I disagree that Bitcoin is money, currency.

[solex]

gopher, perhaps you aim to help, but the thrust of the OP is such that I can't see how it helps.

There is a fundamental of economics that only products can buy products. Money is a medium of exchange between products, and develops the properties of a store of value and unit of account. Bitcoin excels at all these. It has particular strength for remote transactions and as an inelastic monetary base.

I recommend this paper which I am sure you will find interesting too:

http://dev.economicsofbitcoin.com/mastersthesis/mastersthesis-surda-2012-11-19b.pdf

wrt to governments. There are 200 nation state jurisdictions in the world. Bitcoin transcends all their boundaries. None of them have attempted to curtail its usage, so bitcoin should not be hobbled by its community just on the theoretical basis that one of them might make a fuss one day. Onward!

[gopher]

solex,

at last, someone making a logical comment.

I will read through the paper you've referenced, thanks a lot for it.

wrt governments, I do not challenge their right to recognise any electronic currency or try to shut down its use - on contrary, what I am saying is that while Bitcoin (or any electronics, non-government issued currency to that effect) is not recognised by any government as a legal tender, all licensed institutions would be breaking the law if they use it as defined. And that would affect the adoption of Bitcoin negatively. For that reason, I proposed that we look deep into the root characteristics of Bitcoin, see if we can re-define Bitcoin as an electronic-resource rather than tender and give reason to those markets to adopt the use of Bitcoin.

My motion is that if the Bitcion is redefined as resource, something that the broadest user base can use legally today, then majority of the government-licensed users as well as the governments themselves will have no reason to keep rejecting it, on contrary, the clear benefits to using Bitcoin will prevail over their concerns that they would be breaking the law by using it.

[DeathAndTaxes]

wrt governments, I do not challenge their right to recognise any electronic currency or try to shut down its use - on contrary, what I am saying is that while Bitcoin (or any electronics, non-government issued currency to that effect) is not recognised by any government as a legal tender, all licensed institutions would be breaking the law if they use it as defined.

That is pure and utter nonsense.

Currency =/= Legal tender and legal tender obviously doesn't mean what you think it does.

Also your belief that redefining bitcoin would cause it to escape regulation is dubious.  FinCEN for example regulates gold dealers, money orders, and stored value cards (think cellphone airtime).  None are legal tender, none are illegal, and none escape regulation simply because they are defined as "non currency".


MSB regulations in the US for example use the term "currency substitute".  Even if one went through the totally dubious effort to redefine bitcoin as "something else" with the stroke of a single regulator pen they could

The law isn't a video game.  There are no cheat codes.  Generally it works on common sense.  If the law is trying to outlaw x then making y which has all the properties of x is going to be outlawed.  If the law requires compliance when doing x then coming up with BS reasons why y isn't x doesn't really matter.  The legislators and regulators opinion is what matters.  Nobody, I mean not even a 9 year old child, is going to be fooled by the redefining.

Can I buy stuff with "X", can I sell stuff for "X", does "x" act as a store of value, is "X" as viable medium of exchange?  Then "X" is a currency.  Period.  It doesn't matter if you say it isn't regulators will say it is and if they don't they will use language like in the MSB regulations and say it is a "currency substitute".

[n8rwJeTt8TrrLKPa55eU]

What I believe Bitcoin community should do is to re-define Bitcoin, more precisely align it with the reality and give it a new name.

With all respect to Satoshi Nakamoto, I think he chose the name Bitcoin poorly. It implies that it is a coin, version of money, yet there are minor similarities between Bitcoin and the legal tender coins.

Instead, IMHO, he should have chosen a name that reflects the nature of the Bitcoin, much more similar to the precious metals and other resources, store of value and incidentally similar to currency, but definitely not the virtual electronic currency it is portrayed as now.

I'd agree that the name is not as good as it could be, given that Bitcoin is clearly modeled after gold as opposed to fiat coinage.  Some of the other terminology does match, i.e. "miners" as opposed to "minters".  It might be slightly easier to explain the features to people (particularly goldbugs) if it was called "bitgold" or "digital gold".

In fact, the precursor idea to Bitcoin was, quite naturally, called Bit Gold:
http://unenumerated.blogspot.com/2005/12/bit-gold.html

However e-gold was indicted in 2007 and so I suspect Satoshi, being quite paranoid, still had that event fresh in his mind when writing his paper, and so opted for another name so as to avoid controversy.

