Bitcoin Forum

what about selling private keys that have control over a bitcoin balance?

for example in the case of person to person exchange of btc for cash, people could sell their priv keys  as a form of good
some tax reporting duties may apply but at least you wouldn't have to fear fincen regulation type of things?
or doesn't change this a thing legally speaking

some opinions please

this is good idea as long, as seller dont have copy of this key somewhere and dont use it in the wrong time.

this is how i do all of my bitcoin otc transactions. first i select 6 random words to make a brain wallet. i write those words down on a piece of paper fold it up and stick it in my pocket. Then i load the funds onto the private key and exchange the piece of paper for the cash. It prevents me from having to connect to public wifi, something i dont at all like doing with a computer that has bitcoins on it.

oh also finsen regulations dont apply to cash transactions.

Buyer should sweep the funds from the private key. Meaning, they transfer the coins to another address only they control. Either, on the spot, or as soon as they can.

Seller, should message or PM buyer when he notices the coins are gone, so they both know, that would only happen to whoever holds the private key, which is supposed to be just the two of them.

I don't see how this would change anything -- "I didn't sell currency, sir. I sold a box that happened to contain currency." I don't see how that argument could survive the smallest bit of scrutiny.

"oh also finsen regulations dont apply to cash transactions."

FinCen guidelines certainly do apply to cash transactions. For example, if you deposit $10,000 in cash into your bank account, the bank is required to report it. If you buy or sell certain amounts of some forms of PMs for cash, the dealer is required to report it.

Would probably hinge on the definition of "transmission". You can transmit a disease to someone (http://www.biology-online.org/dictionary/Transmissible_disease) in person, and just as easily transmit a physical private key, or speak the passphrase. Though talk about unenforceable on the latter part, you'd have to prohibit any person from giving money to another person AND infringe the 1st Amendment out of existence.

I don't think that analogy of the box with cash in it is correct, this is more like selling you credit card and your PIN with it for the amount your bank account holds
only with bitcoin you don't have to register to open a "bitcoin bank account" so you wouldn't be breaking any laws trading your private keys as you would selling control over your bank account

I think that any reasonable regulator (or judge, if it got to that) would say that selling the account is the same as selling what the account holds.

so selling is the same act as transferring? cause the bitcoins are staying right where they are

That's an odd question. One person transfers bitcoins to another in exchange for dollars. The "movement" of the bitcoins is immaterial. If you sell land, the land doesn't move.

Isn't the whole point that in that case you are transmitting "moving" fiat giving them a reason to regulate you, when you purchase land you are clearly not in the money transmitting business

the moment you deposit cash into a bank account it isnt cash any more, it becomes something called checkbook money. Yes in your example finsen regulations would apply, however your example is not what i would describe as a cash payment.

Also please excuse me if i am infact incorrect. i do not claim to be an expert on government regulation and so would not be surprised in the least if i was incorrect.

Ok, why not sell cheap USB flash drives or SD cards or micro SD cards. The really cheap ones cost about $4 ?

Or you sell photographs.

Or you sell laminated cards.

I never thought about that. So what is stopping people who put private keys on like paper and homemade coins from just cashing the key after they sell it? Obviously not Casascius but other homemades or personal QR's that someone trades?

The Seller, obviously will no longer touch the private key, or he will clearly state that there is a 1 week expiration date on that key that he sold. The Buyer should redeem the private key immediately, either on the spot (best) or as soon as he gets to a computer.

"For sale, abstract looking random blocks of square dots art. $80 per square. Oil on Canvas painting" = QR code for sale, which is a private key that contains 1.0 BTC.

Or I'm sure you can think of something similar.

How about, "deck of playing cards for sale" each of the 52 cards contains a QR code aside from the spades, hearts, clubs and diamonds from 2 to 10, ace, king, queen, jack? After you have redeemed the value on 52 private keys (or maybe only the joker has the QR codes), you still have a deck of cards to play with.

How about, text message service for sale. You pay me $80 and I send you a text message. (which contains 2 private keys in WIF)

I would say that selling the private key vs sending the BTC to a wallet has the same net effect; namely the transfer of ownership of the BTC to another individual. I am not sure I fully understand all of the FINCEN implications mainly because FINCEN has been very cagey about clearly defining the very short comments they made recently about BTC and Money Changers.

If I may use an analogy for your example above: If I have a safe with $20,000 in cash and I tell you I will trade you the key to the safe for your car. I think you would have a hard time in court, arguing that the consideration you gave for the car was the key to the safe and not the $20,000 contained therein.

i don't know how things work legally. but technically this is a very very stupid idea.

The whole point of the regulations is to prevent money laundering. This scheme sounds like a GREAT way to launder money. So probably illegal, unless you're under the legal limit.

Always get your independent legal counsel but a piece of generic advice.

The law isn't like a video game where you can find an exploit and level up easily.  If your intent is to acts as a money transmitter a judge is likely going to rule you are a money transmitter.  There are no sneaky cheat codes in the law (unless you happen to be very rich, politically connected, or a banker).