Bitcoin is a decentralized digital currency, without a central bank or single administrator, that can be sent from user to user on the peer-to-peer bitcoin network without the need for intermediaries. Transactions are verified by network nodes through cryptography and recorded in a public distributed ledger called a blockchain.
Bitcoin is unique in that there are a finite number of them: 21 million.
Bitcoins are created as a reward for a process known as mining. They can be exchanged for other currencies, products, and services.
NOTE: WARNING: Bitcoin is a virtual currency, and while it has some similarities to actual currency, it is not considered legal tender in the United States or any other country. As such, the taxation of Bitcoin transactions is still a developing area of law and the current regulations are constantly changing. Therefore, it is important to consult a tax professional before engaging in any Bitcoin transaction to ensure that you are aware of your tax obligations.
As of February 2015, over 100,000 merchants and vendors accepted bitcoin as payment.
The Internal Revenue Service (IRS) has not yet issued guidance on how to treat bitcoin from a tax perspective. However, the IRS has issued guidance on how it will treat certain types of transactions involving virtual currency.
Based on the IRS guidance, it appears that bitcoin should be treated as property for tax purposes. This means that any gains or losses from the sale or exchange of bitcoins would be subject to capital gains taxes.
2 Related Question Answers Found
When it comes to Bitcoin, there are a lot of opinions out there. Some people believe that it is the future of money, while others think it is a fraud. However, there is one thing that everyone can agree on – Bitcoin is controversial.
When it comes to Bitcoin, there is no clear answer as to whether or not it is legal to buy and sell Bitcoin in the USA. While the US government has not outright banned or criminalized Bitcoin, it has taken a hands-off approach when it comes to regulation. This means that there is no specific law that says you can or cannot buy and sell Bitcoin in the USA.
