"Bitcoin was created by Satoshi Nakamoto, who published the
invention on 31 October 2008 to a cryptography mailing list
in a research paper called "Bitcoin: A Peer-to-Peer
Electronic Cash System". Nakamoto implemented bitcoin as
open source code and released in January 2009."
Bitcoin payments are analogous to a wire transfer or cash
transaction, where payment is 'pushed' directly from one
party to another, without going through another financial
institution. Payment processing is executed through a
private network of computers, and each transaction is
recorded in a blockchain, which is public. Bitcoin is based
on peer-to-peer technology and relies on the blockchain and
the cryptography securing it, without any third party
oversight.
When making a bitcoin transaction, it is not necessary to
provide personal identification information such as your
name and address. Bitcoin transactions are made using an
anonymous alphanumeric address that change with every
transaction and a private key. Payments can also be made on
mobile devices by using quick response (QR) codes.
While credits cards are stored physically in a wallet,
bitcoin transactions are sent to and from electronic
wallets, which can be stored on your computer, smartphone,
or in the cloud.
Bitcoin transactions are irreversible and can only refunded
by the receiving party -- a key difference from credit card
transactions that can be canceled. This means there are no
charge-backs for merchants when taking payment via bitcoin.
A charge-back is the demand by a credit-card provider for a
retailer to cover the loss on a fraudulent or disputed
transaction.
Bitcoin offer many advantages.They include:
- Lower transaction fees.Banks charge 0.5% to 5% plus20 to 30 cent for each transaction to use a credit
card.Bitcoin
transaction fees hoover around 1%.
- No charge-backs.
- Anonymity for users
- no interruptions from intermediaries (for example your
account being frozen as a result of a fraud alert).
The
IRS have rules governing Bitcoins.They include the following:
-Wages paid to employees using virtual currency are taxable
to the employee, must be reported by an employer on a Form
W-2, and are subject to federal income tax withholding and
payroll taxes.
-Payments using virtual currency made to independent
contractors and other service providers are taxable and
self-employment tax rules generally apply.Normally, payers must issue Form 1099.
-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.
-A payment made using virtual currency is subject to
information reporting to the same extent as any other
payment made in property.
Bitcoin is accepted in
over 100 countries around the world to include the U.S.,
Japan, France, Belgium, Germany, U.K., Ireland, Australia,
New Zealand, Italy, Greece, Turkey, Russia, Germany,
Croatia, Thailand, Phillipines, Indonesia, China, India,
Cyprus, Canada, etc.
