The difference between Bitcoin and cash, is that cash is fungible.
At least if it's a coin - if it's a gold coin.
It's really no different from any other gold coin
and so one is as good as another.
That's not quite as true with notes
because notes have serial numbers
but let's ignore that for the time being.
Now, there's other things that're fungible.
like ears of corn, or in the old days, sheep.
In Roman times,
if twenty sheep wandered from Marcus's farm into Crasus's farm,
then the corp could just simply tell Crasus to give Marcus twenty sheep back.
And any twenty sheep, it didn't matter.
But nowadays, of course
sheep have got electronic passports clipped into their ears.
So if that were to happen between two Italian farmers nowadays,
then Marcus could go and get exactly the right twenty sheep back from Crasus.
So here's an example of how technology has made sheep
from a fungible asset into a tractable asset.
Now Bitcoin's the same, because every Bitcoin carries with it
pointers to its entire history.
So you can see everybody's who's owned that Bitcoin or parts of it
ever since these parts were originally mined.
And so you can see where the parts of Bitcoin were stolen at one time or another
or probably went through money laundering schemes
or probably were used in the drugs trade
or various other objectionable qualities
that might cause the authorities to want to call them in
and have a close look at them.
What about the money laundering thing, then?
How does that work?
At present, in England,
you can't get a good title to stolen goods
um
But until 1995, you could
because there was a law called "The Law of Market Overt."
So if I stole your horse,
and I went and sold it in Cambridge Market
between dawn and dusk
then somebody who bought it from me
in good faith would end up owning the horse
and all you could then do was to sue me
or get me hanged or sent to Virginia.
Now this was abolished in 1995
because it was being abused
but the rule survives in the law of money and banking.
Now, if you go to a Barclays Banking ATM,
for example, and you get out a twenty pound note,
then even if that twenty pound note was stolen last year in a bank robbery,
that's not your problem.
That's Barclays Bank's problem.
because you got it from a regulated financial institution.
And so your title to it is certain
Similarly, if you go to John Lewis's,
and you buy a toaster for 30 quid,
and you pay with a 50 and you get a 20 pound note in your change
Then you own that 20 pound note
because it's another rule that says
that if you get something, for value, in good faith,
right?
Then, so long as that something is money
you get good title to it
So
the Bitcoin people have been lobbying
for at least five years
to have Bitcoin to be declared money.
Because if Bitcoin becomes money
then they think that many of the problems around stolen Bitcoins
and Bitcoins that were used in the drugs trade and so on
would go away.
So we've been looking into this
and it turns out that it isn't quite true.
Now no government has yet admitted that Bitcoin is money
But even if a court were to find that Bitcoin is money,
as courts, for example, found that carbon credits could be treated as money
for some purposes;
then it doesn't get the Bitcoin criminals off the hook.
And the reason for this is
that to get good titles for something that was once stolen
you have to do it in good faith.
Now, what's the meaning of "in good faith?"
Somebody might argue
that you can't a Bitcoin in good faith
because everybody knows that so much bad stuff goes on in Bitcoin.
But even if you don't buy that argument
there's another problem
which is that many people in the Bitcoin world have set up
what they call "Bitcoin Mixers"
or even "Bitcoin Laundries,"
where the idea is you take along your stolen Bitcoin
or the Bitcoin you got from selling hashish on the sheep market, or whatever,
you put this black Bitcoin into a pot
and nine other people come along and put in their white Bitcoins into the pot
and you shake the pot very, very hard
and you kind of hope that you get ten white Bitcoins out.
Now the law is quite clear on this,
that if there's money laundering
then you can't have good faith.
And so if you put one black Bitcoin
and nine white Bitcoins into a pot
and you shake it
then if Bitcoins are held to be money
what you get out is ten black Bitcoins.
Sorry, guys.
Asking for Bitcoin to be money was the wrong thing to ask for.
Because if Bitcoin had simply remained a commodity,
you know, like pig iron bars, or whatever,
then this magic wouldn't happen.
The stolen pig iron bar would still be a stolen pig iron bar.
You would put the one black Bitcoin and the nine white Bitcoins into a pot
and then you'd shake them
and some unlucky sod would get the black one out.
In that case, of course,
economics kicks in
because then nobody's got an incentive to take part in a money laundering scheme.
Now, the interesting thing about this
is that if Bitcoin becomes money
or is treated as money for some purposes
then this is a really mortal threat,
to those cryptocurrencies which provide built-in laundries,
such as Monero and Zcash,
Now in Zcash, for example,
most of the time it works just like Bitcoin
and there's a fully traceable blockchain of who passed on a coin to whom.
But you can, if you want,
take your Zerocoin and you can put it back in the mine
and have it remined
and get one out that's nice and shiny and new,
in the sense that it's indistiguishable from all the other coins mined in that round.
Just the same as if you'd been re-casting a gold bar.
You're taking a gold bar to a crooked foundry
or a bent goldsmith
and got it turned into something that was untraceable.
But the affect of this
according to the law of money and banking,
is actually to poison every single coin that  comes out of that mine.
And this would lead regulators to ask themselves
whether or not they should simply instruct regulated Bitcoin exchanges
not under any circumstance to change cash
or other cryptocurrencies
into currencies such as Zcash or Monero
on the grounds that these were designed
for the purpose of money laundering.
and therefore there was an issue of obstruction of justice.
