Category Archives: Bitcoin
No Central Command
Bitcoin isnt owned by anyone. Think of it like email. Anyone can use it, but there isnt a single company that is in charge of it. Bitcoin transactions are irreversible. This means that no one, including banks, or governments can block you from sending or receiving bitcoins with anyone else, anywhere in the world. With this freedom comes the great responsibility of not having any central authority to complain to if something goes wrong. Just like physical cash, dont let strangers hold your bitcoins for you, and dont send them to untrustworthy people on the internet.
There are several different types of Bitcoin wallets, but the most important distinction is in relation to who is in control of the private keys required to spend the bitcoins. Some Bitcoin wallets actually act more like banks because they are holding the users private keys on behalf. If you choose to use one of these services, be aware that you are completely at their mercy regarding the security of your bitcoins. Most wallets, however, allow the user to be in charge of their own private keys. This means that no one in the entire world can access your account without your permission. It also means that no one can help you if you forget your password or otherwise lose access to your private keys. If you decide you want to own a lot of Bitcoin it would be a good idea to divide them among several different wallets. As the saying goes, dont put all your eggs in one basket.
Like everything, Bitcoins price is determined by the laws of supply and demand. Because the supply is limited to 21 million bitcoins, as more people use Bitcoin the increased demand, combined with the fixed supply, will force the price to go up. Because the number of people using Bitcoin in the world is still relatively small, the price of Bitcoin in terms of traditional currency can fluctuate significantly on a daily basis, but will continue to increase as more people start to use it. For example, in early 2011 one Bitcoin was worth less than one USD, but in 2015 one Bitcoin is worth hundreds of USD. In the future, if Bitcoin becomes truly popular, each single Bitcoin will have to be worth at least hundreds of thousands of dollars in order to accommodate this additional demand.
There are several ways to buy Bitcoin, but trusted exchanges are a great way to acquire Bitcoin. Because there are inefficiencies in the traditional banking system, exchanges will sometimes have slightly different prices. If the difference is too great, traders will buy low on one an exchange and sell high on another and close the gap. If an exchange constantly has substantially different prices than others, it is a sign of trouble and that exchange should be avoided. As with everything else, do your research and find an exchange you can trust. Its also a good idea not to use an exchange as a wallet. Move your Bitcoin to your personal wallet so that you have control over your funds at all times. You can view our list of Bitcoin exchanges here.
Because all Bitcoin transactions are stored on a public ledger known as the blockchain, people might be able to link your identity to a transaction over time. Some companies offer various tools such as Bitcoin mixers to help achieve greater privacy, but it takes a huge amount of effort to use Bitcoin anonymously. You may want to follow your countrys tax regulations regarding Bitcoin in order to avoid trouble with the law, but you have the power not to should you choose to take that risk. To improve privacy, most newer Bitcoin wallets will use a new Bitcoin address each time someone sends bitcoins to you.
Bitcoin transactions are seen by the entire network within a few seconds and are usually recorded into Bitcoin’s world wide ledger called the blockchain, in the next block. While its possible that a transaction wont be confirmed in the next block, in the vast majority of circumstances it is fine to accept a transaction as soon as it has been seen by the network. Unlike traditional payment systems, Bitcoin transactions are lightning fast and can be sent globally. Bitcoin is still relatively new, but with each passing day the technology becomes more reliable. It is more and more unlikely that a major bug will emerge in the system as time goes by, and people can trust the technology more with the passing of time. Each month people transact hundreds of millions of dollars worth of Bitcoin.
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Things you need to know Bitcoin.com
Bitcoin was created by an anonymous name called Satoshi Nakamoto Other notable names rumored to be part of the team include
The practical uses of Bitcoin
If you have the required hardware, you can mine bitcoin even if you are not a miner. There are different ways one can mine bitcoin such as cloud mining, mining pool, etc. For cloud mining, all you need to do is to connect to the datacenter and start mining. The good thing about this is that you can mine from anywhere and you dont need a physical hardware to mine.
