Aufsätze Ökonomik

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Prof. Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.

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Bitcoins abbreviated BIC and without plural (so also in German)

An Internet payment system introduced in January 2009. In principle, anyone can participate by joining the Bitcoin community. Anyone who then wants to use Bitcoins as network money must install a so-called wallet on their computer or smartphone. The wallet is a digital wallet, so to speak, in which virtual credit is stored. – Bitcoins are also known as cryptocurrencies because all transactions are encrypted, making it difficult to track who pays whom and how much money. – The German Federal Financial Supervisory Authority (BaFin) has given BIC a legally binding classification as financial instruments in the form of units of account pursuant to Section 1 (11) sentence 1 of the German Banking Act (KWG). These are units that are comparable to foreign currencies and are not denominated in legal tender. This includes units of value which have the function of private means of payment in ring exchange transactions, as well as any other substitute currency which is used as a means of payment in multilateral clearing systems on the basis of agreements under private law. A central issuer is not relevant in this context. – BICs are not electronic money as defined by the Payment Services Supervision Act (Zahlungsdiensteaufsichtsgesetz, ZAG) because there is no issuer that issues BICs establishing a claim against itself. This is different for digital currencies, which are backed by a central authority. BTC are also not legal tender and therefore neither foreign exchange nor notes and coins. The commercial handling of BICs, however, may trigger a permit requirement under the KWG. In the absence of such permission, it may be a criminal offense under Section 54 KWG. The mere use of BIC as a substitute currency for cash or book money in legal tender for participation in the economic cycle, on the other hand, is not an activity requiring a license. Similarly, the mining of BIC does not in itself constitute an activity requiring a license because the miner does not issue or place the BIC himself. The sale or purchase of mined or acquired BIC is also not subject to licensing. However, if further circumstances arise, the obligation to obtain a permit may be triggered. This applies if BIC are not only prospected, bought or sold in order to participate in an existing market, but if a special contribution is made to create or maintain this market. Due to the additional service element, this is then proprietary trading requiring a license pursuant to Section 1 (1a) № 4 KWG. This is the case, for example, if an entity advertises on the market that it regularly buys or sells BIC. Another example is mining pools that commercially offer revenue shares from mined and sold BIC in exchange for the user’s transfer of computing power. – Many papers have appeared on the advantages and disadvantages of BIC – as well as on similar network money systems. – In February 2014, the largest trading platform for BIC, the Japanese bitcoin exchange Mt. Gox, went bankrupt. The main reason was the loss of 750,000 BIC from customers, as well as 100,000 more that Mt. Gox held in its own portfolio, due to theft. BIC worth about EUR 430,000 were also stolen from the Canadian bitcoin bank Flexcoin; and this service provider also closed its bitcoin bank as a result. – See payment methods, innovative, Linden Dollar, PayPal, Quickgeld, regional money, clearing money. – Cf. Annual Report 2013 of BaFin, p. 59 f. (Bitcoins are financial instruments under Section 1, Paragraph 11 of the German Banking Act (KWG); if they become an object of trading, then this requires a permit).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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