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Learn if Bitcoin is a Good Investment for You with the Help of a Bitcoin Lawyer

Bitcoin has become a hot topic in the financial world in recent months, and stories abound of people becoming Bitcoin millionaires.  With all the buzz about Bitcoin and other cryptocurrencies, you may be wondering: is Bitcoin a good investment. Ultimately, only you can decide what your investment approach should be and whether Bitcoin is an investment that should be added to your portfolio. However, you should understand the risks and should consider talking with a Bitcoin lawyer to understand the laws in place and the limitations of legal protections for your investment.

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Breaking Down Bitcoin Investments

Before you can fully understand if Bitcoin is a good investment option, our Bitcoin lawyer breaks down some of the most important details to understand about this cryptocurrency investment option.

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.

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.

Can a Bitcoin Lawyer Help Me Before I Make the Investment? 

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.

Is Bitcoin Safe and Legal?

Bitcoin and other cryptocurrencies have become popular investment products, but if you’re not familiar with the cryptocurrency market, you may wonder: is Bitcoin safe and legal? The answer to this question depends upon the circumstances and it’s not a straightforward question to answer.  If you are considering making a substantial investment or have concerns about the money you have already invested, reaching out to a Bitcoin law firm could be important. The safety and legality of Bitcoin investments depend upon your intentions for the virtual currency and your actions in trading it.

Within the United States, there are no laws against buying and selling bitcoins. However, the IRS requires that you declare your Bitcoins as property. If you do not comply with the rules, you could be subject to penalties for violating tax laws.  Exchanges which sell Bitcoin are also covered by the Bank Secrecy Act, and Initial Coin Offerings, which are similar to IPOs, are also subject to regulation as a security.

While you can buy and sell bitcoins, however, you cannot do so for an unlawful purpose such as money laundering. Attempting to use bitcoin for unlawful purposes can result in prosecution and could leave you faced with serious penalties.

You should not assume that your Bitcoin transactions will be untraceable, as Coinbase has already been ordered to turn over information about certain transactions to the IRS.  The confidentiality of your information is not guaranteed if there is a court order under any circumstances compelling any coin exchange or virtual wallet provider to turn over your account information.

Investing in cryptocurrencies and understanding the legal issues surrounding them is a very complicated prospect.

- Jacob H. Zamansky

If you operate in accordance with regulations and do not use your Bitcoin for illegal activities, you should not face legal consequences in connection with Bitcoins. However, you should be aware that just because an investment is legal does not mean it is safe.

Investors in cryptocurrencies have lost substantial sums of money as a result of hacks. The loss of your password for your virtual wallet or another inability to access your public and private key necessary to prove your ownership of bitcoin could also result in your investment being lost forever.  And, if a coin exchange or virtual wallet disappears, is hacked, or is bankrupted, the FDIC does not insure your investments and you could lose everything.

All of these risks exist in addition to the fact that Bitcoin and other cryptocurrencies are simply a very volatile investment. The price has fluctuated greatly, and it is uncertain whether Bitcoin will become a widely-accepted currency in the long-term, resulting in coins being worth millions, or if it will eventually be worth nothing.

If you are considering investing in Bitcoin, you should talk with a Bitcoin law firm to find out how regulations do – and don’t – protect you and to ensure you understand your obligations so you can comply fully with the law.

Is Bitcoin a Good Investment?

Bitcoin saw remarkable gains in recent months, but also lost more than 20% of its value in a single week. It is an extremely volatile investment, which means that you should not invest money in Bitcoin that you cannot afford to lose.

Bitcoin investing is also not yet subject to the same intensive regulations as other types of financial products like stocks. While there are many securities laws protecting investors in stock, including requirements for publicly traded companies to make financial disclosures, the Bitcoin market is currently far less regulated.  Further, Bitcoin exchanges and virtual wallets are not FDIC insured, so if the wallet company where your Bitcoin is stored suddenly disappears or is hacked and your money is taken, the U.S. government does not guarantee your investment and you could lose everything with no recourse.

While there are undeniably serious risks, however, there could be significant potential upside to investing in Bitcoin if you believe that this cryptocurrency will become a long-term trusted currency.  Some financial experts believe that a single Bitcoin could someday be worth millions if the coins become a long-term trusted source of currency, based on estimates regarding the number of coins in circulation and the number of coins lost.  However, if Bitcoin does not become a trusted currency that is utilized over the long-term, then it is possible that the coins will someday be worth nothing and your entire investment will be lost.

Investing in cryptocurrencies and understanding the legal issues surrounding them is a very complicated prospect.

- Jacob H. Zamansky

When deciding if you think Bitcoin is a good investment or not, you will also need to consider the price of coins at the time you are making a purchase. When Bitcoin was reaching values near $20,000, many believed that it was in a bubble or that a buying frenzy had artificially driven the price up much higher than it should be in the near-term.

Ideally, you don’t want to invest in Bitcoins at the height of the bubble and lose a significant portion of your investment immediately; however, if you believe that Bitcoin’s price is likely to increase significantly compared with where it is today and you intend to hold the investment for the long-term, buying when prices are high may not matter as much if you are not concerned about short-term losses.

Speak With a Bitcoin Lawyer Today

If you are considering a substantial Bitcoin investment or if you have concerns about problems with your current investments, a Bitcoin attorney at Zamansky, LLC can help you. Give us a call today to find out more about the assistance we can offer.

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