For mining pool, all you need to do is to join a mining group, and if that team solves a computational problem, blocks are added to the blockchain, they get the reward and you get a share of it based on your contribution.
PoW algorithm-SHA-256 is used for mining. Which utilizes a lot of computational power.
Bitcoin mining saps energy, costly, uses more power and also the reward delays. For mining, run software, get your wallet ready and be the first to solve a cryptographic problem and you get your reward after the new blocks have been added to the blockchain.Mining is said to be successful when all the transactions are recorded in the blockchain and the new blocks are added to the blockchain.
Notes for investors
Die-hard Bitcoin supporters believe that bitcoin is the future; we are just scratching the surface.Considering the continuous rise of bitcoin in the market capitalization, it is one investment every investor needs to take advantage of it.
The current market capitalization of bitcoin stands at an all-time high of $109 billion. As at January 2016, bitcoin was traded at I BTC for $970 but today is being traded at $6,600 for 1 BTC.
From the statistics presented above, it that bitcoin is one investment, you will never regret embarking on. It keeps recording an impressive results daily in the cryptocurrency market.
Cryptocurrency investment is speculative, and it involves unquantifiable risks the market is full of uncertainty, susceptible to attack and capital loss, and sensitive to secondary issues, time may do not permit to mention here.Seek advice before investing.
When CGAP published its Brief on Bitcoin versus Electronic Money in January of this year, we concluded: The current realities of Bitcoin mean it is still a long way off from reaching the unbanked. It seemed that digital currencies such as Bitcoin were primarily the domain of consumers in developed countries who were tech-savvy and enjoyed playing around with the latest hot item. Yet demonstrating just how quickly things move in this space, just a few months later a start-up called BitPesa launched a service using Bitcoin to provide cheap and fast remittance services to Kenya. CGAP decided to provide support to BitPesa for market research of potential customers, so that CGAP could understand what potential digital currencies have for financial inclusion as well as to understand the practical and regulatory barriers facing a start-up wanting to link Bitcoin with the formal banking and mobile money infrastructure in an emerging market.
Photo Credit: Antana, Flickr Creative Commons
BitPesa, based in Nairobi, is initially focusing on providing remittance services for the UK to Kenya corridor and charges a variable rate of 3% on transfers. Here is how it works.
CGAP was interested in BitPesa as a test case for the link between digital currencies and financial inclusion for two main reasons. First, not only are international remittances very significant (Kenyans working abroad sent home $1.3 billion in 2013) but they are a huge pain point in Africa. Tackling this expensive and inefficient system makes a lot of sense. The World Bank calculates that the average fee for a 300 transfer from the UK to Kenya is 9% – and thats excluding additional margin made off the exchange rate. BitPesas 3% fee is a significant reduction. Aside from cost, international bank transfers and even PayPal can take days or even a week to clear. There doesnt seem to be a lot of motivation from banks to increase efficiency in this space and extremely efficient peer-to-peer protocols like Bitcoin might provide some impetus for improvement.
Second, Kenya is an ideal country in which to test this out as the majority of the population regularly uses accounts of some sort bank accounts or, more commonly, M-PESA accounts which increasingly are linked to bank accounts such as CBAs M-Shwari account. Most remittance services do not send money to accounts; instead recipients must cash out the entire amount immediately at one of the remittance services locations in that country. This is a great opportunity to push remittances into accounts where recipients can store value to use as needed or send it on to pay school fees or buy goods.
So, just six months after its soft launch, what can we learn from BitPesa about the potential of digital currencies for enhanced financial inclusion?
1. So far, the strongest use case for BitPesa is Kenyan entrepreneurs who need to receive payments from abroad.Nicknamed the Silicon Savannah, Nairobi has plenty of tech start-ups, many of whom receive money from abroad. Before BitPesa, someone from the company would literally go to the ATM several times a day and withdraw the maximum amount in order to receive payments from customers abroad and then go into the bank branch to deposit into their shilling denominated account. BitPesa provides an alternative to this inconvenient method of accessing money. The video below shows some great examples of how start-ups are using BitPesa.
