Do Virtual Currencies Satisfy the Definition of Money?

1. In Moss v Hancock [1899] 2 QB 111 money has been accepted as “that which passes freely from hand to hand throughout the community in final discharge of debts and full payment for commodities, being accepted equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or apply it to any other use than in turn to tender it to others in discharge of debts or payment for commodities.”

Critically consider whether virtual currencies satisfy this definition.

In accordance with the definition of Law dictionary of Duhaime, money is an acceptable item for payment for debts or to be provided against the consumption of goods and services. In general term, it is considered to be a consideration which passes freely . Definition covered in case of Moss v Hancock [1899] is wide, but it depends on time place and context. If we consider in terms of the primitive economy, then money will be restricted to the coins, but if we consider in term of modern execution, then it will be limited to legal tender. In accordance with the case of Astbury J  general rule of construction must prevail while considering a particular item as money.

Characteristics of money

In the case of Re Mellor [1929], they had identified 5 legal characteristics of money i.e.

•    It does not have intrinsic value in the law of the material consumed, but the value will be sum or unit in which that coin or note is denominated.

•    Money is not bought or exchanged. However, it has major exception that in the situation where notes or coins are collector’s items considered as ordinary commodities with stated values.

•    Money is negotiable. As per this characteristic, money is received in good faith in order to obtain good title.

•    Money is fungible in nature i.e. legally interchangeable with the units of same denominated values

•    The creditor is not in a situation to demand or obliged to accept anything other than money for the purpose of discharge of debt unless otherwise agreed.

Evaluation of virtual currency in form of money

On the basis of these characteristics, virtual currency can be considered as money. It is because; It do not have intrinsic value in law as it is intangible in nature value of virtual currency is determined on the basis of its denominated value . Further, it is fungible and negotiable in nature. It is because it is received in good faith and can be legally interchangeable with the units of same denominated values.

According to the definition provided by European central bank, it is the type of unfettered digital money which is distributed and controlled by its developing authority . Virtual currency is accepted and used by the virtual community, and it is freely transferred by one party to another. It is accepted by legal or natural persons as means of payment in trading activities and can be stored and transferred by them.