Bitcoin being deemed an Illegal tender- What's the potential aftermath and uses?

[xdrpx]

Regulations for Bitcoin provide some form of relief to cryptocurrency users within a particular jurisdiction or a nation when it has been decided that use of cryptocurrencies, although monitored and the exchanges controlled, can continue to happen among parties that are interested in it. This infact allows stores and people to accept them without being in constant fears of any legal pressures, but when a country deems Bitcoin and cryptocurrencies in general as an illegal tender, it makes me ponder on what possible uses could the dreaded investors and users derive out of their Bitcoins? Would they continue to find value in exchanging cryptocurrencies (its non intended purpose), like trading it similar to a stock / derivative or like currencies being traded in a forex exchange to seek profitable margins?

I'm sure most of you might have a hint of the country that I'm talking about and which has, atleast temporarily, deemed using cryptocurrencies as a medium of exchange / legal tender, illegal. In India, the Minister of Corporate Affairs had read out these lines on public television when he was asked about the 'legal status' of Bitcoins and cryptocurrencies in general. I also remember readinghere that the Ministry of Finance had outrightly stated cryptocurrencies as ponzi scheems and that they are neither currencies nor coins.

Now, it's pretty much possible that many other nations could follow suit and take a similar approach towards Bitcoins. My real concern and the thing that leads to me asking my question is, if they're no longer a legal tender, how would Bitcoin and "cryptocurrencies" in general be used for their original purpose? (considering that loopholes aren't being used, as I'm aware that there's one being utilized at the moment, but could be outlawed soon perhaps?) Most investors would hence prefer to only trade them on an exchange for any value that they find out of it (the value here being the price).

What do you think are its potential aftermath and uses if your country is on the verge to deeming it as an illegal tender? Would you be concerned about no longer being able to use Bitcoins for its intended purpose, i.e; To no longer rely on your Banks and to be your own bank?

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[botany]

Definition of Legal Tender - Legal tender can be used to satisfy debts. For example,  if I am bound by contract to pay a certain person a given amount, I can do so using fiat notes ("Legal tender") issued by the government.

If a certain commodity / currency is not deemed to be legal tender, it does not preclude two private parties from entering into an agreement to exchange the commodity / currency for goods or services. This would be considered as a barter agreement by the government, rather than a 'sale'. Of course, this assumes that the government has not specifically banned barter transactions.

If a country bans the use of cryptocurrencies in transactions, but does not make holding them illegal, I don't think the price of cryptocurrencies will fall. This is because technically value could be realized by sending those cryptocurrencies outside the country. If holding them is illegal, then of course the only value which can be realized is in the grey market, and the price will naturally plummet.

[stomachgrowls]

Definition of Legal Tender - Legal tender can be used to satisfy debts. For example,  if I am bound by contract to pay a certain person a given amount, I can do so using fiat notes ("Legal tender") issued by the government.

If a certain commodity / currency is not deemed to be legal tender, it does not preclude two private parties from entering into an agreement to exchange the commodity / currency for goods or services. This would be considered as a barter agreement by the government, rather than a 'sale'. Of course, this assumes that the government has not specifically banned barter transactions.

If a country bans the use of cryptocurrencies in transactions, but does not make holding them illegal, I don't think the price of cryptocurrencies will fall. This is because technically value could be realized by sending those cryptocurrencies outside the country. If holding them is illegal, then of course the only value which can be realized is in the grey market, and the price will naturally plummet.

Very well said specially on the bolded part on where as long the government doesnt impose such restrictions or laws about cryptocurrency holding or transactions then falling of the price wont really be suited or cant really be presumed.We do know on how accessible on crypto would be in terms of transactions, even it would be prohibited but stopping it would be really impossible.

[xdrpx]

If a country bans the use of cryptocurrencies in transactions, but does not make holding them illegal, I don't think the price of cryptocurrencies will fall. This is because technically value could be realized by sending those cryptocurrencies outside the country. If holding them is illegal, then of course the only value which can be realized is in the grey market, and the price will naturally plummet.

Your point seems apt and I used to believe similarly about being able to send those cryptocurrencies outside the country. I had a good thought about being able to do this, but then had realized that it had several restrictions, limitations and barries of its own. People who can afford to travel abroad would be able to encash their Bitcoins offshore and bring a bit back to their homecountry, but this constitutes a small percentage of the people. Apart from that, being able to send the Bitcoins offshore to procure goods will levy several customs duties (Atleast where I live the percentage of duty for many electronic goods and medium-high value goods are usually taxable sometimes upto 40% and for some items even more) as compared to the items procured within the country if Bitcoins were a legal tender.

