Thought I'd go through and summarise some of the stuff said in this thread and add some extra thoughts as to why Bitcoin isn’t as widely traded and accepted in the UK as elsewhere and a bit on places to get bitcoins in the UK.
LegalBitcoin is subject to AML/KYC laws. This has caught out a lot of people in the UK. (e.g.
http://bitcoinmagazine.com/interview-with-glbses-nefario/ )
On top of that AML/KYC is expensive to do properly and is a very unsure market. Try going to raise some capital from investors for an idea that revolves around a currency which can fluctuate 25% in a day, and could (and has) loose half of it's value in a matter of days and remain below that level for nearly a year.
Most of us here have faith in Bitcoin. But nobody can deny it's risky. There have been a lot of cases of people losing a lot of money with Bitcoin through hacks, market crash and fraud and unfortunately, they're the sort of stories that make the news in the UK. This makes it harder to get the cash required to overcome the AML/KYC hurdles, as well as money for proper legal and financial advice
It's not formally recognised as a currency, but it is recognized as a virtual currency scheme (
http://www.ecb.int/pub/pdf/other/virtualcurrencyschemes201210en.pdf) but that comes with very little legislation.
For VAT, someone wrote to HMRC. It may have been in the thread, or another, the tab was still open in my browser and I can’t figure out where I found the link, but here it is (
https://www.dropbox.com/s/wmpjyym7xztqygx/IMG_20130324_131647.jpg) suggests that if your turn over is over the VAT limit then you must pay VAT.
In theory, Bitcoin shouldn't be affected by Electronic Money Regulation 2011 (because it's not technically e-money according to EU definition - see ECB document above.) EMR is targeted at emoney issuers, if Bitcoin was covered, I suspect the issuer may technically be Satoshi, since an issuer refers typically to initial distribution (e.g. you local shop isn't a money issuer when they give you change.)
With laws governing money, people really need to NOT take the “shoot first, ask questions later” with regards to applicable laws like a lot of now defunct UK Bitcoin services have. If you make any money with anything, your bank and HMRC will be after you for their cut and ignorance is not an excuse. Services that have done such things like Britcoin/intersango do more harm than good, inconveniencing themselves, their customers and the entire Bitcoin community.
Some other laws related: we are protected by the Fraud Act. If you've been scammed with Bitcoin, there is a law that in theory can be used in court. Fraud Act revolves around "misrepresentation of value." Pick any site handling Bitcoin as your evidence for value.
Also protected (as above) from wallet theft via Computer Misuse Act '98 unless you gave the person permission to use your computer (in which case, you could probably still get them with Fraud.)
Another interesting little law overlooked but worth mentioning: Regulation of Investigatory Powers Act 2000, part III. It’s basically a crypto key disclosure law. The police can legally force you to hand over all your private keys or face 2 years in prison. I don’t think this has been used in a case with Bitcoin yet, but I wouldn’t be surprised to see it happen in the future. This could be used to prove that a person received or sent Bitcoins or effectively steal or recover bitcoins gathered through perceived illegitimate methods.
Socialbank/government and customer relationsThere's a lot of mistrust of the banks right now in UK as well as the rest of the EU. As you're all aware Bitcoin got quite a boost from the Cyprus hoohaa, so lack of faith in UK banking is a good thing for Bitcoin uptake in the UK to some extent.
However, the Banks and Government don’t trust us as customers. Bitcoin makes it very challenging to do tax. Initially most people will say “why is it a problem? Stick it on your tax return and all is good.” With the exception of figuring out how to put it on the tax return, that would be true. However, the problem arises in that the Banks and Government can’t/won’t/don’t trust us to all be honest.
Bitcoin makes doing a tax audit more challenging. E.g. they audit Alice because they believe Alice is not being honest with regards to the value that she holds, specifically the amount of BTC. HMRC (the taxman) can’t just go to the banks and ask for a bank statement of Alice’s BTC because banks don’t have that info. Also, they can’t just ask the bank for a log of all transactions out to an exchange, because that doesn’t account for bitcoin price rises or money paid to them through Bitcoin.
There’s also the argument that “Blockchain is public, go look it up on there” – that again relies on Alice being honest about her keys. They could try getting the keys through RIPA, but it’s not hard for Alice to write down a few private keys with a huge balance in UTXOs and hide it behind some wall paper or something and deny all knowledge.
This point is a little bit void though because one could argue that it’s just as easy to set up off shore bank accounts and hide money there to avoid tax. True, it is, and offshore banks are a massive pain in the ass for govs/banks, so why would they encourage another system that causes the same problems?
