The fascination around the Bitcoin and “virtual currencies” how to define?

(Fantastic read – Original in French by Hubert Vauplane) –

Still unknown up until a few years ago, except in the alternative scene, the second decade of this century saw the explosion of the phenomenon of “virtual currencies”. They fascinate as much as they are intriguing. And best known of them, the bitcoin, concentrates all these ambiguities. Of course, the mystery surrounding the creation of Bitcoin, the volatility of its course, the (many) scandals surrounding it, all contribute to this fascination. But the phenomenon is deeper than a media phenomenon.The term already intrigue in itself: “virtual currencies”. The combination of these two words underscores the ambivalence of the concept. Change ? Virtual ?

The virtual, is what is not real . In the scholasticism of the Middle Ages, the virtual qualifies a being or thing having no actual existence (that is to say in the tangible facts), but only a “potential state capable of updating.” It is in this sense that Deleuze hears in his essay on The Act and the virtual [1] . The virtual has no relationship with reality. It is like separate, ontological way. Virtualization is the “out-there” Michel Serres[2] . With the advent of the Internet, the concept of virtual changed. What is virtual is what, without being real, has the qualities of reality, that is to say, is “like” the real. We refer of course to video games and other “virtual world” sometimes even more real than the real. Virtual here remains outside of reality, but is a “reality” clean, full. In this sense, the term “virtual currencies” mean currencies that have no real existence, that is to say not related to the tangible reality, but which exist in an imaginary world. Such is not the case of some of these “virtual currencies”. Some of them are real, in the sense that they interact directly with the tangible world around us: they allow to exchange goods or services against a value, to conduct transactions in the real world perfectly, for example by paying coffee or buying a book when it is not drugs or weapons … this is also the reason why the proponents of these currencies prefer to use the term “electronic coins” , cleaner, according to them, to understand the features of these currencies. These semantic differences are also found in the definitions of tests made by regulators or the courts, highlighting the difficulty of dealing with this phenomenon.

But if not virtual, these “coins” are they just change?

Do they meet the economic definition of money? We know that since Aristotle we attribute three functions of money: unit of account, store of value and medium of exchange. Seen in this light, the “virtual currencies” meet these three functions. And one could find here the debate that has shaken economists for the development of this discipline. One of who currency or exchange came first in the history of humanity [3] . In that the support of the monetary value of trade has long been confused with his physical media: seashell, precious metals like gold or silver, of course, but also coins or notes [4] . But many economists refuse to see these “virtual currencies” of the “real” currencies. And be justified by the own sovereign nature of money: it is and can only be issued by a centralized authority, yesterday the king or the emperor, now the central bank.Basically, the currency is an attribute of sovereignty, supreme authority.But precisely the “virtual currencies” are part of a completely opposite approach, that the refusal of a centralized world of hierarchical power, a vertical organization of society. This is also what made these “coins” have long been advocated by the libertarians or alternative movements. The fundamental characteristic of these “virtual currencies” that is the lack of central organization since they are part of a free and open architecture logic.

It was this characteristic that is often forgotten: the “virtual currencies” are above all a computer protocol based on cryptology. This is the famous ”  blockchain  ” [5] . Hence another term, more correct in designating these currencies, that of “crypto-currency”. If Bitcoin is a currency crypto, the blockchain is a protocol that underpins the functioning of this crypto-currency. This protocol has two major characteristics: it is decentralized (as most protocols, it aims to communication between machines without using a central machine) and consistent. The system is coherent and distributed means that instead of having to consolidate information at a point which is the central authority, all the information is available in each network node. There is no longer need a “big book” Central to validate all information. For example in the case of Bitcoin, all transactions are recorded when confirmed in each network node. It is no longer necessary to have a central authority or the Mint to ensure that there is no fraud or double expenditure (ie use the same bitcoin for two separate transactions). Just check the consistency with all transactions or with the network of the previous node

It is this decentralized, autonomous today worried. Hence the interest of more and more marked policy for these “currencies” in an attempt to measure the impact of their development on the organization of society and of course the consequences on the role of the state.

How to legally define these “virtual currencies”.

They are not first.

