A bearer asset is something that you own and can use however you desire. It may sound like a basic concept, but if you take a moment to reflect on what you truly own, you might be surprised, shocked, or even a little depressed to discover that you don't actually own as much as you think.
Let's consider an example: you have a car that you have paid for in full, with no outstanding payments. At first glance, it may seem like you own that car outright. However, if you dig a little deeper and ask yourself the question, "Does anyone else have a claim on the car?", you might start to realize that true ownership is not as straightforward as it seems.
One aspect to consider is the registration and licensing of your car. If your car is registered, the state you live in essentially has a claim on your car. This means that you are required to pay registration fees to maintain the legal status of your vehicle. Failure to pay these fees could result in penalties or even the revocation of your registration.
Another factor to consider is insurance. In many jurisdictions, having car insurance is a legal requirement for operating a vehicle. This means that you are obligated to maintain an active insurance policy in order to use your car legally. If you fail to meet this requirement, you may face legal consequences or be unable to drive your car.
So, while you may have paid for your car in full, it is important to recognize that there are external factors that can impact your ownership and use of the asset. These factors create a situation where your car is not a true bearer asset, as there are external claims and obligations that limit your control over it.
While the example of a car helps illustrate the concept of bearer assets, it is important to note that this concept extends beyond just physical possessions. Bearer assets can also include financial instruments, such as cash or certain types of investments.
For example, let's consider cash. Cash currency is often seen as the ultimate bearer asset, as it is physical and can be used for any purpose. However, even cash can have limitations. In some countries, there are restrictions on the amount of cash that can be carried or used in certain transactions. This means that even cash, which is often thought of as the most flexible and unrestricted form of ownership, is not entirely free from external constraints. Likewise, whoever issues the currency ultimately owns the currency. Your use the currency to buy and sell, but you don't own the currency.
Similarly, certain types of investments, such as bearer bonds or stocks, can be considered bearer assets. These assets can be bought and sold without the need for formal registration or transfer of ownership. However, there are still regulations and legal requirements that govern the trading and ownership of these assets.
So, while bearer assets may seem like a simple concept at first, it is important to recognize that true ownership and control can be imposed by external factors and obligations. The idea of complete ownership and freedom to use an asset as you desire is often an ideal rather than a reality. Bitcoin is an exception, however. Bitcoin is a bearer asset. Although restrictions may be claimed by governments on Bitcoin, the bearer of the Bitcoin has the choice to comply or not simply because of the nature of the asset.
In conclusion, a bearer asset is something that you own and can use without restrictions. However, it is important to understand that true bearer assets are rare, as there are often external claims, obligations, and regulations that can impact your ownership and use of an asset. Whether it's a car, cash, or a financial investment, it's crucial to recognize the limitations and constraints that can be imposed, even on assets that are commonly perceived as bearer assets.