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Is Bitcoin Legal? Who can Ban Bitcoin?

By July 24, 2017Bitcoin, The Basics
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The rumors of a China ban on Bitcoin mining turned out to be fake. But China did manage to restrict trading Bitcoin for cash, at least temporarily. So can you get in trouble with the law if you decide to mine Bitcoin, invest in Bitcoin or sell for profit?

That depends on the country of residence. For most European countries, Bitcoin is legal and freely-traded, only subject to restrictions for money-laundering. Users need to reveal their identities for trading large sums.

Bitcoin mining has been spreading in Russia. And since Bitmain Antminer ASIC machines consume electricity, there were calls to slow down home-based mining. Still, Russia offered special facilities with cheaper electricity to create ASIC mining farms.

Private mining on ASIC machines has always been freely available. But abuse of university or government machines for mining has been a problem. Besides, consumer electronics cannot delive the hashing power needed to mine on the Bitcoin blockchain. ASIC rigs are built to work with the SHA-356 algorithm more efficiently than user processors or graphic cards, so it is best to acquire an ASIC Antminer for more hashing power.

Also, no government can ban cryptography or holding Bitcoin in a wallet. As long as you preserve the wallet with a backup of the private key, your Bitcoin is safe. While some users’ Bitcoin has been confiscated, it was because the coins were stored in a third-party wallet. There are ways to store and secure wallets that only rely on memory, or a written note, and your Bitcoin holdings, as well as other cryptocurrency reserves, can remain secret.

As for taxing Bitcoin, the US Securities and Exchange Commission decided not to tax for gains on small transactions. Otherwise, ordinary tax is paid only when you sell Bitcoin for profit.

Currently, Bitcoin is still illegal only in Iceland. Curiously, the Northern island country is housing many Bitcoin mining farms due to cool climate and cheap geothermal energy.