 Feel a little bit like Madonna at a concert with this gear on, but that's that's okay So Godwin's law says that in a political discussion eventually Hitler or the Nazis will come up and that happened really quickly today didn't it just now It seems to happen also with Bitcoin and any conversation Bitcoin comes up we can maybe call this Satoshi's law So congratulations to Hans for having the first official PFS talk on a Bitcoin related topic This is my second talk on Bitcoin and the first was in 2013 In Atlanta at the cryptocurrency conference on legal tender law. I'm not really an expert on Bitcoin There's lots of people in the room that are far more experts than I am on the technology and even the economics and the finance of Bitcoin And so today I'm talking about property rights issues Related to this idea So I was gonna start this talk by saying Raise your hand if you own Bitcoin, but I decided against that because I don't want to expose anyone to any prying eyes and It's a trick question because you I would say the talk is titled nobody owns Bitcoin. So you're wrong You don't own Bitcoin But I'm not that mean today, so I won't do that So in a way, I'll go ahead and not hide the ball. The answer is nobody owns Bitcoin. You can't be owned The interesting question is why one short answer is it's very simple people only own their own resources and Therefore no one owns Information it's very simple. That's the answer end of the talk I mean if you understand the case against intellectual property, this should be obvious, right? Except even the case against intellectual property is not obvious to everyone It takes a while to grasp it. It's very difficult for some people. Although once you grasp it, it seems very simple Hans my professor Hoppe made the same a similar argument in his talk in 2016 here where he elaborated on his Argumentation ethics and he pointed out that once he figured it out. He wondered why no one had thought of it But once you figure it out, it is deceptively simple But it's path breaking nonetheless and Hans pointed out something similar About Mises' argument against the possibility of economic calculation under socialism The argument seems very simple once you hear it, but it took Mises to discover it So what's really the fuss about why would we even argue about this and the reason is because in Bitcoin circles and outside Bitcoin People talk about it in certain ways. They say that I own certain bitcoins They talk about the possibility of Bitcoin being stolen or Bitcoin theft and sometimes I say well, I thought about it and Technically you don't own your Bitcoin and you can't really steal Bitcoin and This makes some Bitcoiners angry. It's you know sort of like praising Hillary Clinton in front of a bunch of libertarians or something They think I'm criticizing Bitcoin and you can't criticize Bitcoin around Bitcoiners because nothing Nothing sets them back. If you point out the government might confiscate it. It's not a problem. I mean Bitcoiners are eternally optimistic, right? Anyway, it's not a criticism. It's just a legal analysis. It's not ownable. Lots of things aren't ownable in life Love knowledge relationships and that's not a criticism of those things existing or being valuable in life or playing a role in our life So why does it matter whether we own Bitcoin and how to describe this phenomenon? Well for one thing the state thinks it matters various states around the world are noticing this phenomenon and they're coming up with different tax rules sometimes classifying it as property sometimes in other ways Basically to steal it so I come sometimes caution Bitcoiners quit trying to argue that it's like gold or commodity Or ownable because you might get what you wish for and you might not like the results Let's let's maybe keep the waters a little muddy for the state But why would people disagree about this issue why would there be confusion? One reason is because the state over the centuries, especially in recent times has gradually intruded into law with with democratic law making as Professor Hoppe calls it, which is legislation the state and The other is just conceptual confusion because law is developing over the centuries and not everyone's an expert and experts sometimes disagree And this derives in large part from imprecision and language and their overuse or the misuse of analogies and metaphors Now many Austrian thinkers have and other thinkers have cautioned against the misuse or overuse of metaphors metaphors are really impossible to avoid The imprecision of language is impossible to avoid, but we have to be cautious of it Bombavirk in 1881 Himself said it's basically impossible to avoid the use of metaphors If we could it would be an absurd undertaking to banish from the language of economic theory every manner of speaking That is not literally correct. We couldn't say the one hundredth part of what we have to say if we refuse to take recourse to a metaphor But one requirement is essential that economic theory avoid the error of confusing a practical habit Which we indulge in for the sake of expediency with scientific truth So he's saying we do we have to use metaphors, but we have to be careful Many other thinkers of an ironically Roderick Long a libertarian philosopher pointed out that Ironically in his memoirs Mises accused Bombavirk himself in their dispute over Kention effects of being led astray by the idea of friction and other metaphors borrowed from the physical sciences so even Bombavirk fell prey to this and Professor Rothbard and Guido Hilseman They've also pointed out the dangers of overuse of metaphors in economic and political reasoning a Famous American judge later justice on the Supreme Court Cardozo in 1926 said Metaphors in law are to be narrowly watched for they start out as devices to liberate thought but they often end up enslaving it And there's other imprecisions in language We have to be wary of like as Robert Lefebvre a