internet liability currency
do money and virtual coins have the same laws?
<p>Virtual coins are hot and the trend is settling in, many website are starting to create their own virtual currencies that can be used on their own website.</p>

<p>What laws apply on these coins, are they considered to be something that have value, just like money? What if I buy virtual coins (to be used on their website), and someday they decided to close without warning, does the website have to compensate me with money for my coins?</p>

<p>Cryptocurrency, and "virtual coins" are different things. </p>

<p>What you described as "virtual coins" for a website is really just store credits, not Cryptocurrency. In the event of a website closing down. There is likely very little you would be able to do to recover your money. </p>

<p>Cryptocurrency is considered property by the IRS, not legal money. The value is set by the current market pricing and there are no protections in place.</p>

<h2>Neither crypocurrency nor virtual coins are legally "money"</h2>

<blockquote>
  <p><a href="https://www.investopedia.com/terms/m/money.asp" rel="nofollow noreferrer">Money</a> is an <strong>officially-issued</strong> <strong>legal tender</strong> generally consisting of notes and coin, and is the circulating medium of exchange as <strong>defined by a government</strong>.</p>
</blockquote>

<p>"Legal tender" means that, if I owe you a debt and we have not contracted a specific method of settling that debt, if I offer you "money" you must either accept it or waive the debt. If I offer you crypocurrency or virtual coins or chickens (and we have not contracted that that is an acceptable method of payment) you can tell me to go away and come back with "money".</p>

<p>Cryptocurrency is a speculative investment in an non-government backed, non legal-tender digital register - it is worth whatever someone is willing to pay you for it. Just like your car, your overcoat or the manuscript of your novel it is protected by the laws relating to property.</p>

<p>Virtual coins are a debt owed to you by the website owner, redeemable on the terms you agreed to in the contract (subject to any consumer protection laws). You have lent them "money" and the coins are the documentation of that loan. If they go out of business you would be an unsecured creditor and entitled to whatever the relevant bankruptcy law decides (usually nothing). Note that is no different to the money you lend your bank when you put it in a savings account except that banks are subject to greater prudential regulation and oversight than commercial website operators.</p>
