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Wednesday, July 2, 2014

JERRY BROWN SIGNS BITCOIN LAW THAT FAILS TO LEGALIZE BITCOINS WHILE PROTECTING THE SECRETARY OF STATE FROM LAWSUITS.

So Bitcoiners are abuzz because Governor Jerry Brown signed into law AB129, which repeals California Commercial Code 107.




Section 107 of the California Commercial Code read as follows:

107. No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.

By "lawful money of the United States," long-ago California legislators decreed that only the U.S. Congress can decree what is money, whether coined precious metal by weight and fineness (the true definition of money) or legal tender.

AB 129 changes nothing. AB 129 does not legalize Bitcoins or any other digital copyright protected software whose holders pretend to be money.

AB 129 is declaration by legislators to say that anyone residing in the State of California mining Bitcoins is not running afoul of CCC 107, and little more. AB 129 also declares, in effect, that supermarkets, which print coupons, "do not violate the law when those methods are used for the purchase of goods and services or the transmission of payments."



In  effect, AB 129 removes liability of the state to be sued by anyone who might run afoul of 31 U.S. Code § 5103. For if the State of California would let incorporation of any involved in Bitcoin mining while CCC 107 remained on the books, then the State of California would be liable for lawsuits.

When Jerry Brown signed into law AB 129, in effect, his act did this and only this:

107. No corporation, flexible purpose corporation, association or individual shall issue or put in circulation, as money, anything but the lawful money of the United States.

In 31 U.S. Code § 5103, the Coinage Act of 1965, the sitting Congress decreed by bill and signed into law by President Johnson:

United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.

In so doing, that Congress decreed to which President Johnson signed into law, anyone would be required to accept Federal Reserve bank notes in lieu of gold or silver coin for the full settlement of contract, in which anyone would be henceforth discharged from debt obligation.

By federal law anyone must accept only Federal Reserve Notes in settlement of contract. No one can refuse accepting U.S. Treasury minted token coins or Federal reserve bank notes. They can however, specify denomination of those Federal Reserve bank notes.

For those suffering delusion that Bitcoin is money or currency, they should wait until someone in California refuses to pay debt except with Bitcoin and the creditor refuses to accept that Bitcoin in payment. When one party sues the other and the case hits a Federal court in California, the creditor shall prevail. End of story.

Bitcoins are worthless without cash of various banking systems. The few merchants who accept Bitcoins, sell those Bitcoins back for cash and checking account credits thus enabling themselves to buy what they want, truly.

As I wrote in BITCOIN IS SOFTWARE PROTECTED BY COPYRIGHT. BITCOIN IS NOT LEGAL TENDER CASH, Bitcoins are nothing but software with protected by a digital copy scheme mechanism. The block chain exists so individuals can prove title to coins before sending a copy over to another user and deleting the copy on their own storage media.

Thus, Bitcoin isn't currency. Currency means that which circulates goods by bearer negotiability. Bearer negotiability means the property (right of ownership) goes with possession in every honest deal. No one needs to prove she owns cash to a store clerk before she trades away cash for milk and cookies.

The other day, the U.S. Marshals Service auctioned to venture capitalist Tim Draper 30,000 Bitcoins seized from illegal drug dealing site, The Silk Road, operated by charged by not as-of-yet convicted, Ross Ulbricht.

Draper claimed that, "Bitcoin frees people from trying to operate in a modern market economy with weak currencies." Tim Draper couldn't be more wrong, especially if means the U.S. dollar is among his "weak currencies."

U.S dollars (Federal Reserve bank notes) are accepted everywhere in America without question and almost by everyone of the world in their respective countries, eagerly. Clearly, the U.S. dollar has strong currency. It's the strongest of all.

Travel outside the USA with U.S. dollars. Almost everywhere you go, you can spend your dollars directly for products without converting those dollars to local bank cash with currency.

Almost no one on earth uses Bitcoins. Only a handful of people use Bitcoins to deal in contraband, mostly illegal drugs between junkies and dealers through sites alike to Silk Road.

Bitcoins are collectibles, like Beanie Babies and movies on DVDs. When people trade merchandise for Bitcoins, they engage in barter and not trade of purchases and sales. They swap one product, Bitcoins, for another product, which is whatever they are selling.

The Congress of 1912 brought forth the Federal Reserve through the Federal Reserve Act, enacted December 23, 1913.  By establishing the Federal Reserve, that Congress established Federal Reserve bank notes, which replaced all other bank notes of national banks of issue then in circulation.

The United States Congresses have a long history of coinage acts that led to the Coinage Act of 1965 ( see Coinage acts of 1792, 1834, 1849, 1857, 1864, 1873). The more notable ones are those of 1792, 1834, 1857, 1864, 1873

The Coinage Act of 1792 established the United States Mint and decreed the silver dollar as the unit of money in the United States, declared it to be lawful tender, and created a decimal system for U.S. currency

The Coinage Act of 1834 raised the silver-to-gold weight ratio from 15:1 to 16:1. The Congress reduced the fine content of a gold dollar from 24.75 grains to 23.2 grains.

The Coinage Act of 1857 forbade foreign coins as legal tender. For years, Americans traded with the Spanish dollar. This act stopped that practice.

The Coinage Act or 1873 decreed only gold as lawful money. In so doing the Congress demonetized silver.