Legality of Bitcoins?

As my group discussed in class, bitcoins are known as an "online" currency, created in 2009, that does not actually translate into real currency.  In order to obtain this currency, a person is required to solve an online math problem using a computer with an extremely large computer tower. There are many websites and articles posted online that tell you everything you need to know about bitcoins, including: the basics of what bitcoins are, how a person can become involved with bitcoins and how to obtain / “earn” them, and even how you can use them (transferring them to others, buying items online, etc.).  Most websites vary in how much 1 bitcoin equals when converted to the United States Dollar, but each website ranges between $374.10 to $373.03.  These bitcoins do not directly convert into dollars, the process is much more difficult than that and you cannot even use them in the place of real money.

In fact, it is even unclear, when searching online, whether or not bitcoin IS in fact legal in the United States or whether it is ILLEGAL and seldom regulated. The website money.cnn.com states that bitcoin is mostly unregulated; however, governments are concerned about taxation and their control over the currency.  Another article about bitcoin on this website states that in most countries, bitcoin is neither illegal nor totally unregulated.  Instead, it is somewhere in between the two. 

According to another article on coindesk.com, bitcoins are LEGAL in the United States, depending on the purposes of their use and they were in fact accepted on Silk Road, a website where you could anonymously buy and sell objects, people, and more. FinCEN, the Financial Crimes Enforcement Network in the United States, published guidelines about the use of bitcoins and other online currencies, defining the circumstances that allow bitcoin users to be categorized as money services businesses.

California law states that it is prohibited to use “anything but the lawful money of the United States” in transactions in that state.  This law was repealed and the governor of California has signed an official bill legalizing the use of bitcoins.  The reason for the bill, as said by California assemblyman Roger Dickinson: “in an era of evolving payment methods…it is impractical to ignore the growing use of cash alternatives.”  When searching for a list of other states where bitcoins are completely legal, the only other recorded state I saw reported about was New Hampshire.  Unfortunately, even with all of this information, it still remains very unclear, based on multiple reports on the issue, whether or not bitcoins are legal and regulated or completely illegal.