famous classical libertarian Pointed out when we use possessives in language like my wife. It doesn't mean I own my wife. It's just a possessive, but people Well, that's in a libertarian society anyway So people use this idea my labor It's my labor. I own my labor therefore intellectual property So you see how these ideas lead to confusion another example would be speaking of labor David Hume himself criticized John Locke's overly metaphorical or as Hume called it figurative idea that labor is Joined to or mixed with objects and which was part of his argument for homesteading and even Israel courage or the Austrian economist approvingly cites scholar JP day Who says that? laboring is an activity and although activities can be engaged in or performed or done. They can't be owned So we often say it's my labor. I own it, but Technically speaking you can't own labor So with this in mind, what is what would it mean to own a Bitcoin? Why do people say that? So there's just two parts to this proposition. I own Bitcoin Ownership and Bitcoin so very quickly as I said, I'm not a technical expert and Hans cautioned me not to overwhelm anyone with Too much technical knowledge about Bitcoin. I'm not an expert, but I do have a t-shirt, you know Which I do own it's a real thing So Bitcoin is basically a distributed ledger that tracks private public-key cryptographic pairs with entries in this ledger which Correspond to one of up to 21 million bitcoins and there will only be 21 million ever created in the Bitcoin system in About 120 years, I think we're about 18 now. So it's a very slow growth It's this slide what we're looking at now is being displayed from a file, which is on this computer It's on one memory device Bitcoin is distributed meaning there are about 10,000 or more copies of this ledger on Different people's computers called nodes around the world and it's updated every 10 minutes as new bitcoins are created and transferred So basically it's a ledger, which is just information. So that's what's important to know that Bitcoin is just an entry of Bitcoin as an entry on this big ledger, which is stored on many people's computers around the world So that's all the technical detail now as to ownership I was a little surprised in the last few years to realize that Mises himself had some extremely perceptive comments about this topic Even even better in his 1922 book socialism where he basically distinguished between two types of ownership In 1922 in socialism, he called it sociological ownership in human actually he called it catalytic Basically, he means practical ownership So he means the ability to use a resource, which is what humans do and he called that catalytic ownership I've got a long quote here, but I won't I won't read through the whole thing As compared to juristic or legal ownership, which is what most people mean by the word ownership or property rights And he links this ownership and property rights are what the laws protect So one is the right of ownership or property rights and the other is the ability to use a resource which he He calls catalytic ownership now And in socialism he even he even said this I will read this part the sociological or economic and Juristic concepts of ownership are different and this is natural and he says one can only be surprised that the fact is still sometimes overlooked owner ownership from the economic point of view is the having of goods Right, which is part of human action. This can be called natural or original ownership And it's a purely physical relationship of man to goods But the legal concept is that it says this is what rights people should have So there's a distinction between description and prescription between The way things are the way things should be so Mises clearly recognizes this and this of course follows from his his view of human action, which was praxeology the logic of human action which Can be summarized as saying the human action is Guided by knowledge now this point is often not emphasized in Austrian writing the it's it's implicitly recognized Some scholars mention it from time to time But usually the focus is on the use of means, but of course all human action is guided by knowledge Right, so human actors guided by knowledge about the way the world works They employ scarce means to make changes in the world to achieve their ends That's what human action is so the two ingredients of human action or the possession and ability to consult knowledge It guides your actions and the ability to control resources To change the way things happen in the world. These are scarce means and that is what Mises would call catalytic ownership Now in my view and in the view of probably mainstream scholars It's better to use the word just possession or power or control Instead of saying catalytic ownership and having to distinguish it every time because this leads to confusion And this is exactly part of the reason why Bitcoin is what would say I own Bitcoin What they really mean is I can control it and it's virtually impossible for someone else to steal it from me because of the cryptographic System that's set up. It's almost impossible for a Bitcoin to be taken without your consent and They by that they mean ownership. They're thinking practically, but we should just say possession or control Now notice that Mises links ownership and property rights and that's because property rights Apply only in society right when we have laws But possession or use of resources would apply to any human actor even outside of society even Crusoe alone on his island How's to employ scarce resources? But he can't own these resources in the legal sense because there's no legal system There's no other people to threaten his use of property now What happens is just as ownership is used to mean practical control or possession when it should be restricted to legal ownership The word property has come to be used widely in society To refer to the resource that is