Either way, the horse has long left the barn, the only way you're going to redefine the naming and terminology is by starting your own new cryptocurrency.

[JusticeForYou]

solex,

at last, someone making a logical comment.

I will read through the paper you've referenced, thanks a lot for it.

wrt governments, I do not challenge their right to recognise any electronic currency or try to shut down its use - on contrary, what I am saying is that while Bitcoin (or any electronics, non-government issued currency to that effect) is not recognised by any government as a legal tender, all licensed institutions would be breaking the law if they use it as defined. And that would affect the adoption of Bitcoin negatively. For that reason, I proposed that we look deep into the root characteristics of Bitcoin, see if we can re-define Bitcoin as an electronic-resource rather than tender and give reason to those markets to adopt the use of Bitcoin.

My motion is that if the Bitcion is redefined as resource, something that the broadest user base can use legally today, then majority of the government-licensed users as well as the governments themselves will have no reason to keep rejecting it, on contrary, the clear benefits to using Bitcoin will prevail over their concerns that they would be breaking the law by using it.

You're still trying to split the proverbial hair. If it is used as tender, it is tender. The biggest difference between Bitcoin as 'tender' and others forms is that it is abstract. You can't 'seize' it or freeze it. You might try and grab the private key but if a back up or a strong memory exists not much was accomplished. The moment it is seized or froze is the moment that it is moved to another abstract place holder. It is fiat on steroids without any physical representation.

Just imagine this scenario: The government seizes a private key and takes control. It is now under their control. A unknown third party has a copy and moves the money from that address. Now, did the government that now has control steel the money? Maybe the prosecutor needed a new yacht. Who moved it? And if the suspect didn't move it, was he even guilty of anything?

Just an example of many possible scenarios. Caveat Emptor will reign with this tender. I also for see for that same reason most people will not want to hold the tender but use it as a transactional currency to acquire things. Only people that are fully aware and have taken precautions will want to hold it.

It's not governments that are the threat, it is humans. Attrition will slowly erode the amount of BTC forcing the FED (hehe...) to move the placement holder to increase the supply. This system will actually reward good savers if it remains. What the FED has attributed to attrition will have a certain percentage of 'savers' just holding their money occurring as they increase the supply. (I know, no NEW coins will be produced.) It just allows the ones still in existence and being used to be more useful.

Here is the irony, the governments have strapped future generations with debts that they no nothing about. Heck, they probably were not even born yet. Those governments are expecting that generation to pay debts that they have incurred. But, if the next generation uses BTC, those debts will go unpaid and be put back onto the ones that caused the problems. UNLESS they themselves switch. It will be a Global default.

Just imagine if you were Greek and put all your money in BTC. Greece lost its tax revenue and you came out way ahead. The whole tax scheme currently employed by governments will have to be overhauled. Taxing physical possessions  or transfer of physical possessions will have to take precedence over taxing tender or 'money'. On a business scale this will work just fine but as always on a personal level it will remain the same. They will no nothing about your personal transactions. Just like yard sales. Your supposed to report that income or transfer but hardly anybody does.

[gopher]

wrt governments, I do not challenge their right to recognise any electronic currency or try to shut down its use - on contrary, what I am saying is that while Bitcoin (or any electronics, non-government issued currency to that effect) is not recognised by any government as a legal tender, all licensed institutions would be breaking the law if they use it as defined.

That is pure and utter nonsense.

Currency =/= Legal tender and legal tender obviously doesn't mean what you think it does.

Also your belief that redefining bitcoin would cause it to escape regulation is dubious.  FinCEN for example regulates gold dealers, money orders, and stored value cards (think cellphone airtime).  None are legal tender, none are illegal, and none escape regulation simply because they are defined as "non currency".


MSB regulations in the US for example use the term "currency substitute".  Even if one went through the totally dubious effort to redefine bitcoin as "something else" with the stroke of a single regulator pen they could

The law isn't a video game.  There are no cheat codes.  Generally it works on common sense.  If the law is trying to outlaw x then making y which has all the properties of x is going to be outlawed.  If the law requires compliance when doing x then coming up with BS reasons why y isn't x doesn't really matter.  The legislators and regulators opinion is what matters.  Nobody, I mean not even a 9 year old child, is going to be fooled by the redefining.

