While there are many benefits to the use of cryptocurrency, there is also much skepticism from the general public. Much of this concern centers around legal protection associated with transactions. Se

Bitcoin is referred to as cryptocurrency, which is a form of payment instrument that uses cryptography or a special security algorithm to control the man- agement and manufacture of Bitcoin. [4], such as the United States, Germany, Japan, New Zealand, Finland, South Korea, China, Hong Kong, Denmark, Russia, Taiwan, as well as in Asia such as Singapore, Bangladesh, Thailand and including Indonesia using Bitcoin as a payment instrument. This is even more interesting because it offers a new concept of payment without relying on the trust of each bank or decen- tralization [5]. The more rapid use of Bitcoin as a means of pay- ment, raises concerns for users in making transac- tions, because there is no regulation about bitcoin.

Therefore for those who use bitcoin, legal uncertainty arises as a result of weak protection for users, because these transaction activities only involve progammer, bitcoin users with computer network media, without any interference from the government or the central bank. Reaffirmed by the prohibition to use bitcoin, including Indonesia. The urgency of writing this paper is intended to provide an understanding and descrip- tion of whether the absence of rules about Bitcoin can function the existence of private law, public law, and state administration law as protection for bitcoin users. How is the role of the state in overcoming the problems that arise as a result of the transaction of using bitcoin as a means of payment, related to the obligation to citizens, because it can pose a threat to the country’s economy.

II. REVIEW LITERATURE Some literature analyzing the results of research on Bitcoin serves as a source of literature and theory in the writing of this paper.

A . DEFINITION OF BITCOIN Satoshi Nakamoto in a paper written in November 2008, entitled “Bitcoin: A Peer-to-Peer Electronic Cash System”. The system and the way Bitcoin works is a peer-to-peer online electronic payment [6]. With Dr. Elli Ruslina. International Economic Law, Law Faculty, Pasundan University, Bandung, Indonesia. E-mail: elli.ruslina@ unpas.ac.id October 2019 JOURNAL OF INTERNET LAW 4 the peer-to-peer system, Bitcoin allows one to trans- fer directly without third party intermediaries or any financial institution. The online payment referred to, will be able to minimize all possible errors and secu- rity risks, including also minimizing the occurrence of double transactions. For that, it can bridge this, it can only be done with a peer-to-peer system that is equipped with a digital signature, a transaction time recorder that has been changed with a hash, so that it cannot be changed, and many other cryptography used in it.Bitcoin is two things at once. First, it is a digital currency, meaning that the unit of account it employs has no physical counterpart with legal tender sta- tus [7]. Second, Bitcoin is what Friedrich A. Hayek describe as a “privat currency”: a currency provided by private enterprise aimd at combatting government monopolies on the supply of money. [4]. Financial actors, such as central banks or gov- ernment institutions, are not involved with Bitcoin transactions [7]. Consequently, there is little legal regulation or supervision of Bitcoin usage. The inter - action between Bitcoin from its supply to the means by which it is generated are controlled solely by its users. Hayek argued that traditional government- backed currencies a prone to number of weaknesses, particullary susceptibility to inflation and polital cor - ruption. [4]. Privat currencies, Hayek suggested, are more stable than traditional currencies because they do not share these weaknesses.

B . THE LEGAL RELATIONSHIP OF BITCOIN USERS IN E-COMMERCE As stated in the sense of bitcoin, that transac- tions are carried out by peer-to-peer, which is decen- tralized. Bitcoin consists of three parts, namely block chain, mining network, and wallet. Block chain is a list of every bitcoin transaction that is carried out, this Block chain records all transactions carried out and is a proof of each transaction. This block chain has no managers, both individuals and organizations, but this block chain holder is every computer that mines Bitcoin. People who mine Bitcoin (miners) are people who maintain old transactions and ensure new transactions are recorded. Wallet (wallet) is a part of Bitcoin that is often seen by users. Actually the wal- let/wallet doesn’t store Bitcoin but only stores the private key which allows the owner to add transac- tions to the block chain in an address in the form of a public key. Bitcoin is only stored as a transaction record in the block chain. Bitcoin security comes mostly from hashing, its function is to link one block to another block in the block chain. Each block stores the previous hash block, and the block hash value is now (which also needs to be changed in the next block, etc.) everyone can check that no transaction has ever changed the hash value because if it is done then the hash value will be affected and not l linked.

