Bitcoin Legal status, tax and regulation


Legal status, tax and regulation

Because of bitcoin’s decentralized nature, nation-states cannot shut down the network or alter its technical rules. However, the use of bitcoin can be criminalized, and shutting down exchanges and the peer-to-peer economy in a given country would constitute a “de facto ban”. The legal status of bitcoin varies substantially from country to country and is still undefined or changing in many of them. While some countries have explicitly allowed its use and trade, others have banned or restricted it. Regulations and bans that apply to bitcoin probably extend to similar cryptocurrency systems.

Energy consumption

Bitcoin has been criticized for the amounts of electricity consumed by mining. As of 2015, The Economist estimated that even if all miners used modern facilities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year).

To lower the costs, bitcoin miners have set up in places like Iceland where geothermal energy is cheap and cooling Arctic air is free. Chinese bitcoin miners are known to use hydroelectric power in Tibet to reduce electricity costs.

Criminal activity

The use of bitcoin by criminals has attracted the attention of financial regulators, legislative bodies, law enforcement, and the media. The FBI prepared an intelligence assessment, the SEC has issued a pointed warning about investment schemes using virtual currencies, and the US Senate held a hearing on virtual currencies in November 2013.

Several news outlets have asserted that the popularity of bitcoins hinges on the ability to use them to purchase illegal goods. In 2014, researchers at the University of Kentucky found “robust evidence that computer programming enthusiasts and illegal activity drive interest in bitcoin, and find limited or no support for political and investment motives.”

In popular culture


In September 2015, the establishment of the peer-reviewed academic journal Ledger (ISSN 2379-5980) was announced. It will cover studies of cryptocurrencies and related technologies, and is published by the University of Pittsburgh. The journal encourages authors to digitally sign a file hash of submitted papers, which will then be timestamped into the bitcoin blockchain. Authors are also asked to include a personal bitcoin address in the first page of their papers.


The documentary film, The Rise and Rise of Bitcoin (late 2014), features interviews with people who use bitcoin, such as a computer programmer and a drug dealer.


In Charles Stross’ science fiction novel, Neptune’s Brood, “bitcoin” (a modified version) is used as the universal interstellar payment system.


In November 2017, the American sitcom, The Big Bang Theory, dedicated an episode to the topic of bitcoins titled, “The Bitcoin Entanglement”. In the episode, after hearing the price of a bitcoin had risen to $5000, friends try to track down bitcoins they mined seven years earlier.

The following are forks of the software client for the Bitcoin network derived from the reference client, Bitcoin Core:

  • Bitcoin XT
  • Bitcoin Classic
  • Bitcoin Unlimited
  • Bitcoin ABC

Coin splits

These are coin splits of the digital currency Bitcoin, created intentionally via hard forks of the blockchain, sharing a transaction history with Bitcoin up to a certain time and date:

  • Bitcoin Cash (Forked at Block 478559, 1 August 2017)
  • Bitcoin Gold (Forked at Block 491407, 24 October 2017)
  • Bitcoin Diamond (Forked at Block 495866, 24 November 2017)
  • UnitedBitcoin (Forked at Block 498777, 12 December 2017)
  • BitcoinX (Forked at Block 498888, 12 December 2017)
  • Super Bitcoin (Forked at Block 498888, 12 December 2017)

Proposed but Cancelled Coin Splits

This was a planned coin split of the digital currency Bitcoin, which was later canceled before the split could take place.

  • SegWit2x

Hybrid Fork

  • Bitcore


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