Bitcoin is the first decentralised peer-to-peer payment network that is powered using Blockchain technology. It first appeared in January 2009, the creation of a computer programmer using the pseudonym Satoshi Nakamoto.
Bitcoin is a state-of-the-art Internet virtual currency that allows anyone to buy and sell goods and services without the need of an intermediary agent such as government agency, bank, credit card, etc. The bitcoin software using powerful cryptography and hashing technology solves the problem of double spending with its unique, unalterable blockchain technology.
Uses of Bitcoins
- Buy or Sell bitcoins for currency (US dollar, Euro, INR, etc.).
- Buy or Sell services (internet hosting, games, etc.) or commodities for bitcoins.
Bitcoin continues to remain a mystery to most people including the legal and tax authorities who are trying to understand the implications of Bitcoin as a cryptocurrency to the national and international economy.
The concern seems to be justified due to the complex and autonomous nature of the Bitcoin system and its potential for criminal misuse, and the implications of its use for tax evasion.
Is there a blanket ban or illegality in the adoption of Bitcoin?
The answer is no. Still, the government and other agencies are investing their resources to come up with a framework for regulations in India. RBI (Reserve Bank of India) has released press releases cautioning the public to exercise vigilance in dealing with the Bitcoin system.
It is an interest to the politicians as well as to the law enforcement agencies. There’s an attempt to control the use of the digital currency as the ramifications of Bitcoin, or alternative coins are still unknown. It is natural that the Government agencies across the world are increasingly worried about the implications of Bitcoin due to its anonymity, open and borderless.
What are the legal barriers to using bitcoins as a virtual currency?
The legal status of bitcoin varies considerably from one country to another. There’s no well-defined set of regulations or rules that are global. While the majority of countries do not make the usage of bitcoin itself illegal, its status as a currency varies, with differing regulatory implications.
There are some who use Bitcoin as part of a Ponzi scheme or MLM and take advantage of innocent and vulnerable investors. It is essential that before getting yourself involved with the Bitcoin trading, understand the underlying technology, and implications.You must verify out the systems and the support forums before planning to invest your hard-earned money.
Despite Bitcoin’s legal concerns, there’s an expanding list of countries where Bitcoin is legal now, as more countries draft official laws and procedures to adopt the Bitcoin system.
Is cryptocurrency legal in India? What are the concerns?
Although IRS (Internal Revenue Service) in the US classifies Bitcoin as an asset when not used as a payment compensation for services. The legality of cryptocurrencies has been the major point of concern in India. It has kept several investors on a side where public believe that investing in cryptocurrencies is still a huge risk. If you were engaging in Bitcoin trading and are worried about the tax or legal authorities, then you may need to consult with a lawyer on the existing regulations and laws concerning the use of trading bitcoins.
If you have purchased high-volume of bitcoins outside India, then it is advisable to sell the bitcoins and bring the cash to India. If you earn income from trading bitcoins, then be sure to comply with all the taxation procedures.
As of now, there’s no clear directive from RBI on the bank or use of the Bitcoin system as a financial instrument. However, if and when RBI comes up with a ban policy, you can always move the bitcoins to outside territory and encash them.
Digital currencies are an attractive asset with the proliferation of the digital media. There are risks and market uncertainty associated with the value of bitcoins. Hence, you must be cautious in trading on Bitcoin exchanges.
Understand the implications of Bitcoin or other digital currencies for your business
We can assist you to navigate through the complex realm of crypto-currencies or blockchain technology for your business. If you are a startup and would like to build tech products around Bitcoin or Blockchain technology, then we can help.