Bitcoin uses a peer-to-peer network to allow people to transfer value across borders. This digital currency emerged in 2009, introducing a new cryptocurrency era. While regulators, tax authorities, and enforcement agencies globally are debating the best ways to use and handle cryptocurrencies, a pertinent question that most people ask is whether Bitcoin is illegal or legal. And the answer depends on the user's activity and location.
There's no central bank or government that issues and regulates or endorses Bitcoin. Instead, people use computers to create Bitcoins via the mining process. What's more, Bitcoin is not related to a specific government or entity. Instead, it's a peer-to-peer payment system, and you can't have Bitcoin in a physical form. Therefore, it provides a convenient means of completing cross-border transactions without incurring exchange fees.
The internet has many cryptocurrency exchanges that enable people to create and fund their accounts with the fiat money they need to purchase Bitcoin. But because not everybody can mine Bitcoin, most people buy it using fiat money at crypto exchanges. Nevertheless, take your time to learn about these platforms before signing and purchasing Bitcoin. Perhaps, you can start investing for reviews of various crypto exchanges. That way, you will learn more about these platforms.
After buying Bitcoins via a crypto exchange, you can send them to your digital wallet, from where you can use them to pay for services and goods. Several online retailers accept Bitcoin as a payment method. You can also cash out your tokens at a Bitcoin ATM or spend them at a local store.
Bitcoin and Illegal Activity
A common misconception is that people use Bitcoin for illegal activities. And this has been a controversial topic for a while. Some individuals argue that people use Bitcoin to get services they can't pay for using fiat money. Perhaps, that's because Bitcoin allows the users to spend it with some level of anonymity. It also allows you more freedom that you can't have with fiat money. For such reasons, some people assume that most individuals use Bitcoin to solicit or purchase illegal services.
Investigators can calculate the approximate percentile for Bitcoin transactions that people may have used for illegal services and goods compared to legal transactions. However, this approach paints a less troubling image than some people might think.
Bitcoin transactions percentile involving illegal services and goods is less than that of banking systems, credit cards, and cash. Thus, people use fiat money for unlawful activities more than Bitcoin.
Tracing Bitcoin Transactions
The blockchain, which is the technology behind Bitcoin, can enable investigators to trace back all transactions. And this deters would-be criminals from using this virtual currency for illegal activities because experts can trace their transactions.
Essentially, Bitcoin is combating some financial crimes, though many people don't realize it. For instance, one fact that people often overlook yet it's crucial is the inability to counterfeit Bitcoin. Currently, the U.S. dollar has many counterfeit bills in circulation.
Financial experts estimate that over $200 million of the money circulating in the U.S. is counterfeit. The U.S. government can avoid such an issue by adopting Bitcoin as a legal tender. That's because Bitcoin gives the user total control of the money that enters or leaves their wallet. Also, Bitcoin hinders individuals from making fraudulent charges.
While some people may use Bitcoin for illegal activity, the percentage spent that way is far less than that of fiat money. What's more, Bitcoin helps prevent financial crimes because transactions made in this virtual currency are irreversible. Also, Bitcoin is impossible to fake, meaning you can't have counterfeit tokens like you would with fiat money.