What is Bitcoin and how was it created?
Bitcoin is a consensus network that provides the possibility of a new payment system and a completely digital form of money. It is the first decentralized peer-to-peer payment network operated by its users without central authority or intermediaries. From the user’s point of view, Bitcoin is more or less like the “cash” of the Internet. Bitcoin can also be considered as the most famous triple registration accounting system that exists.
Created by Satoshi Nakamoto as an online P2P payment system based on cryptography, eliminating transaction costs. In fact, in 2009, when bitcoin was created, it became the beginning for the appearance of constantly new cryptocurrencies (Litecoin, ZEC, etc.).
How does Bitcoin work?
For the user, Bitcoin is nothing more than a mobile phone or computer application that provides a personal Bitcoin wallet and allows the user to send and receive bitcoins through it. This is how Bitcoin works for most users. In other words, it works through constant updates of the central registry (the well-known blockchain) with all the transactions that take place. Each computer participating in the Bitcoin network maintains a copy of the blockchain and confirms every transaction made on it.
In short, every time a new bitcoin transaction is “announced” all users update their register with the corresponding change and are in the same!
Bitcoins and legal framework in Greece and EU
So far, there is no legal definition of virtual currency. In Greece there is no special legal framework that regulates the general operation of cryptocurrencies. At the same time, in the EU Most Member States seem sceptical to legislate the phenomenon and are limited to making recommendations on the risks arising from their use.
Comission Directive 2009/110 / EC on electronic money, as incorporated into Greek law by Law 4261/2014, could be the legal basis for the operation of virtual currencies, although such currencies differ from electronic currencies. On the other hand, the European Central Bank rejects the inclusion of Bitcoin in the provisions of the above Directive, considering that virtual currencies are not complete forms of money, while according to article 4 par.3 Law 3862/2010 and Directive 2015/2366 / regarding the payment services in the internal market, virtual currencies cannot be considered money, and therefore do not fall within the framework of payment services legislation.
Bitcoins and tax implications
Bitcoin is not credit money in the capacity of legal tender in any jurisdiction, but often a tax liability arises regardless of the instrument used. There is a wide range of legislation in many different jurisdictions that could offer revenue, sales or any other form of tax liability that arises with Bitcoin. At the same time, Bitcoin cannot be classified as a tangible asset under
Article 14 of Directive 2006/112 / EU on VAT. Virtual currency transactions could be taxed in the same way they are taxed the traditional payment methods. In contrast, bitcoin is exempt from VAT.
Bitcoins and risks
A lot of concerns have been raised about bitcoin as a means of facilitating financial crimes because it can be used to make private and irreversible payments. However, these possibilities already exist with the widely used cash and credit transfers. The use of bitcoin will undoubtedly be subject to similar regulations with the already existing financial systems, and bitcoin is unlikely to prevent forensic investigations from being conducted.
General remarks
Bitcoin was the most important innovation of a financial nature, being a means of payment without any material substance! The prospects for Bitcoin are promising, as the currency is constantly growing. As the use of the currency increases, so will the confidence of traders, which will further enhance its growth. It is clear that this currency carries some high risk. We should not, however, dispute the fact that it has played an important and positive role in countries where restrictions on the capital movement are in place.