Are We the Owners of Our Cryptocurrency?

Recently, a client of Rabbit Swap encountered trouble while trying to exchange Bitcoin for another cryptocurrency. They got an address from our liquidity provider for the Bitcoin transfer but mistakenly sent Bitcoin SV (BSV) instead. Upon realizing the error, the client requested the return of the BSV. Technically, this was possible because a private key for a Bitcoin address can also access coins in Bitcoin forks, such as BSV. However, the liquidity provider declined, citing a lack of operational compatibility with the BSV blockchain and no access to its funds.

We explained to the liquidity provider that accessing the BSV would simply require importing the Bitcoin private key (or its corresponding seed phrase) into a wallet that supports BSV. Yet, the provider hesitated. They believed Craig Wright, BSV’s creator, to be a fraud and distrusted all wallets associated with this blockchain. Therefore, they were not willing to input their seed phrase into such wallets, as it granted access to their Bitcoin addresses. These addresses were actively used for swaps, and they did not want to jeopardize their security.

The client argued that cryptocurrency ownership comes down to possession of the private key. If funds were accidentally sent, the key holder had no rightful claim to them and was obligated to return the assets.

Both perspectives made sense. This raised the fundamental question: does having a private key make someone the owner of the associated cryptocurrency? From this flowed deeper inquiries:

• What does it mean to “own” cryptocurrency?
• Can cryptocurrency truly belong to anyone?
• Do traditional property concepts even apply to cryptocurrency?

In the case of the Rabbit Swap client who accidentally sent BSV instead of BTC, the story had a happy ending. All our partners are professionals, and they fully understand that their decisions directly impact the well-being of clients. Once all other swaps involving the addresses associated with our liquidity provider’s seed phrase were completed and there was no longer a risk of financial loss from a potential leak of private keys, the provider entered the seed phrase into a wallet that supports BSV and transferred the coins back to the sender.