Digital cryptocurrencies are certainly frustrating to government agencies. This is especially true when it comes to the issue of taxation. After all, these currencies give consumers the chance to complete transactions with complete autonomy. They also make it possible for consumers to earn and amass money without having these be fully or even partially taxed. This is a large part of what bitcoin users enjoy so much about the bitcoin system. In recent years, however, new tax laws within the United States have called for better reporting of bitcoin earnings and on the profits that have been made via bitcoin transactions. If you have ever asked the question, “Are bitcoins legal in USA?”, the following information should be very helpful.
Bitcoin was created by Satoshi Nakamoto in 2009. The true identity of Nakamoto, however, has yet to be revealed. Much like the actual value of the currency that it represents, the creator remains somewhat of a mystery. One thing to note about bitcoin, however, is that all of the transactions made with this crypto currency are incredibly transparent – at least to those who remain a part of this community.
This transparency does not extend to the initiators of transactions to include personal details, but it does include transaction amounts and other relevant data. While Bitcoin is currently allowed in the United States, it is not without some contention. People were conduction transactions for bitcoins for quite some time before the US government found a way to demand taxes. This somewhat impinged upon the perceived autonomy of bitcoin community members. All payments made with these funds are subject to the same reporting requirements and taxes that all other currencies are.
There is, nor has there every been, a physical, tangible currency to back bitcoin up. This is a wholly digital money that exists solely online. It is held in a digital wallet. This wallet is basically a software program that holds security keys for use during the performance of transactions. All transactions are recorded in an encrypted fashion in blockchains, which serve the same function as basic bookkeeping ledgers. All parties with bitcoin addresses can receive the latest blockchain when conducting transactions in a peer to peer fashion.
Bitcoin is also available for trade throughout the world via a number of exchanges. This is in fact, how the value of this currency is both established and legitimized. Given that people can mine for coins, this currency is often equated to digital gold. There are other similarities that warrant this distinction. For instance, there is a very finite amount of coins that can be obtained. When these run out or are discovered and claimed by community members, no more will be produced. This ensures that the value remains at an acceptable level by regulating supply and demand.
Given the nature of this currency, the related marketplace is entirely deregulated. As such, there is no single person or agency that is in control of the bitcoin system. This is just how community members like and they have and continue to advocate for their deregulated system. It is not necessary for users to supply their personal details in order to open accounts or make payments given that no actual bank accounts exist. There is also no formal oversight for ensuring that ledger information has not been falsified.
There have been some issues in the past due to lack of regulation. A widely publicized bankruptcy in 2014 revealed some of the risk that is inherent to this cryptocurrency. In this instance, a company named Mt. Gox had $500 million worth of the currency listed in its ledger, however, these digital funds were nonexistent. This resulted in losses for customers of the company, as well as a sharp decline in both the perceived and the calculated value of bitcoins.
Developments like this one shook the confidence of community members but did not destroy the overarching commitment to maintaining a currency system that allowed for total autonomy. In addition to being viewed as lawful currency in the US, this system is also permitted in Australia and Canada. China allows its citizens to enter into private transactions with the currency, but financial institutions are not permitted to enter into any transactions that involve the use of bitcoins.