Bitcoin is a cryptocurrency and a type of decentralized electronic money that is not regulated by any central administrator such as a bank. Therefore, bitcoin can be transferred from one person to another in an anonymous way since there is no intermediary to handle the transaction. A group of individuals using the pseudonym Satoshi Nakamoto released the currency in 2009. The legality of bitcoins, however, is another matter entirely. In some countries, bitcoins are legal while they are illegal in others. It is important to note that bitcoin is one of many forms of cryptocurrency that exist. Therefore, it is likely that all forms of cryptocurrency are illegal in countries where bitcoin is illegal.
Countries Where Bitcoin Is Illegal
Presently, at least 15 countries have declared bitcoin illegal. In terms of geographical distribution, three of these countries are in Africa (Algeria, Morocco, and Egypt), three are in South America (Bolivia, Colombia, and Ecuador), while Asia has the most countries that have banned bitcoin, including China, Indonesia, Saudi Arabia, Pakistan, and Taiwan.
China, one of the economic powerhouses of Asia and the world, has been clamping down on the use of bitcoin. For example, in 2017 China declared initial coin offerings, which are a form of a digital fundraiser, illegal. Following that ban, bitcoin prices dropped by 6% and bitcoin exchanges in China had to cease operations. However, this ban does not extend to all bitcoin operations in China. In fact, in recent times, China has become one of the major markets for cryptocurrency trading because citizens were free to switch to foreign exchanges. In addition, citizens are free to “mine” bitcoin. The ban within China only extended to the central bank in China, the People’s Bank of China, which is largely owned by the government. Like Algeria, the Chinese government banned bitcoin in an attempt to minimize criminal activity. China was the first country in Asia to ban bitcoin, while Indonesia was second, after warnings from Indonesia’s central bank that the currency was a serious threat to the national currency’s stability.
In the case of Algeria, the use and possession of bitcoin have been banned entirely under the 2018 Finance Bill of Algeria. The bill defines bitcoin as a virtual currency, which suggests that the ban also extends to other cryptocurrencies. The major reason why Algeria decided to ban the currency is the same reason why the currency is so enticing in the first place: a central body does not regulate its usage. Therefore, the nation wishes to eliminate opportunities for its citizens to use the currency for criminal purposes.
The Bitcoin Debate
The debate regarding whether bitcoin should be legal or not has been going on for some time now. The key source of this debate is whether the decentralization of the currency is good or bad. Supporters of legalization argue that it provides much needed security in a time when data breaches are a major risk. On the other hand, black markets are also flourishing because of bitcoin.