Virtual currencies are not legal tender . This is the easiest question.To be defined as such, a currency must have a legal course, be defined as the currency of a territory by a State in its legal order, which means it is “emitted” by an entity (private or public, which is the case most of the time) and finally be liberating, that is to say, allow persons resident in a given territory to extinguish debt (for example following the purchase of a good or a service) by delivery of that currency, without the creditor can not deny this exchange and its value.

Virtual currencies are not an electronic currency . Again, the answer is quite simple. An electronic currency implies, at least in European law, a debt holder against the issuer may at any time request the latter to him “pay back” this value against a sum agent in a legal currency. These “currencies” were not issued against the remittance of funds within the meaning of Directive electronic money 2 [6] .

Virtual currencies are not financial instruments in that they do not meet any enumerations proposed by the Markets in Financial Instruments Directive defining the financial instruments.

Virtual currencies are not paying , but currency exchange against a virtual currency can be called payment service. This is the meaning of the aforementioned case law of the Court of Appeal of Paris but also the position of many regulators in Europe, starting with the French regulator[7] .

What the “virtual currencies” may be:

A first attempt revolves around the notion of ”  common goods  “. Even as this expression is polymorphic, the source of many difficulties and incomprehension, a debate, sometimes lively [8] , is emerging on the qualification of the common good of these “virtual currencies” or at least the Blockchain. First conceptual difficulty: a currency, in the economic sense, can be defined as a “common good”? The debate among economists is just beginning [9] . But it assumes that these “virtual currencies” are the “currency”.

The ratio of “common (s)” and “virtual currencies” is a priori tempting because of their characteristics. But for some, the analogy between the two concepts remain there. These “virtual currencies” (at least those “decentralized) would not be” common “in the sense of”  use of property or a service organized in such a way that it can be shared by the merger, voluntary, coordinated and without a relationship of domination, individual interests of its stakeholders  ” [10] . In this sense, “the idea of ‘common’ thus differs from that of ‘private good’ and the ‘public good’[11] . This would be a new legal category, or rather the rebirth of a forgotten category. The “common good” is characterized by its inherently non-market [12] . Not that he has no value (use or monetary), but that the existing relationship between the user community members are more based on the economy of sharing and gift on the economy market [13] .

The debate on the nature of the “common” of these “currencies” and the difficulty lies in the confusion often maintained between these “virtual currencies” and blockchain. If they remain in the private domain (as opposed to a public good), the blockchain for its part, due to its open and decentralized architecture, rather spring of collective or “common”.

We see, what to miss these “virtual currencies”, is their absence of “collective ownership” to the extent that these “currencies” may just be “ownership”. Hence the criticism of the speculation surrounding the volatility of these “currencies”. It is therefore around the concept of property (not ownership) as appropriate to seek: these “virtual currencies” can they be subject to a right of ownership? And if so, how to qualify this right?

If there is agreement not to regard these “coins” are not virtual in the sense of scholasticism, but intangibles in a reality other than purely material [14] , then the choice of a definition is toward the legal concept of ”  an intangible  ” concept subject of extensive discussions, both in France [15] and beyond, as evidenced by the 2014 days of Henri Capitant combination of Intangibles.

First pitfall: do not confuse the immaterial, intangible and virtual [16] . The intangible is not confused with the immaterial. Nor with the virtual. The virtual is what has no existence with the real, physical world as understood by scholasticism. The intangible is what can only be seized, be apprehended in a physical form (often, this is right) but which “exist” good.

Second problem, the lack of clear definition of the concept of “intangible”.

One approach is to see in these “virtual currencies” of property that is an intangible thing (in the traditional sense) and a corpus. Under the Bitcoin (or any other “virtual currency” decentralized), the intangible thing is its monetary value, and the corpus would be the support to which is attached the bitcoin (memory nodes blockchain but also hard drive, USB key…).

A second approach, more radical conceptually, is to go beyond the traditional notion of good and to be classified as anything that has a “value”. Which leads out of the traditional framework which associated the thing to matter.

