By Puneet V. Kakkar*
Virtual Currency in 2018: Existing Laws Adapt to New Technologies
A little over ten years ago, Satoshi Nakamoto mined the first "block" of a blockchain that would operate Bitcoin, a new deregulated virtual currency.1 The operation of Bitcoin was simple yet ground-breaking: Using the technology of cryptography, and the use of a blockchain (or distributed ledger), two parties could transact directly with each other without a third-party intermediary, such as a bank.2 Since that time, over 1,000 virtual currencies have emerged, drawing upon the same general principle of a distributed ledger upon which a community of users (much like the Internet) verifies transactions and balances. Over the past ten years, Bitcoin, and virtual currencies generally, have been used as property (which increases and decreases value), mediums of exchange for goods and services, and transfer of funds between parties. Virtual currency has even allowed people to transact around the world only with the use of a digital device. In May 2013, the market capitalization of Bitcoin was approximately $1.3 billion, with one Bitcoin worth approximately $139. Around five years later, in January 2018, 1 Bitcon exchanged for approximately $14,000 and bore a market capitalization of $229 billion.3 In December 2018, the value of 1 Bitcoin decreased to approximately $3,400, with a market capitalization of $73 billion.4
Overall, 2018 demonstrated that while values for virtual currency can be volatile over time, its place in American society is here to stay. As a result, the role of virtual currency makes its way into lawsuits. Though states and the federal government are beginning to consider how to statutorily regulate the roles of cryptocurrency in everyday lives, government agencies and courts are applying existing law and precedent to address these changing times and technologies and embrace new issues posed by virtual currency.