Can I buy stuff with "X", can I sell stuff for "X", does "x" act as a store of value, is "X" as viable medium of exchange?  Then "X" is a currency.  Period.  It doesn't matter if you say it isn't regulators will say it is and if they don't they will use language like in the MSB regulations and say it is a "currency substitute".

http://en.wikipedia.org/wiki/Legal_tender

No, what you write is utter nonsense.

Irrespective of how much you want Bitcoin to be recognised as legal tender, it is not going to happen. Not today, not tomorrow, not in a 1000 years!

Knowing governments all over the world, if they have no control of a tender, they will not recognise it as a legal tender. Hence, Bitcoin, defined in its current state, stands no chance to be recognised as a legal tender by any proper government, full stop.

And if it is not recognised as legal tender, all government licensed institutions will reject using it or refuse to support it, as doing so they will be deemed to be breaking the law.

I say again, does not matter how much we hate this, this is fact!

What I failed to mention at the beginning of this tread is that I do not question the legality of or the right of the Joe Common to use Bitcoin. I as well as hundreds of thousands other Joe's are using Bitcoin successfully every day, but we are not not regulated by the government to use legal ender only, we are free to use any tender, even barter, to trade freely.

My point is about Bitcoin gaining much broader support, from across all industries, including the strictly-regulated industries, i.e. financial services prviders and government departments. And the only way I see this happening is by not antagonising the legacy monetary system, calling (and hoping) for its demise, but start acting intelligently.

I seriously doubt that the Bitcoin community will come to its senses and will be able to formulate intelligent strategy. But that does not stop me from posting openly on this forum and calling for other's opinions on this matter. Anyway, I am not holding my breath...

[gopher]

What I believe Bitcoin community should do is to re-define Bitcoin, more precisely align it with the reality and give it a new name.

With all respect to Satoshi Nakamoto, I think he chose the name Bitcoin poorly. It implies that it is a coin, version of money, yet there are minor similarities between Bitcoin and the legal tender coins.

Instead, IMHO, he should have chosen a name that reflects the nature of the Bitcoin, much more similar to the precious metals and other resources, store of value and incidentally similar to currency, but definitely not the virtual electronic currency it is portrayed as now.

I'd agree that the name is not as good as it could be, given that Bitcoin is clearly modeled after gold as opposed to fiat coinage.  Some of the other terminology does match, i.e. "miners" as opposed to "minters".  It might be slightly easier to explain the features to people (particularly goldbugs) if it was called "bitgold" or "digital gold".

In fact, the precursor idea to Bitcoin was, quite naturally, called Bit Gold:
http://unenumerated.blogspot.com/2005/12/bit-gold.html

However e-gold was indicted in 2007 and so I suspect Satoshi, being quite paranoid, still had that event fresh in his mind when writing his paper, and so opted for another name so as to avoid controversy.

Either way, the horse has long left the barn, the only way you're going to redefine the naming and terminology is by starting your own new cryptocurrency.

Another intelligent post, thank you very much!

[DeathAndTaxes]

I never said I wanted or think Bitcoin will be legal tender.  It likely never will be legal tender, not next year, not next decade.  However it doesn't have to be legal tender to be a currency.

Currency =/= legal tender.

Nothing prohibit anyone (at least in the US) from accepting deposits and payment in currency other than legal tender.  Period.  

In the US the Euro isn't legal tender but banks are free to allow Euro denominated accounts, accept Euro deposits, even allow clients to engage in currency conversion.   The fact that the Euro is legal tend in the Eurozone is utterly irreverent to the fact that is IS NOT legal tender in the US and much like Bitcoin probably never will be.  Still entities (from Joe Sixpack up to billion dollar corporations) are free to voluntarily write contracts denominated in Euros (or Gold or Bitcoins or bushels of wheat), accept payments according to that contract and hold deposits in the currency of the contract.

Now the federal reserve note being the only legal tender in the US means that in the event of a contract dispute (i.e. you didn't pay me those BTC you owe me) the only legal remedy available to me is to get a judgement for the value of the BTC in legal tender.  As an example if I prove in court that you owe me 100 BTC and the value of 1 BTC is $30 then the courts can only issue a judgement against you and for me in the amount of $3,000 USD.  I can be compensated for the loss of value but I have no legal remedy to ensure I receive the BTC back instead.   Still even if BTC was defined as a digital commodity that wouldn't change either. 

