Most Noticeable facts about Bitcoin

Bitcoin is designed around the idea of a new form of money that uses cryptography to control its creation and transactions, rather than relying on central authorities.” according to the Bitcoin website. (1) New bitcoins are “mined” by users who discover virtual coins by solving computer algorithms. The supposed creators of Bitcoins have stated that the ultimate supply of bitcoins will be capped at 21 million. check this out for more information.

While Bitcoin promotes itself as “a very secure and inexpensive way to handle payments,” (2) few companies have actually made the move to accept bitcoins. A considerable number of those who have are operating in the black market. Bitcoins are traded anonymously over the Internet, without any involvement on the part of the financial institutions established. Sales of drugs and other black-market products accounted for an estimated 20 percent of exchanges on the main Bitcoin exchange, called Mt. Gox, from bitcoins to U.S. dollars as of 2012. After allegedly linking a transaction to the sale of prescription and illegal drugs on the anonymous Bitcoin-only marketplace, Silk Road, the Drug Enforcement Agency recently carried out its first ever Bitcoin seizure. Some users of Bitcoin have also suggested that the currency could serve as a means of tax avoidance.

That may be true, but only in the sense that bitcoins contribute to the illegal evasion of taxes, not in the sense that they actually play any role in the real planning of taxes. Under federal tax law, in order for a taxable transaction to happen, no cash needs to change hands. Barter and other non-cash exchanges are still taxable in their entirety. Bitcoins are traded anonymously over the Internet, without any involvement on the part of the financial institutions established. Sales of drugs and other black-market products accounted for an estimated 20 percent of exchanges on the main Bitcoin exchange, called Mt. Gox, from bitcoins to U.S. dollars as of 2012. After allegedly linking a transaction to the sale of prescription and illegal drugs on the anonymous Bitcoin-only marketplace, Silk Road, the Drug Enforcement Agency recently carried out its first ever Bitcoin seizure.