13 years and still going strong, Bitcoin has been here for a long time. The pioneer of cryptocurrencies, Bitcoin was created as a peer-to-peer electronic cash system. When we compare cryptos based on market capitalization, Bitcoin leads the race, with its experience and popularity in the crypto world.
Throughout the years, many countries have come to accept Bitcoin as a legal method of payment, but most nations hesitate to implement this. There are even several countries that have ruled the usage and trading of Bitcoin illegal. Why is it so? Read on to find out!
Quick Facts about Bitcoin
● Bitcoin is a digital currency and it was created back in 2009.
● There is no physical form or embodiment for this currency – it is made, exchanged, bought, and stored with the help of blockchain technology (a decentralized system).
● The digital currency is not policed by any central authority or bank. It is generated by mining (a method involving the solving of complex equations with the help of computers).
● Bitcoin is widely known for its unpredictability and volatility.
● This crypto has served as an inspiration and a base for the several hundred cryptocurrencies that have evolved throughout the years.
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We Say Yes To Bitcoin
Both the downside and upside with Bitcoin is that it can be exploited anonymously by anyone, to carry out transactions, regardless of their location. This vulnerability of the digital currency makes it easy for hackers to misuse it, thus exposing the problems with the peer-to-peer network. Still, a few nations have indirectly approved the usage of Bitcoin.
This is done by bringing in new regulatory rules and laws that define where and how this cryptocurrency can be put into use.
El Salvador has become the first nation to recognize Bitcoin as an authentic form of payment accepted by the law. This change was brought to action in June 2023.
The United States
Many influential businesses like the DISH and Microsoft are inviting payments performed in Bitcoin. Various government agencies are working hard to minimize the illegal use of Bitcoin so that it can gain more trust.
CRA has approved the usage of Bitcoin as a commodity. This means that transactions made with Bitcoin are deemed as barter exchanges. Canada has maintained a friendly approach towards these currencies, especially Bitcoin.
In Australia, Bitcoin is neither recognized as a foreign currency nor normal money. The ATO has declared it to be an asset that is meant for “capital gains tax purposes”.
The ECJ has laid it down that purchasing and selling of cryptocurrencies will be considered as a supply of services. This applies to all EU members, but a few of them have framed their own policy on the usage and legality of cryptocurrencies.
Bitcoin? That’s a Big NO Here!
While many countries are in dilemma regarding the matters of digital currencies, some have gone and made these currencies illegal. The lack of centralized authority and the frequent misuse of the currencies in fraudulent activities like trafficking have made several nations wary of cryptos.
The country is facing a severe power shortage and the mining of cryptocurrencies only adds to the woe. So, a four-month ban of mining was declared in May.
The only member of the EU to outlaw the usage of cryptos, the North Macedonian Government warns its people against the usage of cryptos as it is widely exploited for illicit activities. Investing in cryptos is also illegal here.
Bitcoin is neither regulated in Russia nor is it legalized to use a method of payment.
For all purposes, Bitcoin is completely banned in China. Any transactions or trades are considered illegal.
The country’s government and the state and central banks have declared that Bitcoin is not an authentic method of payment.
All cryptocurrencies including Bitcoin are restricted in Bolivia.
With the help of a vote in the national assembly, the legality of cryptocurrencies was outlawed in Ecuador.
The country does not accept usage of cryptocurrencies nor does it allow investing in them.
Reasons Behind the Ban of Bitcoin
Although Bitcoin and various other cryptocurrencies are growing in popularity, numerous disadvantages come with them. Most people are still wary of a digital currency for that exact reason – it is digital and there is no physical manifestation of it. The fluctuations in the value of the cryptocurrencies only add to the list of potential risks.
Some common risks that are associated with Bitcoin and the other cryptos are given below.
The cryptocurrency market tends to be a haven for those who are interested in tax evasion and money laundering. Also, there is a high risk of fraudulent activity, with scammers selling fake Bitcoins.
Lack of Security
Bitcoin users are mostly the ones who buy and sell them in exchanges. Just like any other virtual platform, these online markets and exchanges are also prone to data breaches. If a hacker gets hold of the private keys of several individuals, then the process of stealing and transferring Bitcoins into another account becomes easy.
No Proper Regulation
Unlike the currency of a nation, these currencies are not controlled or defined by any form of authority. They also pose a challenge to a government’s currency, and as a result, these governments try to restrict and regulate these cryptos. In the worst case, cryptocurrencies get banned. Check out this go url if you want to trade in cryptocurrencies safely.
Volatility and Losses
Cryptocurrencies, especially Bitcoin, are extremely volatile and their values tend to rise and fall dramatically. If one invests in them without prior knowledge, then they could face a loss of thousands of dollars. But, it also serves high returns when the right moves are made.
Cryptocurrencies might become the future currencies; who knows, one day a regulated form of these currencies could be introduced and it could become a common currency for everyone, everywhere. But, it is definitely not the time now. With several risks, these digital currencies are seen as a threat by several nations, and hey, can you blame them? Alas, there is a long way to go in the field of digital currencies.