Bitcoin is an online currency that has been around for several years, and it was initially created for online means only. The cryptocurrency has other applications in light of other variations, and the currency is even taxable in the 2010’s. The legality of Bitcoin remains a matter within the United States as approved through the usual concerns with taxes and assets. However, other countries may view the cryptocurrency as an illegal and unnecessary item for online transactions. Various scams and problems that plague online currency could cause illegal activity, but the Bitcoin itself remains legal when such problems do not exist.
What Is Bitcoin?
There are multiple forms of cryptocurrency, and these are able to process and apply to certain transactions online. A person may use his or her digital assets through a blockchain platform to pay for online intangible items such as an avatar or equipment for a character in a game. The Bitcoin itself is a concept of currency that is only a digital representation of an online idea. However, in the 2010’s, the cryptocurrency has a real-world application and may even exchange for real currency such as a dollar or pound. As long as it does not have any involvement in scams or illegal activity, the use of Bitcoin is not a crime.
Legal Problems
With cryptocurrency, there are few to no centralized authorities that issue or oversee the currency online or in the real world. The platform has management through a company connected to the distribution and creation of Bitcoin and other cryptocurrencies. The software associated with these items may hide the tracks of users, investors and anyone with any connection to the situation. This could prevent personal information becoming available to the public or other authority figures such as the Internal Revenue Service. There is little to no oversight, and this could lead to many scams and illegal activities.
Other legal issues exist with Bitcoin in the schemes that criminals and users may attempt or engage in with Bitcoin. It is possible to initiate exchanges for monetary cash outs and back out of the deal. Others may interact with another user and steal the Bitcoins he or she has in some manner. Others may use the Bitcoin system to traffic in illegal online items or to shift money around and participate in money laundering. It is possible for organized crime or multiple criminals to attach to the exchange or interaction and harm others through scams and criminal actions. These problems cause severe harm to those investing or performing valid services.
Risks to the System
There are numerous issues that exist in cryptocurrency such as scams that criminal engage in and crimes such as money laundering. The other risks exist in the hiding of activities. With a single person or company involved in providing oversight in some manner, there are few options open to investors or users that participate in Bitcoin exchanges. This could lead to an increase in illegal actions, violations and tax evasion. With the definition of like kind changing through the IRS, the digital asset is a taxable commodity. Buying or using the tracking software to hide interactions and exchanges could provide the means to evade taxation for Bitcoin transactions.
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