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It is misunderstood by tech people ([[bitcoin]] isn’t [[cash]]; it’s a fraudulent asset); by people who ask for [[client money]] protection from a [[bank]], and by those who aspire to take [[Security interest|security]] over it. | It is misunderstood by tech people ([[bitcoin]] isn’t [[cash]]; it’s a fraudulent asset); by people who ask for [[client money]] protection from a [[bank]], and by those who aspire to take [[Security interest|security]] over it. | ||
===A token of abstract value=== | |||
''Cash is not an [[asset]]. It is not [[property]].'' Cash is is a ''token of abstract value''. It is a will ’o’ the wisp, a woodland sprite, an ephemerality which floats freely of the mortal chains of commerce. It is [[derivative]] of nothing beyond the common opinion of all merchants in the town square. It is like Sandy Denny, or one of those free-spirited hippie types that dances round toadstools: It cannot be owned, only ''held''<ref>{{ford fairlane bonus plan}}</ref> — which is another way of saying whoever holds it [[Ownership|owns]] it, outright, against all the world. [[Cash]] requires your total commitment, or nothing: you can’t futz around with it, you can’t declare a [[trust]] over it, [[pledge]] it, or hold it for anyone other than yourself. If you could, this would undermine the practical value of money ''as'' money: a £5 note, to be meaningful, must be a token worth exactly £5. It has no intrinsic value — it’s a scruffy bit of paper. If the notional value is £5 but there is a risk that the person giving it to you may not own it — that some random may snatch it from your hands after you have given up your goods in exchange for it, alleging some prior ownership right — ''then it does not have a value of £5 any more''. | |||
===Whoever holds it owns it. No exceptions.=== | |||
Transfer of [[cash]] to another person — this is called “[[payment]]”, not “[[delivery]]” — with the expectation of its return fundamentally, ''necessarily'', creates [[indebtedness]]. By transferring cash you convert a holding of that abstract token to a claim on the estate of the person to whom you transferred it for repayment of that debt. There can be no kind of [[bailment]] or [[custody]] arrangement over cash. It cannot be. | |||
This isn’t just an English law point. It is not a function of the {{t|CASS}} rules. It is fundamental to the nature of cash in any place, under any law. It dates back to the Code of Hammurabi. Anything which doesn’t automatically create indebtedness ''is not [[money]]''. | |||
Therefore you cannot eliminate credit exposure to a person who holds your cash unless they physically and permanently put aside cash representing the whole of the debt – that is, take the cash out of circulation and put in a vault – ''and'' the debt represented by that cash benefits from some kind of statutory protection against claims from other [[creditor]]s. So the [[cash]] not only has to be physically present in full, it also has to be preferred. Even this only amounts to a statutory preference as against the holder which defeats claims of lower-ranking creditors. | |||
If the bank is entitled to use cash in its operations, as surely it must be, the cash must be in its insolvency estate. All “segregation” can possibly mean is that a protected creditor has a priority claim over any other creditor for the payment of the debt due to it. This is totally different to non-cash, where the custodian never has legal title to the asset and it never falls into its insolvency estate. | |||