The Spectacular Rise of Bitcoin and Its Legality in the Context of Nepal

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Right now, the whole world is dancing in the rhythm of bitcoin. Bitcoin is the most popular cryptocurrency currently in the market.

Rise of Bitcoin:

Bitcoin was created in 2009 A.D. by a mysterious entity, working under the name "Satoshi Nakamoto". The concept was developed with the aim of creating a virtual currency that wouldn't be regulated by the traditional (i.e. existing) banking system. Bitcoin is created by using complex software to solve a complicated mathematical computation, a process called mining. It is traded by a complex blockchain method.

Bitcoin got its first vital jump in the market when its price raised from $0.0008 to $0.08 in 2010 A.D. Since then bitcoin has been highly volatile. It has gone through several rallies and crashes. Lately, Bitcoin achieved a remarkable rise in 2020. From a year-low on the daily charts of US $4,748 in the middle of March, as pandemic fears took hold, bitcoin rose to just below $30,000 by the end of the year. Since then it has climbed to all-time highs above $47,500. As per analysts, the main reason for such a massive price rise is that there has been a big influx of investors from large-scale institutions such as pension schemes, university endowment funds, and investment trusts.

Legality in Nepal:

Despite the western world enjoying the bullish trend of Bitcoin, here in Nepal, dealing in bitcoin and any other cryptocurrency is illegal. There is a clear rule under Nepal Rastra Bank Act, 2058 B.S. and Foreign Exchange Regulation Act, 2019 B.S. that Foreign Currency Transactions can only be done by taking permission from Nepal Rastra Bank. Since Bitcoin has not yet gained legal recognition as a currency, Nepal Rastra Bank, in its notice dated 13th August 2017 has stated Bitcoin to be illegal. The Bitcoin charge sheet asks for punishment under section 96(1) of the Nepal Rastra Bank Act which is associated with an offence under section 95.

Bitcoin can provide payment freedom, security, less risk, transparency, and neutrality in a transaction. Along with these benefits Bitcoin also comes with several problems. The problems are related to Criminal Activity, Tax Evasion, and Investment Scams. These problems add skepticism and insecurity to the use of Bitcoins and cryptocurrencies, making them illegal in technologically underdeveloped countries like Nepal.

What is your view regarding Bitcoin? Should Bitcoin and other cryptocurrencies be made legal in Nepal?