Cryptocurrency is often considered a means to making quick money. It is this quality that attracts many investors towards cryptocurrency. But dealing in Bitcoin is not as easy as it sounds.
Investors curious about knowing more about Bitcoin often wonder if it is legal to make money from Bitcoin. The question of legality is a hot topic of discussion, leading to confusion among investors and potential investors. So let’s learn about the legal aspect of dealing with Bitcoin.
Digital currency is seen as the future of currencies. Investors want to be safe and be on the right side of the law while dealing with Bitcoin. Therefore, it is better to gain as much information as possible to ensure that you are updated and make informed decisions. If you are planning to start investing in Bitcoin, you can start with trusted sources like Bitcoin News Trader website and Bitcoin Digital.
Is It Legal to Make Money from Bitcoin?
Before we understand whether or not it is legal to make money from Bitcoin, let us first understand Bitcoin. In 2009, creator(s) under the pseudonym Satoshi Nakamoto created Bitcoin, a virtual asset that can act as a medium of exchange. It makes use of blockchain technology.
Bitcoin is a decentralised form of currency, which means it is free from the central bank’s authority or Government. Decentralisation means that neither RBI nor any other intermediary has any control over Bitcoin and its exchanges.
As much as this decentralisation provides immense freedom to Bitcoin users, it also means that the Government has placed no rules or guidelines to resolve any disputes that may arise in the future.
It is possible to obtain Bitcoin by mining, purchasing them on cryptocurrency exchanges or receiving Bitcoin to sell goods and services.
Mining refers to the process whereby a miner uses computational powers to verify transactions and solve complex puzzles. There are several cryptocurrency exchanges in India like Bitxoxo, Coinbase, etc., from where users can purchase Bitcoin for real currency. There are also a few businesses that accept Bitcoin for their services.
There are no rules or regulations in India that make buying and dealing in Bitcoin illegal. This means that it is legal to engage in Bitcoin transactions.
In 2018, the RBI banned banks and all other regulated entities from supporting the transaction of cryptocurrency. RBI’s ban meant that cryptocurrency exchanges could not hold bank accounts. RBI stated that cryptocurrency might disrupt the existing system of all financial institutions.
However, even during that period, users could engage in peer to peer transfer via blockchain. Internet and Mobile Association of India or IMAI challenged this decision, and the ban was lifted in March 2020 because the Supreme Court found it unconstitutional.
The Ministry of Corporate Affairs (MCA) also made it mandatory for all companies to reveal their cryptocurrency investment and trading during the financial year. This decision aims to ensure that black money does not get circulated via any cryptocurrency.
People are unsure and afraid of trading in Bitcoin in India when they get to know that there are no regulations regarding cryptocurrency. Therefore, it becomes essential to understand that this does not make trading and dealing in Bitcoin illegal.
However, one must understand that Bitcoin is not a valid legal tender. The concept of legal tender can be understood using an example. You can exchange rice with other people for money, but you can not insist on paying a business with rice as they are not recognised as valid tender.
The blockchain makes up a transparent system wherein everyone can see the transactions. This keeps the system secure and tight. Miners have the responsibility of verifying the trades to see that there is no double-spending. In return for doing this, the miners are paid with bitcoins. This is also the only way to bring new bitcoins into circulation.
Bitcoin has set a cap of 21 million to be available for mining. As of 2020, about 18 million of these bitcoins were already mined. The demand is now more significant than the supply.
Most people in India are unaware of Bitcoin and are not well informed about how bitcoin or any other cryptocurrency works. Moreover, because Bitcoin is not a mainstream medium of investment, Indians perceive that it is illegal and engaging in its trading would make you a criminal.
Bitcoin and all other cryptocurrency are still in their development stage. Nevertheless, they could be the future of trading and investment as they are fast-growing. In addition, many companies like Microsoft and Starbucks are now accepting Bitcoin as a legal mode of payment.
Although Bitcoin is highly volatile, some people study and analyse the market and have earned a fortune. Similarly, many people have also lost everything because of the high fluctuation rates of Bitcoin and other cryptocurrencies.
Patience is vital if you wish to make profits via bitcoin. You have to wait till the time is right and use the market value of Bitcoin to your benefit. This means that you have to buy when the prices are low and sell when prices increase. You must predict the returns on your investment and analyse the situation in the market.
Several features of cryptocurrency, particularly Bitcoin, make it an attractive choice for investors. Low transaction fees, user autonomy and complete discretion are the few bells and whistles that make Bitcoin one of the leading cryptocurrencies in the world.
Contrary to several myths, it is legal in India to invest in Bitcoin. Furthermore, the Finance Minister of India, Nirmala Sitharaman, said that the Government is willing to explore blockchain technology for leading in a digital economy proactively.
There is scope for the growth of cryptocurrency in India. As more and more people are attracted to Bitcoin and trade in it, it will gain popularity. In addition, several countries have embraced Bitcoin in the spirit of digital advancement.
Recently, El Salvador’s president said that he shall pass a bill to make Bitcoin a legal tender. News like this could facilitate the growth of cryptocurrency in India and other countries. We hope our article on Is It Legal to Make Money from Bitcoin helped you.