Difference of Bitcoin from Traditional Currencies
Every currency in the world, apart from cryptocurrencies, is governed by some kind of authority. Every transaction goes through a bank, where people are charged enormous fees, and it normally takes a long time for money to reach the recipient.
Bitcoin, on the other hand, is not controlled by anyone. It’s a decentralised network and it’s built on the cooperation and communication of all the people taking part in it. Because of that, even if some part of the network goes offline, transactions will still be coming through.
It can’t be counterfeited
Bitcoin was designed as a currency that can withstand counterfeiting attempts. The legitimacy of BTC is ensured by the Blockchain technology, as well as by various different defence mechanisms built into every algorithm.
Most other traditional currencies are extremely prone to counterfeiting and those who control them seem to be doing close to nothing to fix it.
Bitcoins don’t exist in physical form, which means they cannot be damaged. Every single Bitcoin is essentially eternal, unlike paper money or coins.
Once sent, cryptocurrencies can’t be recalled
If someone makes a mistake and sends money to the wrong wallet and wishes to get it back, they can’t. Like many other Bitcoin features, this was done in order to prevent fraud. Unfortunately, when it comes to traditional currencies, most transactions can be recalled, all it takes is one phone call.
While there are some traditional currencies like the dollar and euro that are accepted in multiple countries, most of the world’s currencies can only operate within the geographical borders of their country of origin. In contrast to that, BTC is an online currency, meaning that its authorised operating environment is worldwide.
How is Bitcoin taxed?
Bitcoin is yet to obtain a legal tender status in most jurisdictions, but some tax authorities have acknowledged its significance and proposed specific regulations. Those regulations vary significantly from country to country.
For example, the U.S. Internal Revenue Service treats Bitcoin and all other prominent digital currencies as a property rather than a currency. Every taxpayer selling goods and services for Bitcoins has to include the value of the received Bitcoins in their annual tax returns. Miners are also subject to U.S. taxation, but only if the mining proves to be successful.
According to the European Court of Justice, Bitcoin is a currency, not a property. Although it is exempt from VAT, Bitcoin can still be subject to other taxes. The UK tax authorities treat Bitcoin as a foreign currency, with every BTC-related case considered on the basis of its own individual facts and circumstances. As of July 2017, the sale of Bitcoins is exempt from consumption tax in Japan, where it’s officially recognized as a payment method.
So, as Bitcoin is a relatively new currency, the regulations frameworks governing its taxation significantly differ depending on a country. Moreover, in many jurisdictions there are no specific laws or regulations regarding the cryptocurrency.
Should I buy Bitcoin
One of the things Bitcoin is known for is its volatility. It’s no stranger to huge and rapid rises as well as dramatic declines. In mid-December 2017 the cryptocurrency reached its all-time high, surpassing the $19,850 mark, only to crumble and fall below $12,000 within mere days and drop below $7,000 by February. At some point, it’s value dropped by a whopping $2,000 in a single hour.
There’s no telling what Bitcoin’s price will be in a years time. It could, in theory, drop down to almost zero, it could stay roughly the same as it is now, or it could rise again, doubling, tripling, quadrupling in value or soaring tenfold. No one can accurately predict what’s going to happen, no matter how well they understand the technology or how much market analysis they’ve done.
For instance, John McAfee is so confident in Bitcoin’s bright future, he posted a tweet saying that he’ll eat his, erm, private part on national television if one BTC won’t be worth at least $500,000 in three years time. Warren Buffet, on the other hand, predicts that Bitcoin will definitely come to a bad ending.
Difference of Bitcoin from Traditional Currencies
What is a Bitcoin whale
Whales are the world’s largest mammals, and Bitcoin Whales are the largest players on the Bitcoin market. Those are typically not individuals, but institutions such as Hedge Funds and Bitcoin Investment Funds. For instance, Pantera Capital, Bitcoins Reserve, Bitcoin Investment Trust and others.
These institutions typically move around hundreds of thousands of Bitcoins. It’s a very covert operation: those funds arrange a special agreement with an exchange to move such big amounts through exchanges out of sight of regular traders.
According to a recent Bloomberg report, just 1,000 people own 40 percent of the market. In fact, those people own so much; they can send the market into a frenzy by selling just a fraction of their assets.
There are currently more than 25 mln people worldwide that own Bitcoins, according to this study. Interestingly enough, it only takes around 0.153 BTC to be in the top 30 percent of Bitcoin holders in terms of the amount owned. To be in the top one percent, you ‘only’ need to have 15 BTC to your name.