2. Getting to individual remittance recipients, including the unbanked, will be more of a challenge. Businesses need to receive bulk payments and so are highly motivated to figure out the cheapest and most efficient way to do this. Entrepreneurs by nature are tech-savvy. However, its going to take longer for the average Kenyan living in the diaspora to learn about BitPesa and be comfortable trying out a new and unknown technology for sending money abroad. BitPesa is conducting focus groups and outreach in Kenyan neighborhoods in the UK and is confident that this customer segment will grow, but it wont happen overnight.
3. Even if BitPesa succeeds in reaching mass market international remittance recipients, the inclusion effect will be limited to enhanced use cases for the funds received. Channeling remittance funds into a wallet with multiple functionalities is significantly better than the way most recipients access and use funds today. However, for an even bigger effect, consumers would need to be able to use digital currencies within Kenya to send funds or buy goods more cheaply and efficiently. Right now, the service still requires Kenyans to cash out from their BitPesa accounts into local currency. Therefore the most likely route to lasting inclusion would be expanding the availability and use of merchant payments through mobile money such as Kopo Kopo or Lipa na M-PESA.
It will be fascinating to watch the digital currency story unfold . There are many compelling reasons why digital currencies could significantly impact financial inclusion. Practically, despite the promising early beginning of BitPesa, there are many challenges to overcome before digital currencies reach the unbanked at scale in a significant way. In our next blog post, well unpack some of the most controversial elements of digital currencies and lay out which common arguments against them have merit and which we think can be disproved.
Bitcoin vs. Electronic Money: Digital But Different
Washington, D.C., 23 January 2014:A new CGAP report released today compares the main differences between Bitcoin and electronic money (e-money). The report shows that Bitcoin as a virtual currency is markedly different from e-money and cautions regulators and policy makers not to confuse the two.
There are few similarities between Bitcoin and e-money other than both being in digital format, according to the report. While e-money is a mechanism for interacting with government-issued and regulated currencies such as dollars and euros, Bitcoin is a virtual currency that has no fiat currency counterpart. Bitcoin is based on a decentralized peer-to-peer network that can be transferred somewhat anonymously and can be highly volatile in terms of value. These characteristics of Bitcoin, while having some potential benefits, can pose considerable risks to consumers and make it a challenge for regulators.
The full report is available at CGAP.org.
View the infographic comparing Bitcoin and e-money
On the other hand, e-money is digitally issued against equal value of fiat currency, and it can be centrally regulated, usually by a central bank. The report also points out that, unlike Bitcoin, there is growing evidence that e-money schemes have helped bring people into the formal financial system, especially in developing countries through mobile phone technology.
The current reality is that Bitcoin is still a long way off from reaching the unbanked, notes Sarah Rotman, Financial Sector Specialist at CGAP and author of the report. While we shouldnt completely rule out Bitcoins future potential in this market, its very difficult to predict where Bitcoin will be in five years and if it can have any impact for the poor.
With the current widespread attention surrounding Bitcoin, the report warns that regulatory concerns about the virtual currency could spill over to e-money and cause previously favorable regulatory progress to be retracted. It concludes that for e-money to continue to open access to the formal financial system for the worlds unbanked, continuing with proportional regulation is essential.
For more information:
Read the ReportView the Infographic
Media Contact: Kai Bucher +1 202 473 5995 [emailprotected]
Established in 1995, CGAP is a global think-tank which seeks to advance financial inclusion. Housed at the World Bank, CGAP is a collaboration of more than 30 member agencies that are united by the mission of improving the lives of poor people through better access to appropriate financial services. CGAP combines a pragmatic approach to market development with an evidence-based advocacy platform to advance poor peoples access to financial services. More at: http://www.cgap.org
How to report bitcoin transactions depends on how they are classified.
