natlawreview.com / Annie Dike / Wednesday, February 24, 2016
It’s hard to imagine where to begin with this: proving the transfer of items that do not physically exist. Bitcoins have value because they can be used to purchase goods and services. What if you needed to prove a purchase made with bitcoins? It’s not like a receipt prints out from your computer after each transaction. Sure, it’s logged somewhere. Everything on the internet is. But, even if you find it ─ this magic record of transactions ─ would it be admissible or hearsay?
Okay, it’s not magic entirely. But, unlike typical bank records there is something very interesting about bitcoin ledgers, known as blockchain receipts. They are transparent – 100% visible to anyone on the internet. It’s like a huge bank of glass safety deposit boxes. Anyone can see how many bitcoins you have inside your box at any time, but only you hold the key that can unlock it in order to take coins out or put coins in. In addition, the blockchain receipts that are produced as a result of every bitcoin transaction are also publicly auditable. Meaning, anyone can see where coins in your box came from and where you send them. But, just because the record is visible does not immediately mean it is admissible. Think of it like a Google Earth snapshot. It is a computer-generated record that makes an assertion. While that Google Earth photo is a depiction of a specific place at a certain date and time, a blockchain receipt asserts a transfer of a certain number of bitcoins from one “box” (a bitcoin address) to another.