The short answer is that it varies from country to country.
It goes without saying that spending Bitcoins on illegal goods or services, or using them for illicit activities is definitely not legal.
Currently, the majority of European countries, the United States, Canada, Hong Kong, Australia, Columbia, Brazil, Argentina, Turkey, South Africa, Japan, South Korea to name but a few, have taken a permissive stance on the use of Bitcoin.
Some countries have taken a more cautious stance, in these countries Bitcoin may be in the confusing position of not being recognised as an official currency while not being banned either.
Countries which have explicitly banned Bitcoin are Iceland, Bolivia, Ecuador, Vietnam and Kyrgyzstan.
The links below provide a more extensive listing of countries and the legal status of Bitcoin within them:
If in doubt, always check with a legal adviser who is well versed in your country’s currency laws.
Yes, this is one of the most common uses of Bitcoin as it carries some advantages over bank to bank transfers or other money transfer services.
The main advantages are:
International Bank transfers can often take days to complete, while money transfer services can transfer money much faster, they carry significant transaction fees (anywhere between 2 and 20 percent depending on the source and destination country). Sending Bitcoins is both faster than a bank transfer and cheaper than using a money transfer service.
While the Bitcoin network keeps careful track of all Bitcoin transactions and the amount of Bitcoin held in each wallet. It’s vitally important to take care of the keys to your Bitcoin wallet(s). If someone manages to get hold of your keys then they have control of your Bitcoins.
It is therefore extremely important to keep your keys and passwords safe.
In addition to keeping your keys away from attackers, you should also backup your wallets and keep an offline record of their recovery phrase in a safe place. More of this is covered in the answer to ‘Can I lose my Bitcoins?’’
Finally, for those wishing to store large sums of Bitcoin and want some added peace of mind, there are a number of companies which provide secure ‘[cold storage][]’ facilities for Bitcoin. Some also provide insurance against loss.
A key difference between using Bitcoin and using a conventional form electronic payment such as a credit card, is that there is no intermediary bank or financial institution controlling the transaction.
This means that if you send Bitcoins to the wrong address, or send the wrong amount, there central authority to call up and ask to reverse the transaction or give you a refund.
That said, if you were buying a coffee in your local coffee shop and you accidentally paid too much Bitcoin for your cappuccino, there’s nothing stopping the shop owner from sending the extra Bitcoin back to you, just as you would if you had accidentally given them the wrong amount in cash.
Where extra care needs to be taken is while purchasing high value items online. Always make sure you’re dealing with a reputable seller. Always carefully check the bitcoin address you’re sending Bitcoins to.
If in doubt, try sending a test transaction (using a small amount first) and confirm the seller has received it. Remember some Bitcoin addresses are ‘single use’ and can only receive Bitcoins once, so check this with the seller before trying a test transaction.
Of course it is possible to lose your keys or forget your wallet password. If you do this, then you’re unlikely to ever see your Bitcoins again.
It’s always a good idea to keep a backup of your wallet and the recovery phrase. Most wallets support backing up to a ‘paper wallet’ which is a printout that contains all the information necessary to re-create your wallet.
Backing up your wallet also safeguards you from the event of loss or damage to your computer.
Just as national currencies, stocks, bonds and commodities can all rise or decline in value, so can Bitcoin.
There is a degree of faith involved here. The more people that start to use Bitcoin, send Bitcoins to their friends or family, buy or sell goods with it, then the more likely we will see it rise in value.
Of course the converse is true, but this doesn’t mean people can’t benefit from the advantages it brings. limiting the amount of Bitcoins you hold at any one time and the duration you hold them for can help safeguard against dramatic changes in price.
It’s fair to say that for some, the potential benefits of gained from using Bitcoin over traditional banking and payments systems will vary from person to person depending upon their situation.
Bitcoin is a relatively new technology and many of the services and innovations that it makes possible have yet to be created. So many of Bitcoin’s advocates are excited by its future potential.
Having said that, there are many uses of Bitcoin and reasons why Bitcoin may appeal to you.
For those living in developed countries this may not really appear as a benefit, as keeping their money in a bank seems to do them just fine. However, even developed countries are not immune to banking crises as events in 2007-2008 showed. In these extreme circumstances banks can run out of money, causing a ‘run on the bank’ with queues of people trying desperately to withdraw their hard earned cash. For many people the very reason that they use a bank is to keep their money safe and the thought of not being able to access their funds is a frightening one.
The Bitcoin network has no central authority, and therefore the Bitcoins you hold are yours until you decide to send them and no one can technically stop you sending Bitcoins to anyone.
When paying online with a credit card, most often you provide the merchant your card details and in many cases your billing address. The greater the number of merchants you provide this sensitive information to, the greater the risk that your card details or address information could be stolen or intercepted. When they do get stolen, this is bad news. The credit card industry spends a great deal of time and effort fighting card theft and fraud and of course this is reflected in the transaction fees paid by either you or the merchant.
With Bitcoin you send your money instead of the sensitive information on the card which is used to charge your credit account. This is much safer, as every time you make a transaction you’re not passing sensitive credit card information to a merchant which can then later be stolen.
Yes, there are many exchanges situated all over the world which allow you to exchange Bitcoins for most of the world’s major currencies.
Please see the bitcoin exchanges page for more information