Bitcoin – the best-known and most popular cryptocurrency – is to many a word bandied about often in recent days and months, but far less understood.
As in late 2020 Serbia adopted the Law on Digital Property, which regulates this type of property, we must work to raise awareness of it. As its best-known example, bitcoin is a natural place to start.
First of all, the technology that bitcoin is based on – blockchain – and digital currency as a way of using that technology should be distinguished. Blockchain (a combination of the English words 'block' and 'chain') is a database which is not stored in a single location; rather, it is a collection of smaller databases.
These databases are blocks linked together via digital technology, such that any alteration of the database is saved in multiple individual databases. In other words, the database is decentralized.
With bitcoin, this decentralized database contains information on all transactions, i.e. bitcoin exchanges as the units of this virtual currency.
Under our law, virtual currency is a type of digital property which is not issued and whose value is not guaranteed by the central bank or any other public governance body; which is not necessarily pegged to the legal tender, and which has no legal status as money or currency; but which natural persons or legal entities accept as an instrument of exchange, and which can be bought, sold, exchanged, transferred, and stored in electronic form.
One bitcoin is actually a file containing data stored in the owner's digital wallet, which is located on his or her computer or smartphone.
As this database is public, it is possible in theory to find any and all transactions that have ever taken place. This makes the system considerably more transparent and reduces the likelihood of someone using or creating a bitcoin they do not have. As for the value of bitcoin, it is fully determined by the market, i.e. the people and companies using it as an instrument of exchange. What is especially interesting is the steep rise in the price of bitcoin, which passed the 40,000 US dollar mark at one point, resulting in record-high interest in this and other digital currencies.
The lack of a central system means that the value of bitcoin is very volatile and liable to rise and fall sharply, in step with the perceptions of the users and the general public, without any mechanisms to control it.
Serbia is among the first in the world to regulate this area by adopting appropriate legal solutions. In this way, legal certainty is introduced in this sphere by regulating the issue of digital property users and cryptocurrency trade. Simply put, you have bitcoins and you want to sell them. Some accept this, some don't.
The Law on Digital Property envisages organizations which trade bitcoins, where you will be able to legally exchange bitcoins for dinars, the same way you can exchange money at a currency exchange.
By adopting the Law on Digital Property, we aimed to ensure that Serbia got in step with the innovations and changes in the digital world, as well as that we are part of a growing segment of the digital economy.
In this way, we are primarily providing young people with an opportunity to use new sources of financing – which are legally regulated now – and so keep them in Serbia. Here they can put their innovative business ideas into practice as Serbia is not lagging behind the rest of the world in terms of IT technology and making use of the advantages of the digital world.