. Unlike other currencies like U.S. dollars, Bitcoin is not cur- rently regulated, sponsored, or controlled by any government or central bank. Instead, it is controlled essentially by its users. Unlike traditional fiat currencies like U.S. dollars, there is a finite number of Bitcoins that will ever exist. e total number of Bitcoins in existence is set to increase slowly based on pre-set parameters but is set at a maximum of just 21 mil- lion Bitcoins. To compare, there are currently $1.63 trillion U.S. dollars in circulation. 3 Ideally, this means Bitcoins are not subject to currency manipulation, "quantitative easing," inflation, or deflation like our modern dollars or other major world currencies. W H A T I S B I T C O I N ? Features: CRYPTOCURRENCY Bitcoin B Y : R . M O R G A N S A L I S B U R Y f o r K e n t u c k y L a w y e r s : A P r i m e r

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