Bitcoin is a new currency that was created in by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men – meaning, no banks! Bitcoin is a form of digital currency that is created and held electronically on a computer. Bitcoins are not paper money like dollars, euros, or yen controlled by central banks or monetary authorities. Definition: Bitcoin is a cryptocurrency, a form of electronic money. It is a decentralized digital currency without is independent of banks and can be sent from user to user on the peer-to-peer bitcoin blockchain network without the need for intermediaries.
Basic info about bitcoinWhat is bitcoin? - CNNMoney
As well, money earned from buying and selling Bitcoin should be reported as capital gains just as money earned from buying and selling other commodities should be reported. Bitcoin is not the only cryptocurrency available, but its market cap is more than twice the value of the next 10 largest cryptocurrencies combined.
Commodity Futures Tradition Commission. Guide to Bitcoin. How Bitcoin Works. Investing in Bitcoin. How to Mine Bitcoin. Other Cryptocurrencies. Full Bio Follow Linkedin. Follow Twitter. Andrew Hecht wrote about investing and commodities for The Balance. He has almost 35 years experience on Wall Street. Read The Balance's editorial policies. Reviewed by. Full Bio Follow Twitter.
Janet Berry-Johnson is a CPA with 10 years of experience in public accounting and writes about income taxes and small business accounting for companies such as Forbes and Credit Karma. Article Reviewed on October 28, Key Takeaways Bitcoin is a virtual currency held on computers and not controlled by any single bank, nation, or monetary agency.
The IRS treats cryptocurrencies like Bitcoin as property and taxes it as such. Article Table of Contents Skip to section Expand. What Is Bitcoin? Notable Happenings. Do I Need to Pay Taxes? Alternatives to Bitcoin. Article Sources. Bitcoins can be used to buy merchandise anonymously.
In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. Small businesses may like them because there are no credit card fees.
Coinbase is a leading exchange, along with Bitstamp and Bitfinex. But security can be a concern: bitcoins worth tens of millions of dollars were stolen from Bitfinex when it was hacked in People can send bitcoins to each other using mobile apps or their computers. This is how bitcoins are created. Currently, a winner is rewarded with The wallet is a kind of virtual bank account that allows users to send or receive bitcoins, pay for goods or save their money.
Unlike bank accounts, bitcoin wallets are not insured by the FDIC. Wallet in cloud: Servers have been hacked. Wallet on computer: You can accidentally delete them. Viruses could destroy them.