What mainly concerns me here is Bitcoin being a legal tender certainly eases a lot of things and boosts adoption. There are some scenarios where a country's currency value is so poor that people resort to using Bitcoins in the grey / black market (for example in the case of Venezuela) and I fear of this scenario only if holding cryptocurrencies become illegal (Although it'd be a nightmare for the authorities to track if kept well hidden until time to exchange).

The mainy issue is making cryptocurrencies an illegal tender limits the ways in which we can use it within the country and finding avenues abroad isn't as easy and may eventually be a playground for investors to just trade them in an exchange for the value that it has because of the offshore benefits cryptocurrencies provide to people living in other countries.

[Sir Cross]

If a country bans the use of cryptocurrencies in transactions, but does not make holding them illegal, I don't think the price of cryptocurrencies will fall. This is because technically value could be realized by sending those cryptocurrencies outside the country. If holding them is illegal, then of course the only value which can be realized is in the grey market, and the price will naturally plummet.

Your point seems apt and I used to believe similarly about being able to send those cryptocurrencies outside the country. I had a good thought about being able to do this, but then had realized that it had several restrictions, limitations and barries of its own. People who can afford to travel abroad would be able to encash their Bitcoins offshore and bring a bit back to their homecountry, but this constitutes a small percentage of the people. Apart from that, being able to send the Bitcoins offshore to procure goods will levy several customs duties (Atleast where I live the percentage of duty for many electronic goods and medium-high value goods are usually taxable sometimes upto 40% and for some items even more) as compared to the items procured within the country if Bitcoins were a legal tender.

What mainly concerns me here is Bitcoin being a legal tender certainly eases a lot of things and boosts adoption. There are some scenarios where a country's currency value is so poor that people resort to using Bitcoins in the grey / black market (for example in the case of Venezuela) and I fear of this scenario only if holding cryptocurrencies become illegal (Although it'd be a nightmare for the authorities to track if kept well hidden until time to exchange).

The mainy issue is making cryptocurrencies an illegal tender limits the ways in which we can use it within the country and finding avenues abroad isn't as easy and may eventually be a playground for investors to just trade them in an exchange for the value that it has because of the offshore benefits cryptocurrencies provide to people living in other countries.

In my country, bitcoin is considered to have no legal tender and although this would be different if it were to be illegal tender but how it is treated would be nearly the same. It would be difficult to adopt the cryptocurrency as a payment system if this were the case. This would make it hard to "no longer rely on banks or having our own bank". Bitcoin may still be owned if it were not declared illegal to hold crypto but then no transactions can be made with the use of it.

[botany]

Your point seems apt and I used to believe similarly about being able to send those cryptocurrencies outside the country. I had a good thought about being able to do this, but then had realized that it had several restrictions, limitations and barries of its own. People who can afford to travel abroad would be able to encash their Bitcoins offshore and bring a bit back to their homecountry, but this constitutes a small percentage of the people. Apart from that, being able to send the Bitcoins offshore to procure goods will levy several customs duties (Atleast where I live the percentage of duty for many electronic goods and medium-high value goods are usually taxable sometimes upto 40% and for some items even more) as compared to the items procured within the country if Bitcoins were a legal tender.

Bitcoin can still be sold in international exchanges (or domestic exchanges), even if it is not recognized as legal tender. There may be rules on foreign exchange transfers (but this is usually to prevent foreign exchange from leaving the country, not the other way around). You do not have to physically leave the country and sell your bitcoins. If you are not trying to evade taxes, there is no harm in selling bitcoins at an international exchange and receiving the money in fiat currency in your bank account.

[Kronos21]

Why do people care about the government's attitude to bitcoin? You probably forgot the main purpose of the appearance of bitcoins? It was supposed to be an independent currency that nobody regulated and created to be used between people. Why do you need government approval? You buy bitcoins for your honestly earned money. Why do you have to pay extra taxes? People are accustomed to obey the government and this is the main reason why bitcoin cannot succeed.

[gentlemand]

People are buying things, selling things and accepting payments in tons of countries where it's never been legal tender and never will be. Even Japan, the most legit of all, only clarifies it as a recognised payment method as far as I can tell. I wouldn't class that as legal tender.

The chances of it being explicitly forbidden as a payment method are nil outside of goatfucking shitholes and oppressive regimes. And it wouldn't stop P2P stuff anyway.

[AWESUMGOD]

It's been termed as an illegal tender is nothing short of lack of knowledge on the part of government and it's weak research Conducted towards discovering what it stands for. The aftermath and it's usage is super beneficial to its users and I tip it to be used as the only secured means of transaction. My question is can any good thing not have it good and bad? While the outcome of everything depends 9n the mindset of the users and what they intend to make out of it.

