With the ongoing growth in value and use for Bitcoin, it’s easy for folks in the crypto space to assume many people are interested in this asset. After all, who wouldn’t want to be their own bank and transact at the speed of the Internet?
However, it’s important to take a step back and remember that not everyone believes in this project. Many people have concerns about its use and implications for the future. Let’s take a look at which countries use Bitcoin and why.
What is Bitcoin?
Bitcoin is a decentralized, digital currency that uses blockchain technology and cryptography to create a secure network and public ledger. By using the capabilities of these technologies, Bitcoin allows for a pseudonymous way for people to transact with one another.
The concept of Bitcoin is laid out in a white paper written under the pseudonym, Satoshi Nakamoto. In this white paper, Satoshi explains the ideas behind a peer-to-peer digital payment system removed from financial institutions and government control. Their goal was to create a transaction ecosystem that could be verified by anyone while still allowing for individual privacy.
As a digital currency, no physical version of Bitcoin exists. Instead, Bitcoins are associated with wallets, which are cryptographic addresses on the Bitcoin blockchain. Transactions between wallets tell the blockchain which wallet the coins belong to.
While Bitcoin is not a legally-recognized currency in most countries, it has become a popular asset and inspired a wide range of new blockchains and services over its 12-year life.
The Mechanics of the Bitcoin Blockchain
Bitcoin relies on blockchain technology to create its digital ledger. A blockchain is a link of blocks of data containing transaction data from Bitcoin transactions that have already happened. These transactions can be reviewed by anyone at any time using a block explorer application.
For a transaction to get into the ledger, it has to be validated. For Bitcoin, this means that people have to commit hardware that runs advanced calculations to validate transactions using its Proof of Work (PoW) consensus model. These people are called miners.
This ledger is then sent to all of the participants of the blockchain, including both miners and nodes. Because this ledger is sent to everyone in the system, it becomes hard for anyone to cheat the system with a false ledger.
Between the ledger and peer-to-peer nature of the project, Bitcoin acts as a way to trade value without involving a third party in a trustless, decentralized way.
Is Cryptocurrency Legal?
With how commonplace it is to have a bank account now, many people believe that Bitcoin and cryptocurrency as a whole are illegal. However, this isn’t the case.
Many people seem to believe that cryptocurrencies are illegal because of their use in various scams across the world right now. Many of these scams get people to send Bitcoin or other cryptocurrencies to the scammer who then disappears. Because the scammer never gives up their identity and the crypto wallet has no name attached to it, the scammer has an easier time getting away with their crime.
However, fiat money is used more often than cryptocurrency for these kinds of scams. False checks, phishing attempts, and so on are easier to pull off with fiat because of the sheer number of people involved in the modern baking system. Why go for a small subset of the population as a scammer when you have a literal billion targets?
It also doesn’t help that some countries restrict or outright ban cryptocurrency acquisition or usage. These countries believe that the cons of cryptocurrency outweigh the pros and place restrictions on cryptocurrency exchanges to keep their citizens safe.
Time will tell if these national leaders are correct or not.
Which Countries Use Bitcoin?
So, which countries use Bitcoin? Currently, most countries don’t use Bitcoin as legal tender for their citizens. However, that doesn’t mean that Bitcoin is ignored or disregarded in many nations. Here’s a breakdown of how the world views and treats Bitcoin:
Countries Using Bitcoin as Legal Tender
On June 9th, 2021, El Salvador became the first country in the world to accept Bitcoin as legal tender. In addition to the United States dollar, Bitcoin now acts as a legal currency in El Salvador. The Salvadorian Congress passed the bill including this change in a 62-22 vote in favor of the change.
This decision means that El Salvador is now trying to become one of the world leaders in cryptocurrency adoption. In addition to increasing the number of ways people can be paid or buy into Bitcoin, El Salvador is also creating tax exemptions and incentives for people that want to build out Bitcoin infrastructure in El Salvador.
Outside of El Salvador, no other country has yet adopted Bitcoin as a legal currency.
Countries Permissive of Bitcoin
In general, most countries of the world view Bitcoin and other cryptocurrencies as a digital asset, rather than a currency. Because of this ruling, cryptocurrencies fall under different regulations than their respective national currencies.
Here’s a list of most of the nations that overall permit Bitcoin and cryptocurrency use inside their borders:
- All European nations except for Russia
- Costa Rica
- Hong Kong
- New Zealand
- South Africa
- South Korea
- Trinidad and Tobago
- United States of America
In general, these nations allow individuals to buy and hold cryptocurrencies like Bitcoin for their own use. Many of these nations also don’t place any restrictions on businesses when it comes to crypto. For many of these nations, businesses are free to accept or deny cryptocurrency use in exchange for their goods or services.
However, that doesn’t mean regulations won’t happen in the future. As a relatively new asset class, cryptocurrencies are currently judged by older rulings on previous digital assets. However, cryptocurrencies act much differently than other digital assets, making them tough to fit into current laws.
For many of these nations, they are permissible to crypto because they haven’t found a better way to deal with regulating cryptocurrencies like Bitcoin. Time will tell if these nations continue to be open to the innovations that cryptocurrency hopes to bring about.
For now, it seems that many of the nations that hold the foundations and development teams for the major cryptocurrencies are content to leave these foundations be and continue their work.
