Is Bitcoin Safe and Legal? -What about Bitcoin and Consumer Protection?

Bitcoin is encrypted and supported by a special system known as the blockchain.

Bitcoin itself is safe and hard to crack, but Bitcoins are just as secure as the wallet storing them properly and this is largely due to the blockchain technology which supports it.

Bitcoin's legal status is still dramatically different in different countries. As of February 2020, Bitcoin was legal in the United States of America, Canada, the United Kingdom, Japan, and most other developed countries.

Bitcoin is encrypted and secure and supported by a special system known as the blockchain. The blockchain uses volunteers to work together to encrypt transactions that occur on the Bitcoin system.

Is Bitcoin Safe and Legal? -What about Bitcoin and Consumer Protection?

Is Bitcoin Secure?

Bitcoin is encrypted and secure and supported by a special system known as the blockchain. Bitcoin itself is secure and very difficult to hack, but bitcoins are only as secure as the wallet storing them correctly and this is largely due to the blockchain technology which supports it. 

The blockchain uses volunteers to work together to encrypt transactions that occur on the Bitcoin system.

Bitcoin Technology - Protocol and Cryptography - has a strong security track record, and BitTrack Network is probably the largest distributed computing project in the world. The most common vulnerability of bitcoin is in user error. 

Bitcoin Wallet files that store essential personal keys can be accidentally deleted, lost or stolen. It is similar to physical cash stored in digital form. 

Fortunately, users can employ sound security practices to protect their money or use service providers, which provide good levels of security and insurance against theft or loss.

Read here: Bitcoin: First Decentralized Digital Currency - How Bitcoin Works?

Is Bitcoin Legal?

We all know that the digital currency Bitcoin is the first borderless form of money that has gained worldwide popularity.

Bitcoin can be used by anyone and anywhere for peer-to-peer (P2P) transactions, which makes it the most comprehensive form of money in the world.

Bitcoin is a decentralized cryptocurrency that makes it a truly global currency regardless of geographical restrictions and currency exchange regulations and therefore cannot be easily banned.

No one can stop people from using the Internet and managing financial transactions using digital currencies. In fact, no one can ban Bitcoin but countries enforce such a ban by imposing legal consequences and heavy fines. 

Therefore institutions can only work to remove fear from the heart of the people and prevent threats.

As of February 2020, Bitcoin was legal in the United States of America, Canada, the United Kingdom, Japan, and most other developed countries.

Bitcoin's legal status is still dramatically different in emerging markets.

India has left the overall legal status of cryptocurrency unclear and banned banks from dealing with Bitcoins.

China has heavily banned bitcoin but it has not criminalized the holding of bitcoins.

Bitcoin mining is perfectly legal in the US and many other countries, even in China but it is generally not considered legal tender there and in many countries. 

Since Bitcoin is designated as a commodity, capital gains must be reported for tax purposes.

For tax purposes, bitcoin is usually treated as a property rather than a currency.

Read here: What is Bitcoin Mining and How Does it Work?

What about Bitcoin and Taxes?

Bitcoin is not a fiat currency with legal tender status in any jurisdiction, but tax liability is earned despite the medium used often. There are a wide variety of laws in many different jurisdictions, which can cause income, sales, payroll, capital gains, or any other forms of tax liability to arise with Bitcoin.

Can Bitcoin Be Used for Illegal Activities?

Bitcoin is money, and money is always used for legal and illegal purposes. Cash, credit card and current banking system broadly cross the bitcoin in terms of their use for financing crime. Bitcoin can bring significant innovation in the payment system and the benefits of such innovations are often considered beyond their potential deficit.

Bitcoin is designed to be a major step in making money safer and it can also act as a vital protection against many forms of financial crime. For example, bitcoin is completely impossible to duplicate. 

Users are in full control of their payment and can not get a declined fee with credit card fraud. 

Bitcoin transactions are immune from irreversible and fraudulent chargebacks. Bitcoin allows you to secure money against theft and loss by using a very strong and useful mechanism such as backup, encryption, and multiple signatures.

Some concerns have been raised that bitcoin can be more attractive to criminals because it can be used to make private and irreversible payments. However, these facilities already exist with cash and wire transfers, which are widely used and well-established. 

The use of bitcoin will undoubtedly be subject to such rules which are already present in the existing financial systems and there is no possibility to prevent the prevention of bitcoin criminal investigation.

Read here: What are the Advantages and Disadvantages of Bitcoin?

What about Bitcoin and Consumer Protection?

Bitcoin is making people free to deal on their terms. Each user can send and receive payments in a similar manner to cash but they can also participate in more complex contracts. 

Multiple signatures allow the network to accept transactions, only then a certain number of defined groups agree to sign the transaction. This allows for developing innovative dispute mediation services in the future. Such services may allow any other party to accept or reject the transaction in case of disagreement among the other parties, without controlling their money. 

Unlike cash and other payment methods, Bitcoin always leaves public proof that a transaction happened, which could potentially be used in collaboration with businesses against fraudulent businesses.

It is also worth noting that traders usually rely on their public reputation to stay in business and pay their employees, but they do not have access to the same level of information while dealing with new consumers. 

Bitcoin works the way individuals and businesses are protected against fraudulent chargebacks, while the consumer is asked to ask for more security when they do not trust any particular trader.

Has Bitcoin Been Hacked in the Past?

The rules of protocol and cryptography used for Bitcoin are still working after its establishment, which is a good sign that the concept has been well-designed. However, security errors have been found and fixed over time in various software implementations. 

Like any other form of software, the protection of Bitcoin software depends on the speed with which problems are found and fixed. More such issues have been discovered, more bitcoin is getting maturity.

There are often misconceptions about theft and safety violations on various exchanges and businesses. 

Although these incidents are unfortunate, none of them are being hacked, nor do they show inherent errors in bitcoin; Just like a bank theft does not mean that the dollar has been compromised. 

However, it is fair to say that a complete set of good practices and intuitive security solutions are essential for providing better protection of their money to the users and reducing the general risk of theft and loss. 

Over the past few years, such security features have evolved fast, such as Wallet Encryption, Offline Wallet, Hardware Wallet, and Multi-Sign Transaction.

Read here: What is Bitcoin Trading and Why Does Bitcoin Price Fluctuate?

Could Users Collude against Bitcoin?

It is not possible to change the bitcoin protocol easily. Any bitcoin client who does not follow the same rules, cannot apply its rules to other users. 

According to the current specification, double expenditures on the same blockchains are not possible, and neither is the expense incurred without a valid signature. 

Therefore, it is not possible to generate uncontrolled amounts of bitcoin from thin air, spend money on other users, contaminate the network, or anything similar.

However, powerful miners may choose to optionally block or unlock recent transactions. Most users can also put pressure on some of the changes that are being adopted. 

Since bitcoin works only well with all the consent between all users, changing the protocol can be very difficult and requires a huge majority of users to make changes in such a way that the remaining users have to follow.

Other than that there is almost no alternative option. As a general rule, it is difficult to imagine why a bitcoin user chooses to make any changes that might compromise his money.