Bitcoin – Virtual Money – A tool for criminal?

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Bitcoin is a peer-to-peer payment network and digital currency based on an open source protocol, which makes use of a public transaction log. Bitcoin works on a protocol which cannot be changed unless all the users are in support to it. Bitcoin mining is another thing which keeps account of the transactions made, but the questions poping out is on its regulations, how do we control it? How to avoid illicit payments made using Bitcoin because it is completely anonymous. People use virtual wallet to make payments and the only way to track the person is wallet ID which cannot be retrieved to find the identity of person because anyone can create profile with fake name or whatever. Since, the transaction fees are quite less when compared to visa or conventional methods of banking, Bitcoin is expected to bring innovation in the transaction system. Rich companies who can adopt it would find easy to move along, and grab the opportunity and maybe avert/minimize taxation (Hide game). Smaller companies might not thrive because of additional computation energy needed for mining.

Bitcoin has been a subject of scrutiny due to ties with illicit activity. In 2013 the FBI shut down the Silk Road online black market and seized US$28.5 million worth of bitcoin. To the notion of illegal activities related to bitcoin, in fact Bitcoin is money and money has been used in any form both legal and illegal. The benefit attach to Bitcoin is that it cannot be theft, it is completely impossible to counterfeit. Also it is expected to attract criminals that Bitcoin do not provide irreversible payment options.

Bitcoin is not a fiat currency with legal tender status in any jurisdiction, but often tax liability accrues regardless of the medium used. There is a wide variety of legislation in many different jurisdictions which could cause income, sales, payroll, capital gains, or some other form of tax liability to arise with Bitcoin. No one knows what will become of Bitcoin. It is mostly unregulated, but that could change. Governments are concerned about taxation and their lack of control over the currency. Could the tax evaders and money launderers use Bitcoins transactions and thus we never find them? It seems to me that there is too much privacy already. Billionaires hiding taxes in all kinds of secret accounts…is the Bitcoin just another tool for them?

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