In Hungary, cryptocurrencies are recognized as a legitimate form of digital payment. These currencies exist in an entirely non-material state. Blocks of transaction data are stored in the blockchain without any personally identifiable information being included.
Any Hungarian resident can use cryptocurrency to make major online purchases in Hungary and is also allowed to buy and sell crypto assets legally.
But before you make any investment, you need to understand the laws related to cryptocurrency in the country. In Hungary, cryptos are used as a form of virtual currency that can’t be physically accessed by their owners. Cryptocurrencies in Hungary are plentiful and diverse, and none of them are issued by the country’s central bank.
Overview of Cryptocurrency Use in Hungary
Despite everything, cryptocurrency hasn’t caught on with merchants on a nationwide scale. Roughly 50,000 Hungarians have some form of cryptocurrency holdings and are largely interested in speculation (buying low and selling high). Obviously, this is just an estimate, but even if it were accurate, only tens of thousands of individuals would use it regularly.
The digital currency hasn’t gained enough traction stateside for merchants to start accepting it as payment just yet. This is due to a number of factors, including the following: The Hungarian Tax Authority’s (NAV) laws are contentious, and for a long time, nobody knew whether or not they had to be reported or accounted for their investments.
Forint-compatible Point-of-Sale (POS) terminals that take cryptocurrencies have not yet been developed in Hungary, and neither has a good POS terminal that supports multiple currencies. There are currently between fifty and one hundred domestic businesses that accept cryptocurrency as payment. These businesses cover a wide variety of industries, from law and catering to babysitting, hair styling, and beekeeping.
Hungary’s 50% Tax Cut for Crypto Investors
Over the last few years, investors in digital tokens like Bitcoin have been incentivized to report their profits by a reduction in the tax rate from the current 10% to 5%.
Starting in 2022, the government plans to reduce the rate on such earnings from 30.5% to 15%, bringing it in line with capital gains levies on stocks. Authorities worry that individuals will try to conceal their cryptocurrency wealth from them in order to avoid paying the higher tax rate that appears to be the driving force.
Impact of Crypto on the Hungarian Economy
In recent years, Hungary’s low electricity prices and pleasant atmosphere have attracted a number of large-scale bitcoin mining facilities.
Bitcoin mining has boosted the Hungarian economy by attracting international investment and generating numerous new jobs. The mining of cryptocurrencies like Bitcoin has also contributed to the decentralization of the economy.
Crypto is gaining ground in the sports-betting market. Using Fogadas is an efficient way for sports lovers to wager on it. Because of these considerations, Hungary is becoming one of the most popular places in Europe.
Why Hungary is a Better Place For Bitcoin Mining?
In recent years, Hungary has risen to prominence as a prime location for Bitcoin mining in Europe. Because of the government’s encouragement, several Hungarian businesses have begun to invest in Bitcoin mining.
The following things have contributed to the expansion of crypto in Hungary:
The bitcoin business in Hungary enjoys the backing of the government.
There has been a surge of interest in Bitcoin mining among Hungarian businesses.
The price of electricity is quite low in Hungary.
Since the beginning, the Hungarian government has been on the side of those working in the crypto sector. The Prime Minister, Viktor Orbán, made the statement that “virtual currencies could have a substantial impact on the economy and society” back in 2014. The government started issuing cryptocurrency business licenses the next year.
As early as 2016, the government formed a group to investigate blockchain’s possible applications. In addition, a 2017 analysis by the country’s central bank suggested that blockchain technology might have a “transformative” effect on the financial industry.
Bitcoin mining in Hungary has seen remarkable growth in recent years. Only a few thousand Bitcoin miners called the country home in 2016, but many Hungarians work in the mining industry today. The combined hashing power of all Hungarian miners is said to be greater than that of the entire global mining pool in just four years.