Bitcoins

Definition of Bitcoin
Bitcoin Internet portals define it as "a currency, such as the Euro or the US Dollar, used to exchange goods and services. However, unlike other currencies, Bitcoin is an electronic currency which has new features and is known for its efficiency, safety and easy exchange”. (1) It is also considered "a consensual network that allows a new system of payment and a completely digital currency. It is the first network between peers of decentralized payment driven by its users without the intervention of a central authority or intermediaries. From a user point of view, Bitcoin is like money for the internet". (2)

How does Bitcoin operate?
Broadly, the operation manual of http://www.queesbitcoin.info explains that "just as there are email addresses, there are Bitcoin addresses that allow us to send and receive this digital currency." To start using Bitcoin it is necessary to generate one of these addresses using an application. The most frequently used applications include: Blockchain, Electrum, Mycellium, Armory and Bitcoin-qt, etc.
Usually there are two easy ways to obtain Bitcoins: 1. Offering products and services in exchange for Bitcoins. 2. Exchanging them for euros, dollars or other currencies. To receive a payment it is necessary to give the buyer the Bitcoin address in order to make the transaction to that account. Exchange for Euros, US Dollars or any other currency can be done through “Exchange Markets”. These are web pages that connect users who wish to sell Bitcoins with those who wish to buy them. In these pages the exchange process is automatic and instantaneous. (3)
Without getting into technical issues, the "Bitcoin system is based on a peer to peer or user to user in an ingenious manner. Considering that there are no agencies behind this free currency, the users (thousands of computers around the world) make sure to track, control and record the transactions”. (4) Therefore, through this system, the direct exchange of Bitcoins occurs between users without the need of any intermediary intervention. Hence, the value of Bitcoin will be fixed primarily by law of supply and demand, and the trust that users deposit in Bitcoin. Consequently, the value is usually volatile and unstable.

Legal status of Bitcoin
The interest of the international community with respect to Bitcoin arises from the profound changes brought about by the emergence of digital technologies in economic, legal and financial life. While at present this analysis is in full development, several legislations have addressed the issue, including:
United States
The FinCEN (Financial Crimes Enforcement Network) holds that Bitcoin does not meet the required criteria in order to be considered currency according to the criteria established in the Bank Secrecy Act, which establishes that, in order to qualify as currency, it must (i) be designated as legal tender and that (ii) circulate and (iii) is customarily used and accepted as a medium of exchange in the country of issuance.
The Internal Revenue Service (“IRS”), issued a series of guidelines for the taxation of Bitcoin in the United States and concludes the following: 1. For federal tax purposes, virtual currency is treated as property. Thus, general tax principles applicable to property transactions apply to transactions using virtual currency; 2. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes; 3. A taxpayer who receives virtual currency as payment for goods or services must, in computing gross income, include the fair market value of the virtual currency, measured in U.S. dollars, as of the date that the virtual currency was received. The fair market value of the virtual currency will be determined in U.S. dollars as of the date of receipt; 4. The virtual currency received for services performed as an independent contractor, measured in U.S. dollars as of the date of receipt, constitutes self-employment income and is subject to the self-employment tax; 5. Taxpayers may be subject to penalties for failure to comply with tax laws.
On August 6, 2013, Judge Amos L. Mazzant of the United States District Court - Eastern District of Texas (Sherman Division), in the SECURITIES AND EXCHANGE COMMISSION V. T. TRENDON T. SHAVERS and BITCOIN SAVINGS AND TRUST case, in a brief paragraph, ruled on the nature of Bitcoin, stating that Bitcoin could be used to make purchases of goods or services or to pay living expenses to the extent that the seller accepts. In his arguments the judge explains that the only limitation of Bitcoin in relation to traditional currencies is that users can limit their acceptance as payment. He also argued that Bitcoin can be exchanged for traditional currencies such as US Dollars, Euros, Yen, etc., which leads to the conclusion that Bitcoin is a form of currency.
Germany
The Federal Financial Supervisory Authority (“BaFin”) published an article explaining the risks to which users of Bitcoins may be exposed. BaFin defines Bitcoin as “units similar to foreign currencies and not of legal tender” (5).
Moreover, BaFin establishes that the mere use of Bitcoin as a substitute currency for cash or scriptural money in currencies of legal tender to participate in the economy through exchange transactions is not an activity subject to authorization. However, an authorization requirement may arise from additional circumstances.  This applies where Bitcoins are mined, purchased or sold to participate in an existing market, and in addition a special contribution is paid to create or preserve such market.  
Argentina   
The Central Bank of Argentina issued a statement warning the general public about the risks involved in the use of virtual coins. It suggests the public user should note that virtual coins are not issued by the Central Bank or other international monetary authorities; therefore, they have no legal tender and no back up. In the international scope, there is still no consensus on the nature of these assets; however, various authorities have warned of its possible use in money laundering operations and various types of fraud. There are also no governmental mechanisms to ensure its official value. Virtual currencies revealed significant volatility so far, experiencing swift and substantial price changes.
Likewise, the Unidad de Información Financiera (UIF) defines virtual coins as "a digital representation of value that can be digitally traded and whose functions are to provide a medium of exchange, and / or a unit of account, and / or a means to store value, but do not have legal tender, and are not issued or secured by any country or jurisdiction. In this sense virtual coins differ from electronic money, which is a mechanism to digitally transfer fiduciary currencies (i.e. by which currencies with legal tender in any country or jurisdiction are digitally transferred)”. 
It is important to note that, according to the rules of the UIF, regulated entities should pay special attention and reinforced monitoring to operations carried out with virtual currencies due to the risks they pose to the system of crime prevention, specifically with respect to Laundering and Financing of Terrorism.
In summary, the continuous development of new technologies gives rise to several economic, legal and financial problems. In this sense, the receptiveness to Bitcoins of the international community has raised important concerns and has therefore forced different legislations to analyze and study the issue.
In Argentina, the issue is not yet fully developed and only the BCRA and the UIF have issued opinions on the matter. The definition of Bitcoin shall without doubt impact the decision as to whether or not the current legislation in Argentina applies to transactions in which Bitcoins are used.
Even though the future of Bitcoin is uncertain, reality indicates that its use is incrementing with time. Hence, businessmen and the Law must anticipate the relevant business and legal implications.
 
 


1. http://www.bitcoinargentina.org/?page_id=84
2. https://bitcoin.org/es/faq#que-es-bitcoin
3. http://www.queesbitcoin.info/obtener-bitcoins.html
4. http://www.queesbitcoin.info/coacutemo-funciona-bitcoin.html
5.http://www.bafin.de/SharedDocs/Veroeffentlichungen/EN/Fachartikel/2014/fa_bj_1401_bitcoins_en.html