[xdrpx]

Why do people care about the government's attitude to bitcoin? You probably forgot the main purpose of the appearance of bitcoins? It was supposed to be an independent currency that nobody regulated and created to be used between people. Why do you need government approval? You buy bitcoins for your honestly earned money. Why do you have to pay extra taxes? People are accustomed to obey the government and this is the main reason why bitcoin cannot succeed.

I usually prefer to be law abiding and yes I'm quite aware of the several purposes for Bitcoin existing today. I understand your argument about taxation on your Bitcoin holdings and earnings, but that's an age old debate and most people are hesitant to get involved into the matter. Usually people pay taxes, even if they don't want to so that they're not haunted by the Governments actions against them. There're are laws in most countries that impose 200% - 300% of the unpaid tax amount as a penalty and probably jail term. Where I live, Bitcoin gains on trading are considered taxable as capital gains (30%) if it exceeds some value or if it doesn't then it's taxable under the normal income tax bracket (could vary from 10-20%). We're forced to sadly pay taxes to stay out of this mess, and there's no transparency on where the money goes or gets utilized.

Also, Bitcoin can succeed if it helps with international remittances, and if it's for a fee cheaper than that of money remittances services like Western Union or Money Gram. Also Bitcoin allows people to carry amounts larger without having to worry about border control (at airports for example that set limits of how much cash you can carry). This is similar to carrying a credit or a debit card.

I would usually prefer an economy like Japan where Bitcoins are are legally accepted for payments, and there's some form of promotion by the Governments who formally approve of its usage.

[jseverson]

It's been termed as an illegal tender is nothing short of lack of knowledge on the part of government and it's weak research Conducted towards discovering what it stands for. The aftermath and it's usage is super beneficial to its users and I tip it to be used as the only secured means of transaction. My question is can any good thing not have it good and bad? While the outcome of everything depends 9n the mindset of the users and what they intend to make out of it.

Out of the countries that have deemed it illegal in transactions, none has to do with research or knowledge. They simply have laws in place that state that only their currency can be used in transactions.

They're not even discriminating against Bitcoin; they simply don't want people using anything else, including USD and others. Look at two of the most popular cases: Indonesia and Vietnam. People seem to think they're automatically specifically anti-Bitcoin/crypto for banning it for payments without bothering to do their research.

[avikz]

Regulations for Bitcoin provide some form of relief to cryptocurrency users within a particular jurisdiction or a nation when it has been decided that use of cryptocurrencies, although monitored and the exchanges controlled, can continue to happen among parties that are interested in it. This infact allows stores and people to accept them without being in constant fears of any legal pressures, but when a country deems Bitcoin and cryptocurrencies in general as an illegal tender, it makes me ponder on what possible uses could the dreaded investors and users derive out of their Bitcoins? Would they continue to find value in exchanging cryptocurrencies (its non intended purpose), like trading it similar to a stock / derivative or like currencies being traded in a forex exchange to seek profitable margins?

I'm sure most of you might have a hint of the country that I'm talking about and which has, atleast temporarily, deemed using cryptocurrencies as a medium of exchange / legal tender, illegal. In India, the Minister of Corporate Affairs had read out these lines on public television when he was asked about the 'legal status' of Bitcoins and cryptocurrencies in general. I also remember readinghere that the Ministry of Finance had outrightly stated cryptocurrencies as ponzi scheems and that they are neither currencies nor coins.

Keep aside the general interview of our finance minister and an uneducated member of parliament. These are just their personal opinion. However, on February 1st, 2018, out Finance Minister Mr. Arun Jetley made an official statement on crypto currencies and he mentioned that "crypto currency is not a legal tender in India". It means you can't use crypto currency to purchase goods or services and also can't fulfill any debt using that. However, you must note a point here that, he didn't mention anything about crypto currency holding. So users can continue holding crypto currency as per their own will. What they are going to do with that crypto currency, it's the holder's problem. Government can't be blamed in any case. That is what our Finance Minister meant in his official statement during budget day.

Now, it's pretty much possible that many other nations could follow suit and take a similar approach towards Bitcoins. My real concern and the thing that leads to me asking my question is, if they're no longer a legal tender, how would Bitcoin and "cryptocurrencies" in general be used for their original purpose? (considering that loopholes aren't being used, as I'm aware that there's one being utilized at the moment, but could be outlawed soon perhaps?) Most investors would hence prefer to only trade them on an exchange for any value that they find out of it (the value here being the price).

What do you think are its potential aftermath and uses if your country is on the verge to deeming it as an illegal tender? Would you be concerned about no longer being able to use Bitcoins for its intended purpose, i.e; To no longer rely on your Banks and to be your own bank?