Lender tender doesn't mean what you think it does and since you haven't ever explained your flawed understanding of legal tender it is difficult to know what bogus definition you have in your mind.

Simple version:
People are free to engage in whatever currency they want to use.
Creditors must accept repayment in legal tender for debts owed.
If you seek legal action your remedy may be limited to a judgement in legal tender for the value of the loss.

Legal tender means nothing more.  The fact that Bitcoin will probably never be legal tender in any country is of little consequence.

[franky1]

Currency =/= Legal tender and legal tender obviously doesn't mean what you think it does.

to help explain death and taxes meaning it might be worth hitting up the books again

money, the monetary system, e-money are all about FIAT (legal tender) you know the amounts that have a $ £ symbol linked to it.

currency is ANYTHING used in whole or as part of exchange where by more then 2 parties agree on the value.

eg if i invented a rabbit credit and only me and another person ever done one trade using it. then it is just a bartered exchance.

if a few people all used rabbit credits and they had a set understading of its value. that is then a currency.

currency can be vodka, facebook credits, airmiles, sexual favours (in some countries) food, mobile phones the list is endless.

currency is just a grouping term of all the things that can be used as a means of exchange for goods and services. it is not legal tender itself. although MONEY is within the group known as currency as its used as a means of trade. it does not mean that all currency's are automatically legal tender because they act like money does.

'foreign currency' is a laymans term for not native to this country and when used in context of other countries legal tender then it should be used on the context that using the word currency is just a laymans lazy way of not listing every countries FIAT MONEY.

and as for renaming the bitcoin to resemble gold. that is flawed too.

gold is a commodity. and a commodity is a raw material used to produce other products (jewellery, electronics)
much like oil makes car fuel, plastics. wheat makes flour and other things

bitcoin is not a commodity. the only resemblance to gold is the store of value and the term "mining". which leads on that people have stupidly linked btcoin to gold purely from the term "mining". where it would for the bases of use, purpose and comparisons "miners" should be called "vectoring" (due to use of elliptic curve) or something that actually corresponds to solving the digitial puzzle that some people call it. then the snowball effect would be a better understanding that bitcoin is not something you use to design spaceships, motherboards or to add ingredients to, to make a meal(commodity). but its something you hold and own (an asset) much like valuable art a car. its a end product with clear ownership.

and this thought has came from 3 different accountants i spoke to.. and not just a brain fart opinion of just me.

and as for going to court. you can go into court with the mindset that you want the return of property. its not limited to the financial valuation of the product. the only time it becomes a financial thing is if the possession has changed hands again and it is impossible to return it to the rightful owner. then a financial compensation would be the only last resort. but i will say that is UK courts. so speak to a solicitor/lawyer before filing a court action for full and proper guideance

[zebedee]

http://en.wikipedia.org/wiki/Legal_tender

No, what you write is utter nonsense.

Irrespective of how much you want Bitcoin to be recognised as legal tender, it is not going to happen. Not today, not tomorrow, not in a 1000 years!

Knowing governments all over the world, if they have no control of a tender, they will not recognise it as a legal tender. Hence, Bitcoin, defined in its current state, stands no chance to be recognised as a legal tender by any proper government, full stop.

And if it is not recognised as legal tender, all government licensed institutions will reject using it or refuse to support it, as doing so they will be deemed to be breaking the law.

I say again, does not matter how much we hate this, this is fact!

What I failed to mention at the beginning of this tread is that I do not question the legality of or the right of the Joe Common to use Bitcoin. I as well as hundreds of thousands other Joe's are using Bitcoin successfully every day, but we are not not regulated by the government to use legal ender only, we are free to use any tender, even barter, to trade freely.

My point is about Bitcoin gaining much broader support, from across all industries, including the strictly-regulated industries, i.e. financial services prviders and government departments. And the only way I see this happening is by not antagonising the legacy monetary system, calling (and hoping) for its demise, but start acting intelligently.

I seriously doubt that the Bitcoin community will come to its senses and will be able to formulate intelligent strategy. But that does not stop me from posting openly on this forum and calling for other's opinions on this matter. Anyway, I am not holding my breath...

What you're failing to understand is that, ultimately, it doesn't matter what a government defines as A or B.  What matters is what everyday people decide to use as money.

If they decide to use bitcoin (and the reasons are compelling) what someone else wishes to happen, be they govt or individual, is irrelevant.  They will go with the flow, or lose.

