Bitcoin Forum

The Uniform Securities Act of the United States takes the definition of 'security' from the Supreme Court's findings on the primary characteristics of a security in the Howey decision of 1946. The given characteristics are:
1) It is an investment of value
2) In a common enterprise
3) With the expectation of profit
4) To be derived primarily from the efforts of a person other than the investor.

As a side note, Europe accepts this definition of a security almost verbatim and it's generally accepted in Japan, China, and Russia as well.

Bitcoin requires that you invest either computer cycle time or cash to buy in - the most common measures of value. It is a common enterprise with the btc developers (private citizens, not a governmental or internationally recognized non-government entity) at the helm. There is a clear expectation of profit because that's all the actual owners of bitcoins talk about, how much money (in real currencies) they've made. And that profit is derived primarily from the efforts of those promoting and developing bitcoin - without them there would be no confidence or exposure and bitcoins would be worthless.

So, bitcoin is a security. It is most certainly not a debt instrument (such as a bond), and the only other concept available is some sort of ownership instrument - which is a stock.

It's a currency? More broadly a security.

How about baseball trading cards? It checks all 4 points in your message and yet isn't considered a security or a stock share/certificate. Who's right?

You're excluding a significant number of instruments saying there's only "stocks and bonds".  From the definitions in the Uniform Securities Act:

(28) "Security" means a note; stock; treasury stock; security future; bond; debenture;
evidence of indebtedness; certificate of interest or participation in a profit-sharing
agreement; collateral trust certificate; preorganization certificate or subscription;
transferable share; investment contract; voting trust certificate; certificate of deposit for a
security; fractional undivided interest in oil, gas, or other mineral rights; put, call, straddle,
option, or privilege on a security, certificate of deposit, or group or index of securities,
including an interest therein or based on the value thereof; put, call, straddle, option, or
privilege entered into on a national securities exchange relating to foreign currency; or, in
general, an interest or instrument commonly known as a "security"; or a certificate of
interest or participation in, temporary or interim certificate for, receipt for, guarantee of, or
warrant or right to subscribe to or purchase, any of the foregoing

Related:
 - http://www.lextechnologiae.com/2011/06/26/why-bitcoin-isnt-a-security-under-federal-securities-law/

No, that's not what '4' means. It is not that the value is generated by the efforts of other people or everything would be a security. If I build a toolshed with my own hands, the value of that toolshed comes from the efforts of other people in making tools, creating a currency so that people can buy my toolshed, making a society in which I can exchange the toolshed and so on. By "value" it means the thing that is valuable, not the circumstances that make it valuable.

You are incorrect, but i can't fault you because the framers of the securities law I was quoting foresaw this misconception and specifically excluded collectibles from the definition of a security.

When you own bitcoins you do not own a part of the enterprise.  Not any more than owning monopoly money lets you own Hasbro.  It's possible for customers to also be shareholders, but being one does not automatically make you the other.

Bitcoin users are customers now?

I think of bitcoin as about an asset class, along with fiat currencies, metals, bonds, stocks, toxic CDO's etc...

Why does bitcoin have to fit into an existing concept?

Monopoly money owners are customers.  Whether bitcoin users are considered customers is beside the point.

It's possible for bitcoin users to be official developers, but being one does not automatically make you the other.  Owning bitcoins does not grant you partial ownership or control of the bitcoin system.  The enterprise is not the same as the currency.

It doesn't have to fit into an existing concept. But it does have to fit into an existing legal system(s). Otherwise it will be just another contraband dealt by those on the margins of the society. The lextechnologiae link above is very interesting.