In traditional design, the property is a personal thing capable of appropriation. With the emergence of the “intangible”, the debate was revived. Things are not necessarily tangible. They may well come from human activity and thus constitute assets, property objects. How these “things” they become immaterial goods? By using the concept of “value”[17] . We know that this is the ownership report distinguishes things goods, goods being the things that are qualified to belong to someone.Things are objects of law not yet appropriate or not appropriated, while goods are the things or rights that may be appropriate in that it is “useful”. So any useful thing that the “value” would be well capable of appropriation. If this criterion of usefulness is fulfilling its role in corporeal things, it is more delicate use in the case of immaterial things and intangibles. Where recourse to the criterion of “value” to determine whether something is good. What the “value” is likely to appropriation [18] ”  Thus, it is the value, not the material, which would give its usefulness well (market value / exchange value): a well is one thing (in the broad sense of right to object) it is useful to appropriate legally because it has intrinsic value  ” [19] . The word “good” could then be defined as a thing of economic value and might be appropriate.

It better captures the consequences of such an approach for the “virtual currencies” [20] . They certainly have a “value” and fulfill a function of “utility” (unit of account between individuals). They can thus be described as intangibles. This allows them to give them an “existence” legal and not virtual.

[1] “The actual and the virtual,” by Gilles Deleuze, in Dialogues , 1996, Flammarion

[2] Michel Serres, Atlas, Julliard, 1994.

[3] JM Servet, “The primitive barter, a founding myth of a currency economist approach”, in: Numismatic Journal , 6th series – Volume 157, pp 2001. 15-32. Criticism of the fable of barter is included in Graeber, David. Debt: 5000 years of history , Editions Ties That release, 2013.

[4] Massimo Amato, The enigma of the currency , Paris, Ed. Du Cerf, 2015.

[5] The following lines are from the report of Croissance Plus and Kramer Levin, “FinTech 2020: Resume initiative” Fintech-2020-back-the initiative-23OCT15.pdf

[6] Directive 2009/110 / EC of the Parliament and Council of 16 September 2009 on access to the business of electronic money institutions, pursuit and prudential supervision of these institutions.

[7] Position of 20 January 2014 ACPR on transactions in Bitcoins in France, Position 2014-P-01 and Bank of France, the dangers to the development of virtual currencies: the example of bitcoin, focus, No. 10, 5 December 2013.

[8] Jacques Favier, “the Bitcoin and common”, October 25 2015:

[9] Laurent Baronian and Carlo Vercellone “common currency and guaranteed social income,”  Land / Theory  [Online], 1 | 2015, posted November 24, 2014,; DOI: 10.4000 / teth.377

[10] Denis Dupré, Jean-François Ponsot, Jean-Michel Servet, “The bitcoin against the revolution of the commons”: 5th Congress of the French Association of Political Economy (AFEP) “the economy company policy : new challenges, new opportunities “, in July 2015, Lyon, France.

[11] Same

[12] Pierre Dardot and Christian Laval consider in their masterly essay that ”  what is common is ‘inappropriable’ or ‘off-property’, which means, apparently, that the common can not be detained, nor the state as public property, or by one or more particular form of ownership or community property (…). It shows that we can not think of the common property under the concept of  ” Common, essay on the revolution in the XXI century , the discovery, in 2014.

[13]   Gaël Giraud, Financial illusion,  Ed. Atelier, 2012, 168 p:

[14] All would be better if bitcoin currency was defined as the (legal or not) of the distant land of the Internet. It is the currency of a country that is not quite “this world”. See Jacques Favier

[15] Frédéric Zenati The immaterial and things , philosophy of law Archives, Volume 43, The right and intangible, ed. Sirey, 1999, p. 79;Thierry Revet, New property , French Report Capitant Association, Property, 2004, p. 272

[16] VMA-Frisian Roche, The immaterial through virtuality : in law and the immaterial, philosophy Archives Law, vol. 43, Sirey, 1999, p. 139

[17] Gaële Gidrol-Mistral, “The property and the intangible”, Spanish Days 2014, H. Association Capitant Quebecers report.

[18] Catherine Krief-Semitko, value in French civil law. Essay on the property, ownership and possession , L’Harmattan, 2009.

[19] Association H. Capitant Spanish Days 2014 Quebec report.

[20] Cf. Jacques Favier


Hubert Vauplane: Associate attorney in an American business firm, Hubert Vauplane worked over 25 years in the banking and financial sector, as well as a lawyer and operator in a market hall. Before joining the Bar of Paris in September 2011, he was general counsel and compliance Crédit Agricole SA he is associate Professor at the University of Panthéon – Assas and expert with the AMF, the European Commission and the European Central Bank.

%d bloggers like this:
Skip to toolbar