Here is some TurboTax guidance to help you decide where to report transactions:
It depends on how those currencies were held and used. Based on that, the IRS determines whether to treat the currency as income or property.
Bitcoin used to pay for goods and services is taxed as income:
Bitcoin held as capital assets is taxed as property:
If you hold Bitcoin as a capital asset, you must treat it as property for tax purposes. General tax principles applicable to property transactions apply. In other words, just like stocks or bonds, any gain or loss from the sale or exchange of the asset is taxed as a capital gain or loss. Otherwise, the investor realizes ordinary gain or loss on an exchange.
Bitcoin received as incomeand then held and sold for profitis taxed as both:
Yes. The IRS is taking cryptocurrency very seriously, to the extent that they took the digital currency exchange Coinbase to court to obtain user records and now have a contract with digital forensics company Chainalysis to help track cryptocurrency transactions.
Note: Many people have been unsure of how to treat Bitcoin, so you may have recorded earnings incorrectly on prior returns. If you need to amend a previous return, follow these steps. (We also have a video that shows you how.)
“In 2014, the IRS issued a noticeclarifying that it treats digital currencies such as Bitcoin as capital assets and are therefore subject to capital gains taxes. The notice provides that virtual currency is treated as property for U.S. federal tax purposes, it reads. General tax principles that apply to property transactions apply to transactions using virtual currency.
The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
Thus, not every transfer of funds is considered a sale. For the user, sending bitcoins from a Coinbase account to their Trezor hardware wallet, for example, is only a transfer and not a sale since the user is still in possession of the coins.
You should keep your own records for best results and update the report accordingly, Coinbase support explains. For example, if you transfer funds offsite to a desktop wallet, and then back again, you would not count this as a sale of digital currency.
Bitcoin is a digital currency, sometimes referred to as a cryptocurrency, best known as the world’s first truly decentralized digital currency. Bitcoin is traded on a peer-to-peer basis with a distributed ledger called the Blockchain, and the Bitcoin exchange rate to the US Dollar and other major currencies is determined by supply and demand as with other global exchange rates. The traded value of Bitcoin has proven volatile through various booms and busts in demand. Ultimately, however, many see Bitcoin as a store of value against government-backed fiat currencies.
Abbreviated as BTC, Bitcoin is actively traded against the world’s major currencies across decentralized markets. Bitcoins are kept in so-called Bitcoin wallets, which depend on private keys and cryptography to secure its Bitcoins to a specific entity or user.
By comparison to government-backed global currencies, Bitcoin remains fairly complex for the typical user to acquire and use in regular transactions. Growing interest and significant global investments in Bitcoin wallet and Blockchain technology have nonetheless made buying and selling Bitcoin far more accessible to the average user. And indeed growing acceptance by government entities have ameliorated the ambiguity of legal and regulatory status for Bitcoin and Bitcoin exchanges.
You can find historical price of Bitcoin on our chart and latest news and analysis on the Bitcoin exchange rate.
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Bitcoin (BTC) price: News & Live Chart – Trading Analysis …
Breaking Square earnings beat expectations, expected to top $1 billion in revenue in 2018
Square Inc. reported fourth-quarter earnings that beat expectations Tuesday, and projected that it will collect more than $1 billion in adjusted revenue in 2018 for the first time. The payments company reported a net loss of $16 million, or 4 cents a share, on net revenue of $616 million. After adjusting revenue for the costs of performing monetary transactions and earnings for stock-based compensation and other effects, Square claimed profit of 8 cents a share on revenue of $282.7 million. Analysts on average expected Square to report adjusted earnings of 7 cents a share on sales of $266.5 million, according to FactSet. In the same quarter a year ago, Square reported adjusted earnings of 5 cents a share on adjusted revenue of $191.9 million. Square also beat analysts’ expectations with its forecast, which called for the company’s first year topping $1 billion in adjusted revenue, after falling just short in 2017 with $984 million. The company expects adjusted profit of 43 cents to 47 cents a share on adjusted revenue of $1.3 billion to $1.33 billion in 2018; analysts were projecting adjusted earnings of 45 cents a share on adjusted revenue of $1.28 billion, according to FactSet. Despite the beat, Square shares bounced around in response to the report in after-hours trading Tuesday, trading between slight losses and gains.
