Law & Security

As far as we know, Bitcoin is not illegal in terms of the current legislation in most jurisdictions. However, in some jurisdictions (such as Argentina and Russia) legislatively introduced strict restrictions or bans on the use of foreign currencies. Other jurisdictions (eg Thailand) may require licensing of certain subjects, such as bitcoin exchangers. Regulators in different jurisdictions have taken steps to establish rules for individuals and legal entities aimed at, in order to integrate this new technology into the existing financial system. For example, the American network to combat financial crime (FinCEN), a division of the Ministry of Finance of the United States, released an optional guidance on how it describes some of the activities, including the virtual currency.

Bitcoin is money and money is always used for both legal and illegal purposes. Cash, credit cards and modern banking system is much superior Bitcoin in respect of their use to finance crimes. Bitcoin can bring significant innovations in payment systems and the benefits of these innovations is generally considered far exceed their potential drawbacks. Bitcoin is designed so that it is a major step forward in terms of safety of funds. It can also be used as a substantial protection from many forms of financial crimes. For example, bitcoins is absolutely impossible to forge. Customers completely control their payments and can not receive unconfirmed accounts, such as in credit card fraud. Bitcoin transactions are irreversible and are not at risk of fraudulent refunds. Bitcoin is able to protect the money from theft and loss with the help of powerful and useful mechanisms such as the preservation of backup, encryption, and multiple signatures. Expressed some concern that Bitcoin could be more attractive to criminals because it is characterized by confidential and irreversible transfers. However, similar features already have cash and wire transfers, which are used more widely and universally. Using Bitcoin no doubt be subjected to the same regulation that already exists in the current financial systems, Bitcoin and hardly prevent conduct criminal investigations. In general, it is common for revolutionary ideas in any field, be perceived as something controversial, before its advantages become all too clear. A good example among many which illustrate this – the emergence of the Internet.

Technology Bitcoin – the protocol and cryptography is a time-tested high level of security and Bitcoin network is probably the world’s largest distributed computing project. The biggest vulnerability in Bitcoin – a fault of the users. Bitcoin wallet files that store the necessary private keys may be accidentally deleted, lost or stolen. This is very reminiscent of the physical cash stored in electronic form. Fortunately, users can use the best security practices to protect their money or use services provided by a good level of protection and insurance against theft and loss.

Terms and cryptography protocol used in the bitcoin, still work fine, years after the creation of a network that is a good indication that the system is properly designed. However, a variety of security issues and fixes were previously in different implementations’s software. As with any other software, Bitcoin security depends on the speed with which these problems are found and solved. The more of these problems will be found, the more mature will be Bitcoin. Often there is confusion about the thefts and security problems that occur in the different exchangers and bitcoin businesses. Although such problems arise, they are not related to the burglary of Bitcoin, or Bitcoin involve birth defects; as well as robbing a bank does not mean that the dollar is compromised. However, it should be recognized that the users need to provide a set of best practices and simple security solutions to better protect their money, and to reduce the overall risk of theft and loss. Over the past few years, we have developed security features such as encryption wallets, purses offline, storage devices bitcoins, and transactions requiring multiple signatures.

There’s no need and it is wrong to simply change the bitcoin protocol. Any client program that does not conform to generally accepted rules, will not be able to impose its own rules of others. According to the current specification, double spending possible in one and the same chain of blocks, as well as waste bitcoins without correct signature. Therefore, it is impossible to create an uncontrolled number of bitcoins from the air, to spend money other users, damage the network or something like that. However, the majority of miners may in principle arbitrarily block or reverse the recent transaction. Most users can also insist on making some changes. As Bitcoin works correctly only about the full agreement between all users, a change in protocol may be very complex and will require changes in the overwhelming majority of users, so that the rest of the users will have no choice but to follow them. In general, it is difficult to imagine why Bitcoin users are willing to accept the changes that may compromise their own money.

It’s worth to keep in mind, that most of the systems, based on cryptography, are vulnerable in general, including the traditional banking system. However, quantum computers are still not there, and probably will not in the near future. By the time quantum computers will pose a direct threat to Bitcoin protocol can be improved for the post-quantum algorithms. Given the importance of such improvements, we can expect that it will be thoroughly examined by developers and accepted by all users of Bitcoin.