Is BTC taken by developers considered theft if BTC is seen as digital property?

A lot of courts around the world have recognized Bitcoin and similar "crypto-assets" as digital property, even in places like China where they’ve banned many crypto activities. Now we’re facing a situation where some folks are pushing for changes to the Bitcoin software, like the "BWP-110" or "The Cat," which would essentially take away some coins. There are also ideas floating around about dealing with the "Quantum computer threat" that might freeze coins thought to be vulnerable, especially those in P2PK outputs. If one of these proposals actually goes through (let’s hope it doesn’t!), could the people who lose their Bitcoins potentially sue someone? And who would they sue? - The developers who made it happen? If the confiscation was simply a bug and could be reversed, that feels a bit off since it’s part of the risk when you go with open-source software. But things like BWP-110 are clearly designed to confiscate coins. As far as I know, "The Cat" has confiscation as its main goal, just like the proposals regarding quantum confiscation. In these cases, it seems like there might be real legal risks for the developers. Or could they just say people can stick with the old version? - Or maybe against the miners who backed it, assuming it’s a soft fork? That could also be on the table since they’re the ones changing the protocol and moving into a version that takes coins. You could argue that if it’s just a code proposal, it’s still inactive, and the miners are the ones who really bring it to life.

My thinking is very simple: Bitcoin is so expensive because no one in the world can stop or block transactions, freeze coins, and so on. This is a feature of the protocol. Developers can push forks that violate decentralization, but miners won't accept it. The coin's price will collapse, and miners will go bankrupt. I don't see the point in wasting huge amounts of electricity on a centralized protocol.

I *think* it would depend on how they do it. If they take the coins and send them someplace else that is theft. If they change the rules to make them undependable then not theft but much worse. Because that then shows that today we are not going to let you spend *these* coins for reasons # 1 and #2. But tomorrow they can then change the rules to say we are not going to let you spend *those* coins for reasons #3 and #4. It will never end. As they find things they don't like then they will ban those coins. Oh, these coins came from a casino, you can't spend them. https://www.reddit.com/r/Bitcoin/comments/2pfgjg/exposed_lukejr_plans_on_forcing_blacklists_on_all/ -Dave

From my (layman) point of view this could be compared with vandalism. Making coins unspendable is like destroying someone's property without the intention to appropiate their coins yourself. There's a catch though: the 21 million coins limit. If coins are burnt or "taken out of circulation", some consider that makes all other coins more valuable, as the confiscated coins can't be sold anymore. So it's like a theft with the rest of the Bitcoin users as the beneficiaries. Are then all Bitcoin users thieves? Does that depend on the price surging after the confiscation event (according to that logic: if the price surges, then they're thieves)? These questions look funny, but maybe someone will try to exploit them legally if we really see such a proposal thrive. So BWP-110 could in theory be seen as an additional legal risk for all Bitcoin users, at least those who have (e.g. by posts in this forum) supported the move ... On the other hand, the confiscation event could also reduce the value of Bitcoins, because it reduces also the previsibility (you don't know if your coins will be the next ones to be confiscated!). It could reduce the utility of Bitcoin as a whole. That's what myself I'm fearing more than any legal discussion. (As a side note: somebody could consider these coins "burned" and create an OP_RETURN protocol based on the "proof-of-burns" (like Counterparty did), which would be the transactions that led to the confiscation. But these coins would not be Bitcoins anymore. So this doesn't really "counter" the "theft" assumption.) I think these filters were policy based and thus not really a confiscation, it only would have made it more difficult for these transactions to propagate.

They were just policy since that was all he could do at the time. You don't think he would have done more if he could. -Dave

I wonder if the majority will stick to the 'confiscatable' Bitcoin or yet another 'Legacy' Bitcoin will appear with the current, older rules.  I fully agree with DaveF.  Like every thing else, you can clearly see that every time they get to put stricter laws in place they will only continue with even more restrictions later when things cool down. I always bring this subject in to discussion but this is why I got very upset when theymos announced Mixer bans on the Forum.  It very rarely ends with a single rule because there is always something a little bit worse and if you do not ban that as well, why even ban the first thing.  Do both or none.  But if you do both then expect to ban a third thing.  It never ends.  Also, as discussed on the Coin Join topic.  Some people will be innocent and suffer from a ban too. What this would do is it would make Governments extremely excited while a decent portion of us will definitely either stick to a version of Bitcoin with the current rules or permanently move to some thing that enforces actual fungibility such as Monero. The Whitepaper should be clear enough.  Bitcoin should be fungible.  But it looks like so many people are trying really hard to make it non fungible and other than the interests of a few countries, I can not see why.

Let's look at the economic aspect. No one in the world except the US can change the Bitcoin protocol. Bitcoin is integrated into the US economy, people and companies pay taxes, and investment funds use this asset. And suddenly someone decides to change the consensus rules. Not all miners are located in the US, and it will be very difficult to force other miners to accept the consensus.