owned and this also leads to confusion. So for someone would say That bicycle is my property or this phone is my property But even mainstream legal scholars when they're thinking precisely and carefully they recognize that Technically speaking the word property ought to be restricted to the right So you have a property right in a resource You have an ownership right in the resource the owner of the resource has the property right in the resource to call the resource itself property Can lead to confusion because then the question starts Arising Well, we'll get to this in a second But the question is is this property or ideas property or bitcoins property, which is never the question, okay? So if we clean up our terminology and our concept concepts It helps us think more clearly about all this and avoid some Equivocation unintentional or intentional mistakes. So better term you would say to be clear. You would say Humans need to possess not catalectically owned. They need to possess and use scarce resources in Society we have laws now the juristic laws that protect their property rights in these resources That means their owners are these resources Okay, so you possess a resource that you need to employ as part of human action But in society you might have an ownership or a property right and you're the owner Okay, so it's better to do this than to call an object property itself Okay Now how are these property rights? Determined substantively in a free society in a private law society and roughly in the private law Systems of the Roman law and the common law Except for state intrusions the rules were very simple And this is what how you can state the essence of the libertarian rules of how property rights would be developed number one self ownership in The case of your body, which is also a misleading metaphor is better to say better to say body ownership Because the self is a nebulous term But basically if there's a dispute over who owns someone's body the libertarian default answer is Person himself owns it very simple can't justify these rules right now Professor Hoppe has already done this But that's the rule and then in the case of every other resource in the world These are the scarce means of action that these are things that were previously unowned And this is what distinguishes all other resources from people's bodies people's bodies were not previously unowned and Therefore are not technically homesteaded in my view. That's why the rule is separate It's just there's direct ownership of your body because of your Special connection to it, but in the case of external resources, there are three rules One is original appropriation sometimes called homesteading which means the first user has a better claim than other people And then there's contractual transfer, which means the owner of that resource Consensually transfers it to someone else by a sale or a gift or a bequest and an inheritance And then you could think of a third rule rectification or restitution if you commit a tort against someone you might owe them some Recompense by giving them some of your money or your property to make them whole But other than these three or four simple rules There are no other rules that you need to consult to determine the owner of any resource when there's a dispute now knowledge itself can't be owned Because knowledge is not a scarce resource. That's part of human action But so why I went through the I emphasize knowledge is what guides human action and knowledge or information Does it's not an independently existing thing. It's always a patterning of a thing so this piece of paper you could say it has information on it, but The information couldn't exist without being on the paper. It can't just be free-floating It's always the impatterning of a thing and that thing is always a scarce resource that someone can own So information is always just a characteristic or a feature of a thing that is already owned by someone Okay, so basically media things that information can be stored on or Themselves physical scarce resources which already have an owner according to the private law rules that I've already discussed So you have to realize then according to the scheme a Person owns a resource, but you don't own its characteristics or features So there's a tendency for people to double count if I write a book people think I own the book But it's not just the the pieces of paper that I printed it on or the notebook that I wrote it in the first time Or the computer hard drive that I stored it on when I typed it It's also the pattern of it But the pattern can't be separated from the underlying medium because it has to be stored on something So if you if you say I own this pattern of information and I own the paper it's double counting and What that leads to is the idea that you own a universal you own a feature of your property Which means you own everyone else's resource that has a similar feature. So for example, if I own a red bicycle And you say because I own a red bicycle I own its color or it's its age or its weight Then you would own every other object in the world or ever the bicycle that's red or that has the same age Obviously, that's absurd that would in turn property on its head and would give people ownership over other people's resources So the the characteristics of an object define what it is, but the ownership rights are in the object itself I've got enough time for an hour and a half of talk so I have some extra slides here I'm gonna put this on my website by the way and by the way I did this PowerPoint because I'm always reluctant to do PowerPoints because it's a little bit like an amway salesman dorky, but um Renata lovely Renata told me that half of our audience here is not native English speakers And sometimes even a southerner speak a little bit fast And she said it would help to have a handout so I can see the word you're saying and maybe follow a little bit more so I did the