Investing in Bitcoin – legal?

In case of any cryptocurrency, there is no one to complain to nor you can do anything about lost money, except you can still pump money to the system without expecting any returns. Those who had made money has already moved out. Now, if you invest more money into bitcoins or cryptocurrency, nobody is sure that you can get back the money. It is like investing in stock. But, if you invest in stock, there is a guarantee that you will be able to get the money back and there is a body to complain if anything is manipulated. The amount of money pumped into cryptocurrency can gain more in normal stock market with a little patience and without panic. More than checking the Bitcoin legality, it is more relevant to check what would you do if you lost or if you are unable to withdraw your funds and if the exchange or the wallet team is not responding. In many cases, they allegedly allege that there is a lot of support tickets to be cleared before your ticket is addressed.

Is Bitcoin investment Legal?

Bitcoin is notified to be illegal in some countries like Algeria, Bolivia, Ecuador, Kyrgyzstan, Bangladesh, Nepal etc. Except these countries, most of the countries say cryptocurrencies are not supported. These nations never published any legal laws or rules making cryptocurrency illegal. If observed closely, we can find that, even in the cryptocurrency banned nations, politicians and normal people are still trading cryptocurrencies.

How do they trade crypto currencies in banned countries?

It is easy to convert your money into another currency using wallets and then purchase any cryptocurrencies from trusted exchanges. For example, Bitcoin can only be purchased in US Dollars and most of the cryptocurrencies can only be purchased using Bitcoin.

How to select a cryptocurrency exchange and are they trustworthy?

There are a lot of cryptocurrency exchanges older than a decade, but what matters is, where it operates, how it is regulated and the track of the testimonials and how they upgrade their technology to prevent hacking. Today, we have seen a lot of top cryptocurrency exchanges going down because they are hacked or they are upgrading their technology to increase the capacity. There are a lot of exchanges which has been shutdown without even returning the invested amount or amount as per the last trade and there is no way to locate them or locate.

Cryptocurrency VS Stock

To understand this, please answer the below questions in your mind:

What is the cost of a bitcoin and how much would you buy?

What would be the loss in Bitcoin, when it falls?

How much would you invest in bitcoin?

How many Bitcoins would you be able to buy if you were to?

How much would you gain in Bitcoin with that money for a maximum and normal positive change like 1000 USD?

You should know that stocks are way less to spend than a bitcoin and the profits are maximum and losses are minimal in stock market trading. It is legal and it is usually tax free.

Buy cheapest stocks with a lot of movement and in a better category and you will see your investment multiplying. Market is also manipulated, so be careful about a fall, which won’t be a loss considering how much you made in total.

What is Bitcoin?

Bitcoin is created by a group known as Satoshi Nakamoto and released as opensource in 2009, whose identity is unknown. Bitcoin is a decentralized digital currency used to make worldwide payment peer to peer without an Administrator or intermediary. The records of the cryptocurrency is stored in a public ledger called blockchain and verified by nodes using cryptography.

How is Bit Coin created?

Bitcoin is created as a reward for process known as Bit coin mining. People who perform the Bitcoin mining repeatedly keep the blockchain consistent by verifying the block, which is complete, unalterable by collecting new transactions. Each block has a cryptographic hash for the previous block using SHA-256 algorithm, creating a block chain.

For every new block, it should contain the proof of work represented by nonce. Miners find the nonce, so that the result is smaller than the difficulty of the network’s difficulty target, to hash the block content. This proof will then be easy to verify any node in the network to verify, but extremely time consuming to generate. Miners try any series like 1,2,3,4… etc to find the exact nonce before meeting the difficulty target.

Approximately, the difficulty of the network is recently fore every 2,016 blocks, the difficulty target is adjusted and takes 14 days to verify every block taking 10 minutes each. The network will adapt its power according to the total amount of the mining power, it has.

What makes blockchain tough to hack?

For any modifications to be made to the block chain, it is required for any person or an attacker to modify all subsequent blocks in order to make a block consistent. As new blocks keep adding continuously, difficulty of modifying the blocks and the processing power needed multiplies exponentially.

Difficulty of Mining

As it is extremely expensive or the processing power is not achieved by a single device or a single person, the mining is performed using the process called pool mining. In pool mining, the process of mining is distributed among  different individuals and different devices to reduce variance in miners income. Individual rigs have to wait for a long time to confirm a block of transactions and receive payment. In a pool, all participating miners gets paid when a block is solved and payment depends on the work done by each individual.

Creation of Bitcoin

 

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