Due to the issues I raised in this thread, it could be a legal risk for miners to support the "confiscatable" chain. So I guess at least some could indeed support a "Legacy Bitcoin" which hardforks away, in the case a "confiscation softfork" gets any majority. The question is of course if this Legacy Bitcoin would be able to hold a value close to the original one, it depends on which chain more coins are dumped (well, at least Luke seems to have lost a lot of his coins ...). But: Let's assume the question I raised in the OP is true and confiscations are considered theft, and developers and/or miners supporting such a move face legal risk. Wouldn't this mean that each of these steps to enforce stricter rules would become a risk too? I doubt if even "the US" could change the Bitcoin protocol. The US miners according to a recent web search have a market share of about 37%. That would not be enough for a softfork. It would however be enough for a contentious hardfork. We could imagine a scenario where the US massively buys Bitcoin as a strategic reserve and/or imposes any legislation that coins held by US institutions cannot be held on a chain with the feature X. X could be privacy, but also at least in theory data-storage related, e.g. we could imagine that they forbid US institutions holding coins on a chain where US military documents could be uploaded and distributed. And thus, as a reaction to this legal change, a Bitcoin developer group develops a hard-forking client with a protocol that confiscates coins. But hardforks aren't that problematic regarding legal issues, because you always could support the original chain, and probably many outside the US would do that in this scenario. So no coins on the original Bitcoin chain would be confiscated. The problem seems to me exclusive to softforks. It could be however an issue of hardforks where no alternative chain is mined at all, but I consider that very unlikely in such a controversial scenario.

If the US can't do this, then other countries have no chance. The recent publication of Epstein's emails has revealed many interesting details about Bitcoin and cryptocurrency entrepreneurs. Why fight a revolution when you can pay revolutionaries grants and salaries?  I see the old dilemma: Code or Law. If law becomes paramount, then Bitcoin becomes pointless.

I was trying to figure out why you brought up the example of the US changing the protocol. But I think your reasoning is: If confiscation is considered theft, then the US could impose a protocol change which "rolls back" the confiscation. Or directly forbid the trading or mining of the "Confiscation Bitcoin" (e.g. the B?P-110 LukeCash). However, actually all countries where Bitcoin is considered property and thus confiscation theft would be able to exercise pressure in that direction. Not only directly (via a law restricting confiscation) but more probably indirectly: as I speculated in the OP in such a scenario miners would have to take into account legal risks if they support a "confiscating" Bitcoin fork. People who lost coins due to the confiscation could sue them. I think this dilemma will not have a perfect solution. Bitcoin is a social system: the consensus always will have a "social" element, where some groups exercise pressure their favourite features and try to prevent the adoption of features they don't like. There is no "perfect code" probably (in the sense of a Bitcoin protocol version which will be better than all other alternatives, for all possible use cases). There will always be tradeoffs. For example, Taproot increased the expressivity of the Bitcoin script language, but on the other hand many associate it with the Ordinals-caused congestion. And that means that law can interfere in some ways with this "social agreement". But confiscation probably is a red line that should be prevented at all cost. Only if there is really an existential threat, it should be possible, but with transition periods as long as possible. And I doubt even the quantum threat justifies confiscation.

I'll try to explain my logic. Russians have a saying: "If a gun is hanging on the wall, it's bound to go off." To explain this with an example, I'd recall the story of the Canadian truck drivers whose accounts were frozen by the government (which was later deemed illegal). Might makes right in the world right now; Trump can crash global markets with a single speech or social media post. Confiscation is a red button; if it appears in Bitcoin, someone will definitely push it.

Even if we assume that Bitcoins can be stolen at all (but see below), this doesn't seem convincing. Consider a limited edition art print. If someone would take some of the prints out of the market, this person might be considered to have stolen them (if he kept them somewhere). But no one would reasonably assume that those who rightfully obtained their copies are thieves because of this, no matter how far the price rises. But this all would only matter if the jurisdiction that applies knows "theft" of something non-physical. In other jurisdictions, confiscation might be more something like computer manipulation or fraud, if anything at all.

The theft of a tangible item, such as the art print in your example, would deprive the owner of control of the asset, who had stored it insecurely. However, other owners of the art print would still own it and manage it independently. With Bitcoin, the situation is completely different: all coins are stored in a single decentralized repository—the blockchain—and restrictions or blocking of some coins significantly reduces the value of others.