PowerPoint for Renata and this will be on my website when I post This so there's some extra slides here, which I'm gonna skip because of time So as I mentioned earlier What's the real question when there's dispute or debate about what the law should be? the real question is not is This property is X property which is the way a lot of people put it They'll say our ideas property like if you argue about intellectual property They'll say well the dispute is whether ideas are property and you're saying ideas aren't property But I think they are property because it took innovation and labor to create them and I created it and I So they think the dispute is our ideas property and then the question is who's the owner Once you can see that it's property then the question is who's the owner some libertarians like T Boram I can another say well if if I wrote a poem the poem is a thing that exists and I created it and it's ownable The only person that could own it would be me the creator That's the natural answer so they they sort of skip the first question about Whether it's an ownable type of thing in the first place and they do that because they ask or ideas property is this bicycle property That's not the question. The question would be whose bicycle is it our Bitcoin's property is not the right question So the question's always in a context when there's two or more people that have a dispute or a contest over a thing That's the type of thing that you could have a dispute over which is always a scarce means of action a scarce resource a physical material thing That can causally interfere with the world that you use to achieve your ends when there's a dispute about that Then the question is okay. There's a dispute. Who's the owner? You answer the question back insulting the private property rules. There's only four. They're very simple Now I coined a term my view is when any when anyone coins a term they're in danger of being a crank If you're really a genius you might can coin two or three Mises had catalectics and praxeology Hayek had a bunch that are a little bit too many Eric Vogelin had to I mean some of these guys go crazy But then real cranks have a bunch of terms. You can't even understand their stuff So I'm gonna just have one which is conflictable because the word scarcity another slide I probably won't get to but scarcity has another is another word with dual meanings And it confuses people because by scarcity in essence what we mean is what Mises meant When he referred to scarce means of action, right? The things that we have to use in the world because we don't live in a world of super abundance So scarcity for us means the opposite of super abundance super abundance Is this an unimaginable state of the Garden of Eden where we have no wants no dissatisfaction? We would not even act so it's almost an unrealistic hypothetical, but super abundant scarcity to us basically means It means what economists call rivalry or I would say things over which there can be conflict so conflict ability Most people confuse that with more ordinary meaning of scarcity, which means lack of abundance Which just means not enough supply which the laws of supply and demand regulate Now again this conflict arises over the use of a resource that's a scarce resource a physical material thing But never over its characteristics Never over its color or over its weight or its age And this is analogous to one of professor hopper's insights where he's pointed out that property rights are always in the physical integrity Of a resource not in their value. You can't have a physical property right in a value And for similar reasons Characteristics of own resources are not independently owned, which is why information can't be owned Okay, so here's my super abundant stuff, which I'll Let's get all right. So the sum up now So by now the Bitcoin case in my view should be clear bitcoins are just entries in a ledger Okay, the ledger is just information stored on 10,000 private computers around the world a bunch of different hard drives And they're all owned by different people or companies So if I owned a Bitcoin that would mean I own the pattern of information Distorted on other people's computers that would mean I have a property right in their computers But I don't have a property right in their computers. They own their computers And this is analogous to Rothbard's own Proto anti IP argument where he argued against defamation law or reputation rights because he pointed out You can't have a right to your reputation because the reputation is just what other people think about you And that's just information in their brains. And if you own your reputation you own their brains, which is What we would normally call slavery? So we tend to be against that Now there's one answer that point. Maybe I could answer in the Q&A or after It's it's important to note also that the Bitcoin system is because it's pseudonymous And the way it's designed there are no terms of service So you can't make the argument that if I if I steal your Bitcoin And by the way The only way to steal a Bitcoin would be either to trespass into someone's computer or their home and like literally Violate their property rights to get their private key, which is already a crime So you don't need to make a double crime or to guess it and It's impossible to guess it But if you did happen to guess it This is the argument that if you guess someone's private key and you transfer their bitcoins to your account using their the private key that you Luckily guessed that that would be theft because they own the bitcoins and this is based on the argument my argument that no that wouldn't Be theft because that's actually permitted by the rules of the Bitcoin system Okay, so in conclusion while Bitcoin may not be legally ownable in a free society. It can still be useful Just like knowledge can't be owned. It's still useful Nobody owns bitcoins, but you can still use them. Thank you