In recent years, cryptocurrency has become, for some, a new standard of paying for items on the internet. While this highly volatile currency has become a near overnight phenomenon, there might be a more sinister meaning to it. However, before we jump into that, we should address the question that some people might have: what is bitcoin?
Bitcoin’s origins can be traced back 2009 when an anonymous person who went by Satoshi Nakamoto invented the currency. This currency was attractive to many because it eliminated the “middle man,” i.e. banks. Another reason people were attracted to it was the fact that it could be used anonymously, and that bitcoins are not tied to any countries monetary regulations. While bitcoins are not universally accepted everywhere, some companies such as Overstock (an online furniture retailer) and Expedia (a hotel booking website) allow bitcoins to be used as payment.
Before 2017, a single bitcoin was worth around 900 USD. As of last year, it skyrocketed into twenty of thousands of dollars.
There are two ways to get Bitcoin(s). One of which is to do what is called “mining.” Where multiple people compete against each other to solve equations, whoever completes the equation first is awarded a set amount of bitcoin(s). The other method of getting them is by helping decode bitcoin payments. Every year the production of bitcoins slows and will eventually they will stop being produced. People don’t usually have the money to spend on making the best mining rig to become successful in mining, which leave the only option is to trade it. Websites offer the ability to trade regular currency to bitcoins as well as other types of crypto-currency.
Owning bitcoins isn’t as simple has putting coins in a wallet. Or is it? Bitcoins are stored in “digital wallets.”, which exists either in the cloud on the persons computer. The wallet is, in a way, like a bank account in that it allows the users to send and receive bitcoins. However, there is nothing insuring the wallets, so if the wallets were to be accidently deleted, then they are gone forever.
Also some have been looking out how it can be used for tax evasion. A prime reason that this could be occurring is the fact that bitcoin has near complete anonymity. That translates to having the currency being able to be traded to anyone anywhere with little record of the transaction taking place, as the only thing that is recorded in a bitcoin transaction is the wallet id of the sender and the recipient.
In the United States, the Internal Revenue Service (IRS) classifies bitcoin income as income and expects people to pay income tax on it. However, due to the anonymity, it becomes difficult to prove if people are receiving income from them.
Recently the South Korean Government after conducting raids against bitcoin exchanges for committing tax evasion, have stated that legislation is on the way to ban cryptocurrency from being traded. This would add them to the list of countries that have already banned them, which includes Bangladesh, and Bolivia.
All in all, it can’t be said whether the true purpose of bitcoin is to give criminals a way to purchase goods with near anonymity, or to just be a currency that is purely digital. However, with the possible bans and decreasing value, the future of cryptocurrency may be in jeopardy.