Legal actions carried out fall into the realm of private law, the legal relationship that occurs is only binding on the parties involved in Bitcoin transactions.

C . BITCOIN REGULATION AND LEGAL PROTECTION Legal protection is a subjective right that must be possessed by legal subjects. E-commerce activities that use Bitcoin as a payment tool have involved parties, including the bitcoin users. In order for his actions to be protected there should be a legal instrument. But in reality there are no specific arrangements. Some coun- tries are trying to anticipate Bitcoin users, including: The Japanese Financial Services Agency (FSA) analyzes technology and develops clear and fair legis- lation to regulate virtual currency exchange. Bitcoin exchange is a good way for the adoption of bitcoin and the future of virtual currencies. The regulatory agenda is a good thing in building trust in Bitcoin, so the world can understand and accept Bitcoin and other digital currencies. This FSA regulation success- fully revealed of 669 Suspicious Financial Transaction Reports (STRs), the result was crypto represented only 0.16% of money laundering activity and Japan planned to bring to the G 20 meeting to call for joint regulatory efforts to combat cryptocurrency use, but G 20 refused motion for global regulation because the cryptocurrency is still less than 1% of the world economy. Europe, France and the German Finance Minister have agreed to start general oppression in the digital currency market, as the cryptocurrency ban is unavoid- able, as stated by Marcon and Merkel, namely col- lective dissatisfaction with Bitcoin, while other EU governments continue to reject the boom. One key is to control currencies and taxes. Cryptocurrency JOURNAL OF INTERNET LAW October 2019 5 interferes with a decentralized regime, is a real threat to sovereignty, so that the response of governments that will see more non-control than technological evolu- tion is unavoidable. The European Union previously proposed to impose a cryptocurrency market as a secu- rity threat related to money laundering and terosris.

The French and German Finance Ministers will sub- mit a joint proposal to regulate the bitcoin cryptocur- rency at the next G20 summit. But the President of the European Central Bank issued a statement about cryp- tocurrency, that the ECB does not have the power to ban or regulate Bitcoin. At the ECB we follow this evo- lution, but this technology is not yet ripe for consider - ation in ECB monetary policy or as a payment system. Singapore’s Deputy Prime Minister and Chair of the Singapore Monetary Authority (MAS), stressed that MAS, Singapore’s financial regulator and the Central Bank, would not distinguish between trans- actions conducted in fiat and cryptocurrency in an effort to enforce Singapore Anti-Money Laundering (AML) law. Also added that all financial institutions will be subject to the same rules. The MAS Chair also stated that the Department of Commercial Affairs would be empowered to investigate and try cases relating to money laundering and terrorism financ- ing. Furthermore, that regulation of virtual currency transactions can pose challenges that are not related to monitoring currency circulation. While it does not recognize bitcoin as a payment tool, China recognize that digital currency is inevi- table and is in no hurry to regulate cryptocurrencies according to the Central Bank Governor, People’s Bank of China (PBoC).

Central Bank Officer The use of Bitcoin in Indonesia in reality does not have a clear legal status, even Bank Indonesia issued a statement that the cryptocurrency is illegal as money or a means of payment, with the consideration that not issued by the monetary authority, does not meet the characteristics of money. The legal consideration is Law Number 7 of 2011 concerning Currency; in prin- ciple payment in each transaction must use rupiah; PBI No.17/3/PBI/2015, that all transactions in Indonesia must use Rupiah; PBI No.18/40/PBI/2016, prohibition of making payment transactions with virtual currency; PBI No.19/12/PBI, that the implementation of Tek Fin is prohibited from conducting SP activities with virtual currency. Based on the results of a literature review relating to transactions using Bitcoin, some countries did not issue regulations on bitcoin.

