Some people ponder over the legality of the bitcoin, so let me tell you that it is absolutely legal. But it is also true that some countries have declared the Bitcoin as illegal and that is why mining is also prohibited and considered illegal in such countries.
Well, this is a subjective matter and varies from one jurisdiction to another but if one is mining Bitcoin with his/her resources in a legit way, then it is totally legal, at least in many of the countries.
On the other side, some of the countries have declared possession of Bitcoin and other cryptocurrencies as illegal.
Why there is opposition towards Bitcoin?
This hostility and opposition stem from the decentralized and stateless nature of bitcoin. Hitherto, people have had the habit of a state-backed currency, but bitcoin is breaking that habit.
Apart from it, the fact that anyone can join this network and contribute to its growth is a nightmare for some of the governments around the world. Some countries like China deem cryptocurrencies as a threat to the national currency and national banks.
And if you want to understand why they think so, you will need to understand a bit more about the bitcoin mining process. Here we have tried to explain in a simple manner.
Bitcoin Mining Overview
Bitcoin mining is the process of updating the bitcoin blockchain or the ledger or a method through which new bitcoins enter the whole ecosystem.
Usually, bitcoin miners put their resources like time, electricity, equipment, computation, etc. to validate new transactions and hence mine new ‘blocks.’ Blocks are a group of transactions. When a miner is able to mine a block, besides the transaction fees, it gets rewarded in the form of 12.5 BTC.
The good thing with the open and permissionless blockchains like bitcoin is that anyone can start their full node and bring their equipment to participate in the mining process.
Anyway, nowadays Bitcoin mining has become a niche business which only mining farms with special ASIC (Application-specific integrated circuit) equipment do. Still, anyone with enough capital can start it.
Legality of bitcoin
There is a lot of disparity amongst the countries regarding the legal status of bitcoin which is because of its open and decentralized nature.
Apart from this, governments of various nations don’t want bitcoin as they do not want to give up or lose their power of printing money at their whims, which Bitcoin nullifies.
Bitcoin was invented to put an end to insidious modern day banking all over the world and to create an alternative for people who wanted to opt out of this modern day banking system. It has the potential to save people from the inflationary policies of the corrupt governments. It was also built to show the world that decentralized trust can be created if backed by a robust mathematical model like cryptography.
It was not a mere coincidence that Satoshi came just after the financial crisis of 2008. In the opinion of several tech-economists, it was an all-out attack on the central banking system that has become incompetent as well as insidious in the recent times.
Now, as the bitcoin is competing with the central banker’s money, the governments are banning it to create a savior for themselves and that is why some countries have put an outright ban on Bitcoin and declared it illegal.
On the other hand, some countries in the world planning to launch one of their own cryptocurrencies. Many other countries have neither banned it nor termed it illegal, but are still unclear about their stance on the matter.
In countries like Algeria, Bolivia, Ecuador, Bangladesh, Nepal, Macedonia, and Venezuela, Bitcoin is illegal.
Countries with Explicit Mining Stance
- Indonesia – Mining remains not covered by the regulation.
- Slovenia – Bitcoin mining is recognized and taxed.
- Ukraine – Mining is a legal type of entrepreneurship.
- Iceland – Mining as a business is permitted.
- Belarus – Individual & businesses have the right to engage in mining.
Countries with partial ban On Bitcoin
- Canada – Banking ban, banking services are denied to crypto businesses.
- India – Banking ban, banking services are denied to crypto businesses.
- Indonesia – Illegal as a payment tool.
- Thailand – Banking ban, banking services are denied to crypto businesses.
In countries where Bitcoin is allowed, it does not necessarily mean that it is a legal tender there and instead, it is allowed to be traded as a commodity.
It is most appropriate to say that bitcoin mining is legal in many countries except a few. Many African countries have remained silent on the matter of Bitcoin and so their stance is still not clear.
Nevertheless, if you are mining in a country where Bitcoin is regulated, and you have your own equipment and electricity, you are good to continue with mining.