The most popular cryptocurrency around the world is Bitcoin. More and more businesses and individuals are turning to cryptocurrency transactions. Even the people who are not into crypto trading have a general understanding of the concept. But there are still a few lingering doubts around the entire subject.
Many misconceptions arise owing to lack of concrete rules or a uniform regulatory authority. Some authorities fear that it could be used illicitly or for money laundering. Since the biggest advantage of blockchain technology is utmost privacy, it is impossible to trace the source if it is used for illegal activities on the dark web. So, here is the big question- is Bitcoin legal?
Countries where Bitcoin is legal
There are some countries like Iceland which have denied a legal status to Bitcoin. In some countries, Bitcoin is considered safe to use as long as they are not for illegal activities and illicit purchases. In the US, you can use Bitcoin for all legal internet transactions. IRS considers all cryptocurrencies as properties and they are governed by federal tax laws.
Using Bitcoin, its mining and possession are illegal in Russia. In most of Europe and North America, Bitcoin use is considered legal. Other governments which have a negative outlook towards Bitcoin have not yet stated that they are anti-Bitcoin like Russia.
So, the question of the legality of Bitcoin differs for each country. The common factor to remember is that most of them do not treat Bitcoin as an official currency, but, as a property or an asset. There are special laws to govern mining of crypto coins, trading activities, and operating Bitcoin exchanges.
Bitcoin mining, in simple terms, means that the transactions will be recorded on a public ledger named Blockchain. Still, the users remain anonymous. New blocks are created with computer algorithm after every transaction and added to the blockchain.
As the years pass, the creation of blocks gets tougher as computing the complex algorithms become more difficult and take more time. Almost every four years, Bitcoin rewarded when new blocks are created, decrease by half. When Bitcoin mining began, 50 Bitcoin were rewarded for creating new blocks. As the number of Bitcoin rewarded for each block decreases with time, it came down to 25, and presently it is 12.5.
This means it will take a while to see gains. So, to get profits in mining, you’ll need a powerful processor. Specialised machines called ‘rigs’ are designed to mine Bitcoin or create new blocks. From an economic point of view, you need the rigs to quickly solve the algorithms and run on very little energy.
People have misconceptions about mining that it is similar to counterfeiting money. Here, you are not creating a fake currency, crypto coins are totally new types of currencies. There is a need to clarify the false beliefs and dispel the myths surrounding Bitcoin mining.
Digital currency and Bitcoin mining are seen by many governments as threats because crypto coins can become alternatives to national currencies. While using a computer system, virus attacks can occur and hackers can use it to mine Bitcoin illegally. This is also why some countries are skeptical towards fully accepting Bitcoin mining.
Even in many countries which are silent regarding the legality of Bitcoin, the usage is regulated, but mining is not illegal. Bitcoin mining is safe in some countries, but regulations can change any moment. Overall, the legal status of Bitcoin varies from one jurisdiction to another.
Disclaimer: “This article was contributed by the CEO of Blackmore Group, Phillip Nunn. Entrepreneur, financial expert, corporate evangelist, fintech and crypto trading authority, Phillip is an industry speaker and renowned thought leader on topics such as Fintech, Cryptocurrency, and Blockchain technologies. Follow his blog at https://phillipnunn.co.uk/phillips-blog/ ”