If you have been reading about Bitcoin in the news, you may be wondering exactly what this virtual currency is, how investing in it works, what laws regulate it, and what the risks are. If you have questions, we have answers. You can read on to get answers to some of the most frequent questions about Bitcoin and if you have specific questions related to your situation, you can reach out to a Bitcoin attorney today for help.
What is Bitcoin?
Bitcoin is a cryptocurrency or a form of virtual currency. Unlike most currencies, which are regulated by a central bank, Bitcoin relies on a decentralized peer-to-peer network that contains a ledger of transactions that cannot be modified. Cryptography controls the creation of bitcoin and is used to track and confirm bitcoin transactions. The public ledger on which confirmed transactions are recorded is called the blockchain.
Investing in cryptocurrencies and understanding the legal issues surrounding them is a very complicated prospect.- Jacob H. Zamansky
How Can You Acquire a Bitcoin?
You can acquire Bitcoin by purchasing coins on a coin exchange, which serves as a trading platform. You can acquire bitcoin as payment for goods or services or can exchange bitcoins with others. You can also use a competitive mining process to acquire bitcoin, but you will need computer skills to understand how the mining process works and you will need a specialized computer.
How Do You Store Bitcoin?
When you own Bitcoin, you need a public and private key to prove ownership and access your coins. You can use a wallet to store your public and private keys. There are many different kinds of wallets, including web-based wallets, and wallet apps for your phone or computer.
Is Bitcoin Safe and Legal?
There is nothing illegal about buying or selling Bitcoin within the United States as long as you do not use Bitcoin for illegal purposes such as money laundering. You are also required to comply with IRS rules. Certain sellers of Bitcoin are subject to the Bank Secrecy Act and must comply with rules aimed at preventing money laundering.
Is Bitcoin a Good Investment?
Whether Bitcoin is a good investment or not depends upon whether you believe there is a future for this virtual currency. If the currency continues to be widely accepted, coins could be worth millions. Your investment could also decline to $0 if Bitcoin does not turn out to be a virtual currency that is accepted as having value over the long-term. Bitcoin is also a very volatile investment, so you should not invest money you cannot afford to lose.
What Are Some of the Risks of Investing in Bitcoin?
When you invest in Bitcoin, you risk the investment declining in value, potentially to $0. If you forget your password or otherwise cannot access your virtual wallet, you may be unable to access your Bitcoin. If your coins are taken in a hack or if the wallet you store your bitcoins in disappears, your investments are not FDIC insured.
How Can a Bitcoin Lawyer Help?
A Bitcoin lawyer can provide you with assistance understanding Bitcoin investments, complying with rules and regulations related to Bitcoin, and determining if you have any legal recourse if you have suffered losses through fraud or other wrongdoing. Contact a Bitcoin attorney at Zamansky, LLC to find out about the help we can provide to you and to get advice before making a substantial Bitcoin investment.