Countries Contentious of Bitcoin
Not all countries of the world are as receptive to Bitcoin as the majority of the world. For one reason or another, some countries believe people’s access or usage of Bitcoin should be restricted in some way. Here’s a list of those countries and a little bit about what their restrictions are:
- Bangladesh: Due to threats of imprisonment over using Bitcoin, cryptocurrency isn’t very popular in Bangladesh.
- Cambodia: Cambodia’s national bank asks its citizens to avoid using cryptocurrencies.
- Canada: In addition to regulatory requirements, some banks prevent their customers from using credit and debit cards to purchase Bitcoin on cryptocurrency exchanges.
- Colombia: Banks have not been allowed to facilitate Bitcoin transactions since 2014 in Colombia.
- Ecuador: While buying Bitcoin is legal in Ecuador, you cannot use it as a payment method or have banks facilitate its sale.
- Indonesia: Citing Islamic law, Indonesia doesn’t allow Bitcoin use as a payment tool due to its speculative and undefined value.
- Iran: No banks in Iran are allowed to deal in cryptocurrency according to the Iranian government.
- Jordan: Although you can hold Bitcoin in Jordan, their government prevents the sale and facilitation of Bitcoin by institutions and citizens within its borders.
- Nigeria: Since 2017, Nigeria has made it that banks transacting in Bitcoin would receive a high penalty fee when caught.
- Qatar: Banks and the Qatar Financial Centre cannot trade Bitcoin due to federal law in Qatar.
- Russia: While still somewhat unclear legally, Bitcoin has steadily moved to be legal in Russia in recent months.
- Saudi Arabia: Due to ties to terrorism, Saudi Arabia does not allow its citizens to use Bitcoin in connection with the Saudi Central Bank.
- Taiwan: Financial institutions and third-party Bitcoin ATM distributors have a lot of restrictions placed on them in Taiwan when it comes to Bitcoin.
- Turkey: With the recent ban on crypto as a payment and banking tool, all you can do with Bitcoin now in Turkey is hold onto it.
- Vietnam: While you can trade Bitcoin as a digital asset in Vietnam, you cannot use it as a payment method.
For all of these nations, their relationship with Bitcoin, and cryptocurrency in general, are being defined as time goes on. We will have to see how attitudes towards crypto change or adapt as time goes on for the citizens and governments of these nations.
Countries Hostile to or That Ban Bitcoin
Finally, there are a handful of nations that outright ban or are hostile towards Bitcoin. These nations believe that the use of Bitcoin or cryptocurrency is harmful to the point of prohibiting it. These nations are:
- Algeria: This nation cites the lack of physical media like cash or a credit card as the reason why cryptocurrencies like Bitcoin are banned.
- Bolivia: The total ban of Bitcoin in Bolivia comes from their central bank.
- China: Bitcoin transactions, holdings, and mining are all banned as some new regulations were put in place by the Chinese government in 2021.
- Egypt: Egypt cites Islamic law for the reasons why the nation bans Bitcoin usage.
- Morocco: Due to consumer concerns, Morocco heavily restricts Bitcoin to a functional ban while calling for consumer guidelines and assistance in the crypto space.
- Nepal: This nation has implemented a total ban on all things Bitcoin.
Bitcoin Usage Worldwide
Over its 12 years of existence, Bitcoin has gone from Internet obscurity to the powerhouse of the cryptocurrency space. With over 200 million wallets on the Bitcoin blockchain, Bitcoin has grown to be a powerful transaction medium separate from any third parties.
However, this adoption is not equal across the world. Bitcoin users by country vary, and some places have taken to Bitcoin more than others. Some data from Statista shows a surprising breakdown of crypto usage as a percentage of the population:
- Nigeria – 32%
- Vietnam – 21%
- Turkey – 16%
- India – 9%
- USA – 6%
- Germany – 5%
Overall, it seems that cryptocurrency is being picked up by the poorer nations of the world faster than the rest of the world. Many of these nations don’t have the same level of banking and investment options as the richer nations, meaning cryptocurrency can bring wealth to these places not seen before.
The Pros and Cons of Bitcoin
Seeing the wide range of opinions on Bitcoin, the question of which country uses Bitcoin is complicated. With how differently some countries have reacted to the digital asset, there must be something causing the divide. The answer lies in the strengths and weaknesses of Bitcoin.
As a digital asset and currency, Bitcoin has a few advantages:
- High returns: Bitcoin historically returns a high return year over year, despite its volatility.
- Pseudonymity: People can remain anonymous when using Bitcoin as long as no one can relate a wallet address to your name or address.
- Decentralized: With no third party to handle transactions, trades can happen on the Bitcoin blockchain at the speed on the Internet.
However, there are clear downsides to the Bitcoin ecosystem:
- Highly technical: It’s harder to use Bitcoin than a credit or debit card due to the lack of UI breakthroughs in the crypto sphere.
- Slow transaction time: Compared to other, newer blockchains, Bitcoin has a slower transaction time.
- Irreversible: Once a Bitcoin transaction has been submitted, you can’t undo it, unlike a charge to a credit card.
Most countries in the world are receptive to Bitcoin as either a digital asset or payment method. While these countries also tend to regulate its use or keep an eye on it, they are okay with letting their citizens use Bitcoin as they want. However, there are a handful of nations that are combative or hostile to Bitcoin.
In the end, Bitcoin has the potential to bring value and banking capabilities to folks around the world that might not otherwise have it.