(I may generate some hate here, but here goes) This all again comes back to trust. One could say “well they should trust us to be honest with our tax.” Why should the gov/banks trust us to pay our taxes or fees, just look at this thread. There’s a lot of talk about how to wing it to not pay tax. I, like the next person, dislikes paying tax. However, it’s a necessary evil (alright, maybe not in the amounts they charge) and I think morally, if we’ve ever walked on a road, been to a public school, been treated by the NHS etc.etc.etc. then we should all pay at least SOME tax. However, the tax issue is not really specific to the UK. UK gov apparently needs all the money it can get these days.
In the newsInterest in Bitcoin is definitely going up. The news is featuring it more, particularly BBC, with articles that aren't all bad - although a good portion are related somehow to hacking. (To any non regular BBC-UK news readers, on behalf of the people of the UK, please accept my apologies for the lack of spelling, grammar or fact checking in any of the articles linked to in the link below.):
http://lmgtfy.com/?q=site%3Awww.bbc.co.uk%2Fnews%2F+BitcoinAlthough the general tone is getting more positive, most people were aware of the first few articles about silkroad, mtgox hack, and other hacks. Now, even a good article is probably acknowledged by lots as “oh that currency that got hacked and is used for drugs.” That is changing I think, but it’s a hard image to shake off.
Spokes people for Bitcoin and its image in the UKhttp://www.guardian.co.uk/technology/video/2013/mar/22/bitcoin-currency-videoPeople like Amir Taaki. As much as I appreciated him when Britcoin was going fine, I don’t think Amir is a suitable public character for Bitcoin in the UK. Videos like the one above mean when people think of Bitcoin, they think of people like Amir.
Imagine if your bank came out with a promo, and spokesperson lived in a squat, wears a beanie, speaks with AQI, say things like “I had loads of Bitcoin, but I sold them for $100 and I was like ‘woooo!’ then it went up to $30 and I was like ‘fuck they’d be be worth like half a million dollars – but whatever, but it’s not about the money...” and “stopping people taking drugs is like stopping people having sex” and “I feel responsibility because I have this skill that not many other people have.” Whilst I agree with the sentiment of most of what he’s saying, and his style of dress and presentation is not too dissimilar to my own, I don’t think he presents the right image for larger adoption in the UK. Having Amir do high profile videos in UK news relating to Bitcoin I think is generating an image which is not an image 75%+ of the UK like, agree with or are willing to follow or subscribe to. (Just to clarify, I have no problem with how Amir chooses to live or present himself – I even have some respect for him in some way – I just don’t think it’s the image to help Bitcoin in the UK.)
Similar to what someone said earlier in the thread, people are to some extent indoctrinated in that they haven’t questioned the alternatives to the current system. I’m not sure they’re wanting or willing to either. As a result I think Bitcoin adoption in the UK would be helped if it wasn’t sold as an anarchists wet dream to overthrow the banks, but more as a fast cheap way of sending and receiving money or paying for things, as well as a potential investment opportunity.
usabilityDue to the lack of large adoption, there are not many convenient UK based Bitcoin services, very few online wallets or genuine legitimate exchanges or places to buy things. A lot of people aren’t tech savvy and may not inherently trust themselves to look after a single file that maybe worth a lot of money. I think it would help if there were some services or documents targeted specifically at the UK luddite. “Transfer money from your bank to this account, see your bitcoins here” level of simple, non of this “first go download a client, wait for the blockchain to finish synching, go try find an exchange, figure out the niche obscure payment system they accept etc.etc.etc.”
Also, I believe the average Joe likes a lot of features provided by services such as PayPal. I don’t think they want to be under the impression that if they pay for something, they don’t have a bank or similar to complain to if they’re scammed or lose their money. There’s no reason a decent centralised 3rd party system that offers protection such as PayPal couldn’t be setup for Bitcoin. For users of Bitcoin now, that may undermine the point of Bitcoin as a decentralised system with no authority of transactions, but the average UK citizens doesn’t care for that sort of stuff too much right now, they want to know their money is safe, regardless of the own incompetence.
For buying bitcoin WikileaksDude posted earlier this url which seems really useful – takes 48 hours to get money into Bitstamp, and minimal fees along the way (maybe 1 – 2%):
www.bitcoinuk.blogspot.comAlso:
https://bitbargain.co.uk/https://localbitcoins.com/If you’re feeling risky:
http://www.ebay.co.ukThanks,
Dom.
Disclaimer: above is largely my own (and others) opinions and observations, not legal advice or even necessarily objective facts.
