Much of the discussion of bitcoin in the popular press has concentrated on its status as a currency. Putting aside a vocal minority of radical libertarians and anarchists, however, most bitcoin enthusiasts are concentrating on how its underlying technology – the blockchain – can be used for a wide variety of uses including a more efficient payment system that would eliminate or minimize the roles of third-party intermediaries and a secure and transparent platform for trading securities. Unfortunately, unless it is amended, the Uniform Commercial Code (the “U.C.C.”) may keep bitcoin from reaching its full potential as a payment system because it cannot be made to fit within the U.C.C.’s definition of “money”. This means that it cannot be transferred to a bonafide purchaser for value free of adverse claims. In contrast, surprisingly, the U.C.C. as currently in effect can accommodate the development of cryptosecurities that would be issued and traded on a blockchain because they would fall within the definition of “uncertificated securities”. Ironically, cryptosecurities could invigorate a rarely used statutory schema that was created to solve a completely different problem.
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