Is Digital Currency Legal?
The legality of digital currencies including bitcoin vary from country to country and even in different regions of the same country, as per their own regulatory frameworks and law enforcement paradigms.
While there do exist many different nations in the world that have quite explicitly allowed the use of bitcoin trading as a medium of exchange (Japan being one of the pioneers in this regard, where bitcoin is becoming increasingly popular as an alternative currency and a means of executing monetary transactions) and trade.
On the other hand, there are many different countries that have either restricted or even out rightly banned it. Apart from that, different government institutions, agencies, and regulatory bodies have essentially classified bitcoin as per their own requirements.
The issues that many people fail to understand regarding the legality of bitcoin has nothing to do with legality as such, but more to do so with their ‘utility’, i.e. how the people who use it derive utility from it.
Example Of Bitcoin Misuse
The” WannaCry” virus is a primary example of bitcoin misuse. As a matter of fact, many people did not even know about the digital currency until their systems were hacked and compromised and they were ordered to pay ransom amounts to the hijackers or else lose all their data.
The creators of this particularly odious form of ‘ransomware’ virus used bitcoin as a means of completing the transaction and thereby allowing organizations to regain access to their own resources, from which they had been locked out. However, a point to understand here is that the digital currency in question (bitcoin) was not illegal, but the people who used it were criminals.
The utility of bitcoin is the same as paper currency. It is a simple means of completing a transaction. It is the nature of the transaction itself, that could be illegal, not the medium of exchange, per se.
Bitcoin: An Entirely New Model
Nevertheless, the fact remains that the bitcoin platform essentially introduced an otherwise entirely new model, separate and distinct from just about all existing ones. This means that the traditional regulators along with their associated regulations that are responsible for governing fiat or paper currencies are almost entirely redundant and not applicable to bitcoin.
Before the advent of digital currencies, the difference between fake and real currencies was relatively prosaic. All the different types of illegal, counterfeit currencies were simply classified as money that essentially ‘misrepresented’ itself as a form of legal tender that was enforceable by governmental fiats and sanctions as they applied to that particular currency. On the other hand, Bitcoin is completely different since it has no existence outside the virtual world. Unlike paper currencies, they cannot be seen or felt.
In many countries, governments are afraid that that bitcoin could potentially be put to use for the buying and selling of contraband, money laundering, dealing in illicit goods and other illegal activities without leaving a paper trail.
However, the fact of the matter is that illegal transactions will remain illegal, irrespective of the fact that such goods are paid by paper currencies, precious stones, and even gold. This is why bitcoin is becoming so popular in so many nations since the actions of a few criminals cannot be taken as an example against the myriad legal transactions in bitcoin, that take place every day.