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Buy Bitcoin IRA | Bitcoin IRA Investment & Retirement Account …
In 2013, one bitcoin cost $20. In 2017, it costs $20 to send one bitcoin. With record highs, thriving adoption, and media attention, this should be a celebratory time for bitcoin believers. And yet its hard to shake the feeling that something isnt quite right. How did we reach a point where the worlds bank killer and Western Union crippler has become incapable of taking on the institutions it once sneered at? Bitcoin is hot as hell right now. But its also a mess.
Also read:Bitpay Plans to Use Bitcoin Cash for Payment Invoices and Debit Loads
By any reckoning, 2017 has been a phenomenal year for bitcoin. Even the currencys most ardent supporters would have struggled, 12 months ago, to predict the current state of affairs. But neither could they have envisaged, in their worst nightmares, it costing upwards of $20 to transfer a fraction of a coin. To chalk this year up as an unfettered success story calls for moving the goalposts and performing mental gymnastics. Bitcoin has made great leaps alright. Its just unfortunate that not all of them have been forwards.
It can be debated whether Satoshis white paper envisioned bitcoin as a P2P settlement for micro-transactions. What cant be debated is that bitcoin is effectively now unsendable and undependable for anything under a couple of hundred dollars. From the clearnet to the darknet, the conversation is the same: fees have become untenable. Despite this, bitcoins most ardent defenders remain in denial.
On some corners of the internet, questioning the gospel of Satoshi and the infallibility of bitcoin is heresy. I cant send a friend five dollars without a $15 transaction fee and this is the currency of the future? raged one Redditor, to which the first three responses on r/bitcoin ran:
Theres a modicum of truth to these rejoinders, but in the here and now, muh segwit or just wait for LN isnt much help.
Everyone has their price, a dollar figure at which theyd be willing to sell bitcoin, and also a figure theyre willing to pay to send it. Paying $20 to transfer $10 million of bitcoin seems reasonable. Paying the same amount to send $100 worth seems ridiculous. Bitcoin has been unsuitable for micro-transactions for some time, but its now reaching a stage where its unsuitable for mid-sized transactions.
Is bitcoin a store of wealth because thats its best use case, or has it simply morphed into one because no one can afford to move it?
Many of bitcoins new investors are of humble means, setting aside $50 a week or whatever they can spare to put into digital currency. Always store your coins in a wallet you hold the private key for, they were urged. Now theyre discovering that their only option is to store their bitcoin on an exchange, at least until their holdings reach a level where its practical to withdraw to a hardware wallet.
If cryptocurrencies were to be likened to energy sources, bitcoin would be coal: expensive to move and impractical to transport in small quantities. Its impossible to order a handful of coal every time you want to light a fire: its a sackful or nothing. Ethereum (gas) and bitcoin cash (hydro) are the opposite: cheap and on tap.
Coal does have one thing in its favor though longevity. In cryptocurrency terms, bitcoin is a veritable fossil. Its been there from the start and, thanks to its market dominance, brand recognition, and capital locked in, will be extremely hard to destroy. Scaling solutions will probably arrive, and transaction fees will eventually drop, though quite when is anyones guess. The question is if those solutions will arrive in time. Until then, bitcoin will continue to serve as coal fueling the furnace on the runaway Cryptocurrency Express: an indispensable hot mess.
What do you think is the solution to high fees? And what measures have you been taking to mitigate rising fees? Let us know in the comments section below.
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Bitcoin Fees Have Become Infeasible – Bitcoin News