[gopher]

http://en.wikipedia.org/wiki/Legal_tender

No, what you write is utter nonsense.

Irrespective of how much you want Bitcoin to be recognised as legal tender, it is not going to happen. Not today, not tomorrow, not in a 1000 years!

Knowing governments all over the world, if they have no control of a tender, they will not recognise it as a legal tender. Hence, Bitcoin, defined in its current state, stands no chance to be recognised as a legal tender by any proper government, full stop.

And if it is not recognised as legal tender, all government licensed institutions will reject using it or refuse to support it, as doing so they will be deemed to be breaking the law.

I say again, does not matter how much we hate this, this is fact!

What I failed to mention at the beginning of this tread is that I do not question the legality of or the right of the Joe Common to use Bitcoin. I as well as hundreds of thousands other Joe's are using Bitcoin successfully every day, but we are not not regulated by the government to use legal ender only, we are free to use any tender, even barter, to trade freely.

My point is about Bitcoin gaining much broader support, from across all industries, including the strictly-regulated industries, i.e. financial services prviders and government departments. And the only way I see this happening is by not antagonising the legacy monetary system, calling (and hoping) for its demise, but start acting intelligently.

I seriously doubt that the Bitcoin community will come to its senses and will be able to formulate intelligent strategy. But that does not stop me from posting openly on this forum and calling for other's opinions on this matter. Anyway, I am not holding my breath...

What you're failing to understand is that, ultimately, it doesn't matter what a government defines as A or B.  What matters is what everyday people decide to use as money.

If they decide to use bitcoin (and the reasons are compelling) what someone else wishes to happen, be they govt or individual, is irrelevant.  They will go with the flow, or lose.

Another wishful thinking.

No, I understand just well.

But, and I hate to say this, in the world I live in, the government gets 100% their way, 100% of the time. And, to add insult to the injury, majority of the people support their government, to the dismay of the minority.

Show me a historic example where some people decided to do something against the government's way, and then the government followed the flow.

Wait a second... I now realise... it has happened... in Utopia!

[nebulus]

I am fine with calling all "this" Bitcoin. I actually think that "Bitcoin" is a great trademark. Please don't touch that if you finally decide to go on your "Save the whole world campaign" instead of trolling.

[gopher]

nebulus, what you wish is safe, not only from my possible actions, but by design.

One of the best features of this whatever we call is that the only way it can change it's nature is by consensus of all users, and that, I am absolutely certain of, will never happen, as majority users will never come to their senses, never mind consensus to anything.

Hence, Bitcoin will remain Bitcoin, the "currency of the future, the slayer of all legal tender, the saviour of bankrupt governments".

I have no intention to safe the world, I am sorry that you have so grossly misinterpreted my "campaign", I was merely probing small part of the Bitcoin community to get a general sense in possible reaction to a problem that I see, but not necessarily others see. Not trolling at all.

[nebulus]

My bad...

[nwbitcoin]

The more I look into bitcoin, the more I realise it is going to be the crypto currency that pushes the barriers, but will also most likely die in the process - think of it like napster for digital money.

However, thinking that now is the time to set the definitions is wrong.  That comes far later, and to be honest, it is not the early adopter who gets to make that decision.  That happens when your local political representative starts talking about it with other non technical people. Their understanding will come from other mainstream users who will talk about it as money - so that definition of it as currency will be implied, and that is good enough for law makers.

To see this in action, just think of the way that so many definitions have been created thanks to the mainstream taking ownership of the internet.  We had it with the lawful status of email, the introduction and lawful usage of a digital signature.  Another example is the way that the data protection laws are manipulated by organisations to their own agendas etc.

We are living in interesting times!

[gopher]

I agree with you.

I have been thinking about the wrong timing of trying to change the definition too.

Then my mind drifted onto the alternative course - instead of changing definition (may be impossible to implement even in the long term), would it not be easier to start a fork that keeps all the vital parameters of Bitcoin intact, allow merged mining with it (similar to NMC), then execute new PR campaign with new set of definitions.

That way, the new fork can develop on its own unique way, get mined and traded separately, but more importantly, will get to be seen in a different, hopefully favourable light by the broader population, good enough to convince them to look at it and use it.

[solex]

I agree with you.

I have been thinking about the wrong timing of trying to change the definition too.