We don't have a reason to worry if other countries take the similar approach. Because bitcoin and other cryptos were never created to be accepted by the governments. It was created with a vision of becoming a reliable p2p currency and we have diverted from that path long back. Today bitcoin is considered as an excellent investment asset. People are more comfortable to hold it for longer period of time instead of using it for general purchase. So I see no reason to worry as of now. Bitcoin exists because of the free market rule where the holder are the supreme decision makers. Till the time demand for crypto currency exists, we don't need to rely on any government.

[warrior333]

It's been termed as an illegal tender is nothing short of lack of knowledge on the part of government and it's weak research Conducted towards discovering what it stands for. The aftermath and it's usage is super beneficial to its users and I tip it to be used as the only secured means of transaction. My question is can any good thing not have it good and bad? While the outcome of everything depends 9n the mindset of the users and what they intend to make out of it.

I disagree with you. Why would the government conduct research? They'll never do that. Their interests do not coincide with ordinary people. The main goal of the government is to take the maximum money from people and establish maximum control over transactions and costs. It helps to have power over all people. Bitcoin destroys this scheme. Therefore, the government will do everything to destroy bitcoin. Even if they claim to support cryptocurrencies.

[jseverson]

I disagree with you. Why would the government conduct research? They'll never do that. Their interests do not coincide with ordinary people. The main goal of the government is to take the maximum money from people and establish maximum control over transactions and costs. It helps to have power over all people. Bitcoin destroys this scheme. Therefore, the government will do everything to destroy bitcoin. Even if they claim to support cryptocurrencies.

They actually do, sometimes. Take this somewhat recent, relevant case:

https://www.dezeen.com/2017/01/20/tesla-autopilot-reduced-car-crashes-40-per-cent-us-federal-investigation/

They seem to be working with companies for autopilot regulations.

That being said, I do agree that most things governments say about Bitcoin don't seem to be fact-based. What I don't agree with is that they're doing everything to destroy Bitcoin, unless they're actually passing crippling regulations for cryptocurrencies specifically. As I have said in a previous post, Bitcoin being illegal as tender is usually not specific to it, but is rather applicable to every single foreign currency, which makes such a move not anti-Bitcoin.

[audaciousbeing]

I would contribute on what legal tender is. Because as at today, not all things we use as a medium of exchange is a legal tender but the use of it does not make it illegal. People use post cards, people buy and sell recharge cards, they use same to settle debts, I can use my property as collateral, we have exchange goods for another goods but that does not make it a legal tender despite it being used as a medium of exchange.

Money itself being recognised as legal tender does not serve a one purpose as medium of exchange rather its just a bucket out of the pool on the purposes it can serve. The same goes for bitcoin and even countries that have not come up with regulations bitcoin has been serving several purposes and those that have come with regulations won't because of that makes it legal tender. The term legal tender goes deeper than a paper, coins, regulations but the identity that have come to define the existence of the jurisdiction and that is something nothing can compete with.

[palle11]

It's been termed as an illegal tender is nothing short of lack of knowledge on the part of government and it's weak research Conducted towards discovering what it stands for. The aftermath and it's usage is super beneficial to its users and I tip it to be used as the only secured means of transaction. My question is can any good thing not have it good and bad? While the outcome of everything depends 9n the mindset of the users and what they intend to make out of it.

I think this illegality will be the idea of government because it is the government that would make a classification of legal tender and illegal tender. If it is supported by government then the shallow classification is legal tender. But with a very little time, the cryptos will become unresistable when it will be realised that the fight against crypto is vanity.

[Coffee135]

You pay a lot of attention to what the government thinks about cryptocurrencies. You shouldn't be interested. Governments will always oppose the use of cryptocurrencies. Do not expect mercy. A government ban can make it difficult for you to access Fiat. But they can not forbid you to earn and store coins for example on the stock exchange. When the situation changes you will have a lot of capital.

[richardsNY]

But they can not forbid you to earn and store coins for example on the stock exchange. When the situation changes you will have a lot of capital.

Technically, governments can do anything with centralized environments, so you can't just blindly assume that you are free from any barbary when making use of exchanges and whatnot. The only way to claim total freedom is when you have nothing to do with any centralized service within this ecosystem. I honestly don't think that we're very far away from the moment governments can shut you off completely from the mainstream infrastructure, which again points out how important it is to stock up as many Bitcoins as possible and have them stored offline online. We actually don't need any centralized services, so why use them anyway, aside from the convenience you think they offer you....

[gantez]

The potential usage of bitcoin in the future is depending on acceptance. If it succeeds as a legal tender that will be very remarkable achievement for bitcoin. The effect is what we are already experiencing as market is not going on the bullish for a long time since after the ATH.

[marielbeckham]

Despite this detail, BTC can be sold in the numerous international exchanges.