Let us assume that a country wants to make Bitcoin it's legal currency. Or it wants to pass a law specifically about Bitcoin.
How could it legally be defined?
Could they just say "Our country recognizes the following currencies to be legal forms of exchange , bitcoin, ..."
With its decentralized nature and evolving blockchain, would there not be a requirement to have some sort of central authority which would continue to update the definition of Bitcoin? What if there is a branch off due to a code change, something is added and some miners accept it and some do not. What source of the code would be considered the "official" source? etc..
So far countries have been able to just group "cryptocurrencies or digital currencies" into one group which covers many things. But at some point it will probably be necessary to legally define Bitcoin. Not just as a country's currency but via contract disputes, payment agreements, property laws, etc...
There are many legal definitions that may be used. Here are a few of the more common, there are many others. I may do a paper on this at some point.
Legal TenderLegal Tender laws tend to require that they be accepted in payment of debt. This creates a burden on the entire population governed by such law. (I do not favor ANY legal tender law, as they are non-voluntary and tend to cause at least as much problems as they address.) Payment by agreement and negotiation ought be sufficient. Those that take recourse in courts of law may be subjected to that court'w ruling with or without a Legal Tender law.
Lawful MoneyIn the USA, the state of California has adopted Bitcoin as Lawful Money. This means that it can be used as money. It does not require someone to accept it, but there is no restriction on doing so. California needed to do this because of some of their other weird laws.
AssetLike any real asset, subject to capital gains with each transaction.
ContrabandEcuador appears to be moving this route, where any possession of bitcoin may be cause for seizure of it.