Then my mind drifted onto the alternative course - instead of changing definition (may be impossible to implement even in the long term), would it not be easier to start a fork that keeps all the vital parameters of Bitcoin intact, allow merged mining with it (similar to NMC), then execute new PR campaign with new set of definitions.

That way, the new fork can develop on its own unique way, get mined and traded separately, but more importantly, will get to be seen in a different, hopefully favourable light by the broader population, good enough to convince them to look at it and use it.

I am going to repeat DeathAndTaxes because he makes an unanswerably powerful point:

MSB regulations in the US for example use the term "currency substitute".  Even if one went through the totally dubious effort to redefine bitcoin as "something else" with the stroke of a single regulator pen they could

[marcus_of_augustus]

Don't fall into the trap of thinking that bitcoin needs to be defined at all ... right now it is just "bitcoin".

The technology is still evolving, and rapidly also, already it is capable of doing things completely unlike any simple "resource". In the far future, "bitcoin" could be a whole concept definition basis of its own, for example, do you think people defined what a "wheel" was before it was invented, refined, matured as a technology? By defining, it you are trying to put a highly complex, multiply-connected surface in to a simple closed box ... and it just doesn't work.

Leave it be, it needs no definition to be a palpable reality and it grates on many levels to attempt to do so. Somethings just cannot be defined, labelled, controlled, enforced, as much as you wish them to be.

[gopher]

I agree with you.

I have been thinking about the wrong timing of trying to change the definition too.

Then my mind drifted onto the alternative course - instead of changing definition (may be impossible to implement even in the long term), would it not be easier to start a fork that keeps all the vital parameters of Bitcoin intact, allow merged mining with it (similar to NMC), then execute new PR campaign with new set of definitions.

That way, the new fork can develop on its own unique way, get mined and traded separately, but more importantly, will get to be seen in a different, hopefully favourable light by the broader population, good enough to convince them to look at it and use it.

I am going to repeat DeathAndTaxes because he makes an unanswerably powerful point:

MSB regulations in the US for example use the term "currency substitute".  Even if one went through the totally dubious effort to redefine bitcoin as "something else" with the stroke of a single regulator pen they could

I mostly disagree with what DeathAndTaxes wrote in this tread, it is either poorly or not at all substantiated; or it is not applicable to my motion - go and read the tread from the beginning, I refer to the reasonable and logical replies, then make a relevant comment, I will appreciate it.

@ marcus_of_augustus:

The reason I believe the Bitcoin needs redefining is to get some traction in being adopted by the regulated markets (i.e. financial institutions, government departments, etc); and when it comes to value exchange and trading, these markets are major players in contributing to any GDP, so no one should ignore them.

Irrespective of the wishful thinking that the Banks should accept Bitcoin, it is only that, a wishful thinking, as any financial institution is prevented by law to use alternative to the legal tender currencies.

Hence, if we keep Bitcoin defined as a currency (which I believe it is not) we will never gain the acceptance of the broader markets, Bitcoin will always remain a niche player it is now. And yes, $250M or even $1Bn market cap is a niche player. 

The irony of all this is, as I wrote earlier, if the majority of the Bitcoin community is happy to play with a niche product, it will stay as such, and there is nothing the minority can do about it.

[DeathAndTaxes]

Irrespective of the wishful thinking that the Banks should accept Bitcoin, it is only that, a wishful thinking, as any financial institution is prevented by law to use alternative to the legal tender currencies.

False, once again you have no understanding of what the term "legal tender" means.  In the US the EUR is NOT legal tender so therefore financial institutions are prohibited from being involved in transactions involving EUR, right?  In the US there is only one legal tender, the federal reserve note (and no longer issued US notes).  

United States coins and currency (including Federal reserve notes and circulating notes of Federal reserve banks and national banks) are legal tender for all debts, public charges, taxes, and dues. Foreign gold or silver coins are not legal tender for debts.

http://www.law.cornell.edu/uscode/text/31/5103

This is why for example every Forex exchange, foreign fund wire service, or remittance service is illegal.  Oh wait... they aren't.

That is because no such restriction on "legal tender" exists for financial institutions.  

Once again currency =/= legal tender.

Bitcoin can be a currency and not be legal tender, much like in the US foreign currencies are still currencies but they are not legal tender.  Likewise the US dollar is still a currency outside of the US but for most parts of the world it is not legal tender (a few foreign countries also have made the US dollar legal tender).