The Fireside Chats are a series of talks intended to open up the research areas of HMC’s tutors to the rest of College. The format is an interview-style chat between a tutor and a student who is not in their subject area. Emma Wherrett interviewed Prof. Louise Gullifer for the first chat of the series.

 You have probably heard of the crypto-currency Bitcoin before, but have you ever wondered what happens to a person’s Bitcoin should they go bankrupt? How can Bitcoin be legally classified as property when Bitcoins essentially don’t exist? These are some of the questions which Professor Louise Gullifer, QC (Hon), senior law tutor at Harris Manchester College, discussed at the first Fireside Chat of the year. Having recently delivered a co-authored paper on the subject, “Bitcoin and Insolvency”, Professor Gullifer was able to explain, in an engaging and clear manner, the various components of the interesting issues that arise when dealing with the crypto-currency. Leading the night’s interview was Emma Wherrett, second year English language and literature. The topic of the evening was not something Emma would typically engage with in her subject area, but she found the experience very illuminating and enjoyable. “When I first learned the topic of Louise’s report, I was intrigued - ‘Bitcoin’ and ‘insolvency’ were phenomena of which I had heard much, but knew relatively little.”, says Emma. “As a JCR member and English student, interviewing Louise about her recent paper on Bitcoin and insolvency was a fantastic opportunity to engage with a member of the broader college community and also to explore an area beyond my own academic field.”

The terms themselves, “Bitcoin” and “Insolvency”, were briefly explained to set the scene. Insolvency, Professor Gullifer explains, is what happens when a person or business owes more than it owns. Bitcoin is a crypto-currency, but as Professor Gullifer says: “There’s nothing there.” Essentially, Bitcoin is a public ledger made of blockchain, which records the transactions of bitcoin – but the bitcoin does not physically exist. The transactions are secured through computers, called nodes, connected to the Bitcoin network. The individuals securing these transactions are incentivized by receiving newly generated coins for doing complicated math problems and adding to the blockchain. This process is also known as mining.

The discussion moved on to how the law currently recognizes Bitcoin when it is only a construct. As previously mentioned, Bitcoin is seen as a ledger, which according to Professor Gullifer is a common thing seen though history. “The Romans used coins as currency instead of their gold. The coin represented value but was not actually value.”, she says, “Although it was not actually value, it was still tangible. All legal systems see all tangible things as property.” The problem then, is not that blockchain works as a ledger, but that the ledger does not record transactions of a tangible thing.

“If you’ve read Harry Potter, you will remember that Harry uses Gringotts bank. Inside there are great big caves full of gold guarded by goblins and dragons. When you put your money into Barclays, there are no dragons, there are no goblins and moreover, there is no money.” Professor Gullifer says, to explain how modern ledgers work. “You have a claim on Barclays bank. The money is now the bank’s, but they owe you the money.” It is normally assumed that the bank is able to pay you back, but Professor Gullifer makes it clear that your bank statement is just a ledger of claims, like the ledgers of coin payments were to the Romans. The difference to Bitcoin is that your bank statement is still talking about property, because the claim under English law is property. “The problem with Bitcoin is that the record is all there is. Just a record of transfers of nothing.” Says Professor Gullifer. “How do you make it property when there is nothing there?”

The difficulties for the insolvency officer, when a bitcoin owner becomes insolvent, therefore, are twofold: First, knowing that the bitcoin is there at all. If the owner never told anyone, it might never be discovered, because blockchain has no names on it. Second, the problem of classifying Bitcoin as property under the law, so it can be withdrawn from the insolvent person. One possible solution could be gaining control of the private key which is needed to transfer the bitcoin. “The security of Bitcoin comes from the way it is transferred – because there is nothing there.”, says Professor Gullifer. “You need a public key and a private key to make the transfer. The public key is related to the private key, but you can’t find out the private key from the public. It’s not a real key, but a unique string of 64 numbers and letters, generated automatically.”

If the officer got hold of the private key, you could find a buyer and turn the bitcoin into “real” money relatively easily. However, that still poses the difficulty of getting hold of the private key in the first place, if it is not written down on something physical or kept in third party storage. Professor Gullifer emphasized that the problem of storing the unique private key is an issue for the owners themselves as well, and has reportedly caused panic when lost, as access to that bitcoin is gone forever without the key.

The first of its kind, the Fireside Chat was well attended, leaving the Charles Wellbeloved Room quite packed. The general reception of the talk was very positive; students of law as well as other subjects expressed excitement at having learned something new from an expert in the field. “This was the first fireside chat I attended and found it to be fascinating!” says Anna Donaghy, first year Philosophy and Theology, “Particularly how engaging the explanation was, given that I had limited knowledge at the beginning of the talk. I was impressed by how the questions and detailed responses helped me to learn a great deal in a short space of time.” Leonor Vulpe Albari, third year Law, agrees with Anna. “Louise was able to explain complex subjects in very simple and relatable ways. Her Gringotts bank example brought the subject matter to life.” Leonor says, “Don’t leave us, Louise!”

Many thanks to Professor Gullifer for the talk and to Emma Wherrett for leading the interview. Further dates for the upcoming Fireside Chats are currently being settled. Keep an eye on your inbox for more information.