Cryptocurrency has thrust itself, with the intent to disrupt, into a tradition that carries a lot of baggage—money. In the beginning, its decentralized ledger implemented on blockchain was seen as an airtight security guarantee. That was before dramatic theft occurred, from the Mt. Gox affair and others [Redman] to major attacks from cybercriminals in North Korean [Chainalysis]. Although warnings have been published [Black], cryptocurrency theft victims may be surprised by such losses. Kraken's security page still says, "Our team of experts have built in a number of sophisticated measures to prevent the theft of money or information" [Kraken]. Yet cryptocurrency can be "stolen" in the sense that you can have it one day and discover that, due to larceny, you don't have it the next day.
My point is a simple one: It feels like theft, but it's not. Cryptocurrency cannot be stolen—by definition. We don't need to ask whether crypto is a commodity or a credit vehicle, nor whether the exchange or the client owns the funds [Anderson]. We need only look at the principle behind the arrangement. Most bank accounts have an owner, a vessel (the account), some contents (the money), and some means of access (an account identifier or accountholder's personal identity). AND there is some authority that manages these elements (the bank). Cryptocurrency conflates the vessel and the contents, while rejecting the authority. I claim that cryptocurrency also absorbs the owner into the access, leaving only two things, the access and the contents.
Note that the term "decentralized finance" might be more precise here, but "crypto" is the coin of the realm, so to speak. We digress to note that cryptocurrency promoters explicitly omit the element of authority, claiming its absence as a feature, not a bug. Yet this doctrine has already, and ironically, been contravened. The government(!) of El Salvador has declared that Bitcoin is legal tender and must be accepted as payment; the IMF (an even broader authority!) urges retraction [IMF]. A long-standing request to the local government for permission to excavate the tip (landfill) in Newport (Wales) has ben rejected by that Council [BBC]. Law enforcement can indeed handle this as a crime [HamiltonPolice]. In all of these situations, a crypto holder has invoked authority to thwart the anarchy of decentralized finance.
To return to the concept of theft: Our unabridged dictionary of 1930-something (Websters Third International, title page long gone, remaining 3206 pages intact) defines theft as the "taking and removing of property" with the intent to deprive the rightful owner. So both taking and removing are elements. In fact, there's a word for the removing, the act of carrying away items in larceny—asportation. Our tradition has long given up the idea that money requires a tangible realization, but we retain the idea that it's stored somewhere, to which place we go when we want it and from which we can get it. That's obvious with fiat currency in the form of cash, but it also applies to bank accounts, where transfer is accomplished through ledger entries that move (intangible) funds from one bank account to another.
Where is crypto? Cryptocurrency funds do not reside in a digital wallet—a digital wallet is like a physical wallet or envelope or piggy bank, rather than a bank account. Cryptocurrency resides on the blockchain. ("Every bitcoin consists of its entire history since it was mined" [Anderson, pg. 6].) In a transfer, no asportation takes place. Access is granted through the key, not through the digital wallet that contains the key. In human reckoning, there may be a "rightful owner" to be deprived (and a thief, the cryptocur, if you will), but crypto has no room for that specification. Whoever controls the key is the owner.
We can verify this conflation by looking at cases of loss [Popper]. Total loss of the key means that ownership vaporizes. If there were an authority, any authority with an independent instrument of ownership, people would be lining up to retrieve their crypto. Note that fiat cash and bearer bonds can be lost completely through physical destruction, but the money does not continue to exist in limbo.
Of course, this is somewhat academic. Diffculties are worked out—or progress made even as the difficulties are uncovered and worked out. Legal action to recover "stolen" crypto (as I understand it) forges ahead under on alternate interpretations of either the property or the act.
There is no concept of ordinary theft that does not rely on some identification of an owner outside of the holder. This gap in the concept of cryptocurrency as money seems so obvious that I'm surprised to find no mention of it (missed references welcome!) in the voluminous Web pieces promoting decentralized finance, where freedom and independence take the spotlight. In the Reddit Bitcoin group, the user gnovos gives us an exception, commenting "I guess the big question is, since the value of a bitcoin is determined exclusively by the say-so of the other computers in the network, is it even possible to really `steal' one? Or do we have to come up with an entirely new concept of theft..." [gnovos]. You go, gnovos!
Let me float the suggestion that some grounding in the broader human issues, the sort of examination that occurs in the humanities, might have inspired such considerations, clarifying the status and treatment of these assets before it became awkward. And let me float the suggestion that more questions should be asked concerning another fervently held principle of decentralized finance, its benefit to the unbanked.
On the reasoning offered here, if you hear someone say that "cryptocurrency cannot be stolen," you can agree! But you may be agreeing with a sense far different from that intended.
[Anderson] Ross Anderson, Ilia Shumailov, Mansoor Ahmed and Alessandro Rietmann. Bitcoin Redux. 2018. Workshop on the Economics of Information Security. https://doi.org/10.17863/CAM.35122
[BBC] British Broadcasting Corporation. 2021. Bitcoin: Newport man's plea to find £210m hard drive in tip. Accessed 26 January 2022.
[Black] David B. Black. 2019. How Can Bitcoin Be Lost Or Stolen When It's In An Immutable Encrypted Distributed Ledger? Forbes. Feb 22, 2019. Accessed 28 January 2022.
[Chainalysis] Chainalysis Team. 2022. North Korean Hackers Have Prolific Year as Their Unlaundered Cryptocurrency Holdings Reach All-time High. January 13, 2022. Accessed 26 January 2022.
[gnovos] User gnovos. 2011. Reddit thread "Is bitcoin 'theft' illegal?" Jun 09, 2011.
[HamiltonPolice] Hamilton Police Service. 2021. Arrest Made in $46 Million Dollar Cryptocurrency Theft. Press Release. Accessed 26 January 2022.
[IMF] International Monetary Fund. 2022. IMF Executive Board Concludes 2021 Article IV Consultation with El Salvador. Press Release from IMF Communications Department. Accessed 26 January 2022.
[Kraken] Kraken Security page. Kraken Bitcoin Exchange. Payward, Inc. Accessed 27 January 2022.
[Popper] Nathaniel Popper. 2021. Lost Passwords Lock Millionaires Out of Their Bitcoin Fortunes. The New York Times. Jan. 14, 2021. Accessed 26 January 2022.
[Redman] Jamie Redman. 2019. Hackers Have Looted More Bitcoin Than Satoshi's Entire Stash. Bitcoin.com May 24, 2019. Accessed 26 January 2022.
Robin K. Hill is a lecturer in the Department of Computer Science and an affiliate of both the Department of Philosophy and Religious Studies and the Wyoming Institute for Humanities Research at the University of Wyoming. She has been a member of ACM since 1978.