Bitcoin is gaining acceptance as valid currency, but not every nation agrees. Germany and China at are the vanguard, while the U.S. is skeptical and Thailand had banned it.
This virtual currency first appeared on the Internet, but now holds legal standing in Germany, where it is considered a “unit of account.” That doesn’t mean it’s currency like the dollar or euro, but that it has value as “private money.”
In Germany, the usual value-added tax would be paid by those using bitcoin commercially, but the Finance Ministry declared profits from bitcoin investments tax free after one year, which indicates they are considered a form of portfolio management.
Chinese investors are among the largest contingent of bitcoin downloaders. Since bitcoin’s debut there, value has increase 46 percent, compared to 2 percent for the Shanghai Composite Index.
Their future in the U.S. is being questioned because of increasing federal scrutiny. Last May, the U.S. seized more than $2.9 million in bitcoins from the U.S. bitcoin subsidiary Mutum Sigillum LLC, alleging that Mt. Gox owner Mark Karpeles had concealed the fact that he opened his account to operate a money transfer business. Karpeles counters that Mt. Gox operates in compliance with U.S. state and federal financial regulations. The U.S. Senate Committee on Homeland Security is working with federal regulators to understand bitcoin in terms of the threats and risks related to virtual currencies.
Thailand banned bitcoin transactions last July, to maintain control over its cash flow.
Slightly more than 11.5 million of the 21 million bitcoins created are in circulation, according to Blockchain.info. In July 2010, bitcoins traded for 5 cents. In August, value fluctuated from about $103 to $125, according to Mt. Gox, the Japanese corporation that is the leading bitcoin exchange.