If you are one of those people that was a bit skeptical about the virtual, digital currency that we know as Bitcoin, you might be starting to think that it’s time to take it a bit more seriously.
You can describe Bitcoin as a crypto-currency, invented in the year 2008 by Satoshi Nakamoto (https://en.wikipedia.org/wiki/Satoshi_Nakamoto widely believed to be the pseudonym of a group of programmers and developers).
While it is a digital, virtual, borderless currency that isn’t regulated by any country or central bank, we know that Bitcoin is now a currency that is accepted by a wide range of service providers and retailers.
So if you’re thinking that it might be time for you to get your hands on some Bitcoin so that you can start purchasing goods and services with this currency, here’s a quick guide to help you get started.
The first thing to do is to educate yourself about the currency. The bottom line is that Bitcoin is a financial instrument and before you start throwing your money around you need to understand how the currency works, how to store it, and how to spend it.
Security is an important factor with any sort of financial activity. Your Bitcoin wallet is where you store the Bitcoin that you hold.
While some of the initial speculative activity associated with Bitcoin has calmed down, there is still some volatility associated with the value of Bitcoin. In that sense you should still view Bitcoin as a relatively high risk form of investment or asset. The value of your Bitcoin may increase or decrease in a relatively short period of time.
One of the real strengths of the Bitcoin system is that the payments are irreversible. That also means that you don’t have a lot of protection once the funds have left your Bitcoin wallet – a transaction can only be refunded if the person who has received the funds transfers the value back to you.
A lot of the early publicity around Bitcoin was its perceived association with criminal activity or possibly terrorist activity. One of the attractions of Bitcoin for people who may be seeking to operate outside the law is the perception that Bitcoin transactions are anonymous. While there are some levels of privacy with Bitcoin, all Bitcoin transactions are stored publicly and permanently in the block chain or general ledger, so the balance and transactions of any Bitcoin address can be viewed but the identity of the person who holds or controls a specific Bitcoin address remains hidden unless it is revealed during a purchase.
While Bitcoin is a currency that is not regulated or controlled by a specific country, government, or central bank, that does not mean that Bitcoin exempts you from any local tax obligations. The local requirements of your place of operations may still mean that your Bitcoin holdings could be subject to income, sales, payroll, or capital gain taxes. As with any other form of financial activity, it is the responsibility of the Bitcoin holder to ensure that they are complying with local taxation requirements.
Are you ready to start transacting in Bitcoin? It seems that this digital, virtual, crypto-currency is here to stay.