III. METHOD Literature survey method used in this paper, in the form of books, journals and rules related to the topics discussed. Furthermore, library data were ana- lyzed descriptively and qualitatively.

IV. DISCUSSION A . THE FUNCTIONS OF PRIVATE LAW AND PUBLIC LAW IN THE SETTING OF BITCOIN AS A MEANS OF PAYMENT .

Based on an inventory of literature data, both from book and journal literature, as well as some regulations related to transactions, it was found that the payment system was a form of the Central Bank’s duty to maintain economic stability.

Singapore, several countries in Europe, China and Indonesia as samples for analysis. These countries determine their respective policies, including not regulating transactions with virtual currencies. The Central Bank of Indonesia regulates the payment system including payment instruments, banking procedures and also the interbank fund transfer sys- tem used in the payment process. The Central Bank has a role (bitcoin as a legal payment instrument in online) [8]. Regulatory, the central bank does not regulate transactions using virtual money, but the realization of the practice of using virtual money in the form of bitcoin is mostly done in economic life, resulting in a legal vacuum (rechts vacuum). The existence of private law, public law, and state administrative law must be functioned according to their needs. The use of Bitcoin in transactions that are decentralized, only involves peer-to-peer, meaning that there is a legal relationship between the parties concerned [1]. In reality based on inventory and observation through literature in several countries that the existence of bitcoin as a means of payment has not been specifi- cally regulated. Though the regulation of bitcoin regu- lation is a problem and is always debated by the digital October 2019 JOURNAL OF INTERNET LAW 6 currency industry. This regulatory issue is important because bitcoin transaction activities involve technol- ogy. Technologically, Bitcoin has unique features, so it has the potential to cause impacts and disruption to vari- ous industries and institutions. As stated in the literature review, Bitcoin transactions involve 3 items, miners, wal- lets, and blockchain, all of these are digital devices.Although there has been a will from government agencies and the Central Bank and Regulators have begun to publish opinions about Bitcoin that have begun to be published regarding the risk of Bitcoin, which is intended for users and financial stability.

Then this publication began to be responded by sev- eral countries, such as the European Union, Singapore, and China. The European Central Bank, however, insists that digital currency schemes do not pose a sig- nificant risk, because the volume is relatively lower than the link with the real economy. There, however, can be changes if the cryptocurrency scheme is more widespread and more important. This legal vacuum allows problems that arise to be resolved through the domain of private law because it involves the parties; public law may also be involved in this issue if it is related to economic stability; State administrative law is also important to consider in the framework of control, although the use of Bitcoin does not involve institutions formed by the state.

B . THE ROLE OF THE STATE IN PROVIDING LEGAL PROTECTIONE The use of Bitcoin as a payment instrument on a regulatory basis has not been specifically regulated due to various considerations of state policies, such as the European Central Bank, the Bank insists that as long as the use of Bitcoin does not cause economic stabil- ity, consider regulation is not yet a requirement that must be prioritized, even though digital industry play- ers, that the rules of one element must be hastened to death. Indonesia has different considerations, that bitcoin as a virtual currency is not a means of financ- ing, even the Central Bank of Indonesia prohibits the use of bitcoin. But the reality seems to allow bitcoin users to perform transactions. Paying attention to the situation and conditions of the use of bitcoin and the availability of regulations to regulate bitcoin has not yet been realized, the closest party is the Central Bank. The Central Bank has duties and obligations, even supervision in order to maintain economic stability in their respective countries.

V. CONCLUSION In order to fill the legal vacuum for electronic transactions by using Bitcoin payment instruments, the tools of private law and criminal law can be used as an alternative to solving problems. The role of the state, especially the Central Bank, is a special institution that has responsibility as one of the obligations of the state in providing legal protec- tion to its citizens.

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