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Virtual Currency 101

Author: Moe Harrison /Friday, June 13, 2014/Categories: SNI Companies, SNI Financial, SNI Certes, SNI Technology

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What is virtual currency? The US Department of Treasury defines it as "a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency.” In simple terms, virtual currency is currency that exists in electronic form. It is not physical, such as paper money or coins. The most popular virtual currency company is Bitcoin.

Bitcoin is a form of digital currency, created and held electronically. Bitcoins aren’t printed, like dollars or euros – they’re produced by lots of people around the world, using software that solves mathematical problems. It’s the first example of a growing category of virtual currency known as cryptocurrency.

Bitcoin can be used to buy things electronically. In that sense it’s like conventional dollars, euros, or yen, which are also traded digitally. What is unique is that Bitcoin is decentralized. No single institution controls the bitcoin network. In addition Bitcoins are “mined” using computing power in a distributed network. This network also processes transactions made with the virtual currency, effectively making bitcoin its own payment network. Other popular virtual currencies are Other PeerCoin, LiteCoin, and Ripple. Currently it is estimated that there are close to 100 virtual currencies available globally.

Concerns with virtual currency include online security, lack of regulation, and the anonymous nature of transactions. Virtual currency also has no fixed value making it difficult to quote the prices of specific goods and services. In addition, ties between virtual currency, which is completely anonymous, and criminal actions have raised concerns about its true intent.

A late March 2014 ruling from the IRS declared bitcoins and virtual currencies as property. Because Bitcoins change in value, sometimes as much as $10 per day, this makes them more complex to use, hold and report. This IRS guidance opens the door for states and cities to apply sales taxes anytime someone acquires a Bitcoin. As reported by the Wall Street Journal in early June 2014: “Bitcoins have neither the advantage of being legal tender nor laws enabling their use. Folks who are accumulating bitcoins should take note.”

Yet, around this same time, Apple changed its policy to let software developers include virtual-currency transactions in their applications; paving the way for new forms of money like Bitcoin to appear on iPhones and iPads.

While the debate ranges on about virtual currency, it is important for finance professionals to monitor these developments and ensure that their company’s interests in this area are well represented.

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Moe Harrison
Moe Harrison

Moe Harrison

Moe Harrison is a Regional Vice President with SNI. With more than 15 years’ experience in recruiting and personnel management, Moe has a unique perspective on the top issues and concerns of employers and candidates in the accounting and finance fields.

Other posts by Moe Harrison
Contact author Full biography

Full biography

Moe Harrison is a Regional Vice President with SNI. With more than 15 years’ experience in recruiting and personnel management, Moe has a unique perspective on the top issues and concerns of employers and candidates in the accounting and finance fields.

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2 comments on article "Virtual Currency 101"


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1/4/2019 4:28 AM

Value of the virtual currency is reduced for the persons. The institutes of the finances and advanced writers review have been ensured for the cities. The currency is evaluated for the collection of the coins.

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