By design, the Bitcoin blockchain allows to track the control of every single satoshi back to the block where it was mined. This means that, similar to an art print or any other collectible item, if some of them get stolen, blocked or restricted, this does not affect the other owners in their ability to manage them. That is, if we assume satoshis on the blockchain can be owned. Storage on a single decentralized repository does not change the situation where the represented assets can be managed independently from each other. If we assume that restriction or blocking of some coins negatively (or positively, as the post I quoted assumed) affects the value of other coins, this does not imply this would be the effect of something like "theft". In fact, your theory of the value being negatively affected makes it even more plausible to assume something like computer manipulation or sabotage. The offender interferes with the data processing, creating a situation where the data processing behaves differently from what the users expect, thus causing financial loss and/or reputational damage. This happens also for centralized data processing, and can be prosecuted in some jurisdictions, but not as theft.

Let me give you a simple example. Suppose my friend and I keep our money in safe deposit boxes at the same bank. The next day, I learn that thieves robbed the bank and broke into some of the safe deposit boxes. My safe deposit box remains intact, but my friend lost his assets. I will withdraw my assets from this bank's safe deposit box as soon as possible. The beauty of Bitcoin is that no one can restrict transactions.

I just realized I completely forgot to answer you d5000, sorry for my almost three months late reply! I would say yes.  My hopes are high that people are not dumb enough to dump the Bitcoin that can not be confiscated for seizable Bitcoin.  It sounds really dumb.  We are progressively dumber however as a society, so while my hopes are high I would not be surprised if the opposite is more likely nowadays. They may become risks too, if you mean legal risks.  Now I do not know how things work in other countries, but in mine legally fighting the government is like punching a wall due to high levels of corruption.  There are many countries where people are afraid to even think of exploiting a law or fighting against it.  So I am assuming that while these risks are theoretically there, they are nothing in the face of a corrupt state.  Which are many. The other way around that I am thinking of is the more corrupt and restrictive countries like China obliging the use of the seizable Bitcoin while the less corrupt ones mainly use the 'legacy' one like today.  This would keep both versions of Bitcoin used and probably close in value too.

Got that. Going back to the topic, this makes you one of the other BTC owners whose coins haven't been confiscated aka "taken out of circulation": Given the example with the deposit boxes, I still don't see how users who aren't directly affected could be subject of something like "theft", no matter if they get a benefit or a disadvantage from other coins being confiscated. The whole thread is about the theoretical (?) situation where developers somehow manage to do so.

I can give you another example. Let's say the owner of a quantum computer hacks a couple of large wallets and burns 1 million bitcoins, sending them to addresses whose private keys are virtually impossible to crack. Are you sure the value of the remaining bitcoins will increase after this? I want to tell you that bitcoin is valuable because its supply is limited and it's impossible to crack with a brute-force attack.

Good example, thanks! Indeed I think with that sentence I went too far. I think for the "effect" on the remaining coins much depends also on the number of coins which are confiscated. If a large number of coins is blocked (e.g. BIP-361 if Satoshi doesn't move his coins) then this could result in the value indeed going up a bit. But if the number of coins is small (BIP-110?) then I guess the effect of the doubt about Bitcoin's protection to property would be more relevant - some people could sell their coins because they don't trust the Bitcoin system as a whole anymore. I've googled the kind of offense this could be, and it seems in the US it would be "Computer Damage" according to the Computer Fraud and Abuse Act. This offense does not cover only hardware, but also other kinds of "information". So I think we have the response here for the initial question too. An article linked in my Google search lists malware as an example. Any Bitcoin modification (e.g. BIP 361, BIP 110) which confiscates coins could be considered malware, as it can cause damage to information, just like a computer virus. In the case of BIP 110, even if originators added a protection to existing UTXOs, there are still possible confiscation scenarios, above all for contracts with locktime in the future. Thus this is comparable to a virus where the malware originator adds a "safeguard" like "don't delete files in the Documents folder", but if someone uses another folder for Documents which are then damaged or deleted.

Developer  can create forks or clients that weaken the decentralization principle or add more centralized control. Bitcoin consensus is not determined by developers but by miners, node operators, exchanges, businesses, and ultimately the market, which rules are economically valuable If miners try to implement a fork that breaks censorship resistance or confiscation resistance, the market will likely reject the chain economically, user confidence will decrease, demand will collapse, and miners will suffer the most from the decline in the value of the coin Bitcoin mining is economically viable because people see it as a politically neutral, censorship-resistant, and unregulated network. If these features are removed, there is no longer any justification for running proof-of-work, which consumes so much electricity. Because a centralized system can be operated much more cost-effectively with a simple database. Bitcoin’s rules cannot be changed unilaterally. Bitcoin’s power comes from its decentralized consensus. Developer can propose code, but the final decision depends on the collective acceptance of node operators, miners, exchanges, businesses and users. Bitcoin is deeply embedded in the U.S. Economy through ETF investment funds tax revenues, and corporate holdings. Therore, any change that would compromise the neutrality or security of the network would be economically costly. Not all miners or nodes are located in any one country. If one party tries to impose controversial rules, other participants around the world can continue to operate the chain while maintaining the old consensus. Bitcoin’s history has shown that the market ultimately favors the chain that is more decentralized, secure, and predictable.