You may have heard of bitcoin, a fractionalized digital currency, which isn’t backed by any government. Many merchants are now turning to bitcoin as a way to avoid credit card fees. There is a significant amount of financial privacy involved with this currency as it is the digital equivalent of cash. Peer to peer transactions can be seen by everyone on a public network, so it is fairly secure. bitcoin ATMs are slowly popping up. Imagine paying for your groceries with virtual currency with no banker, and no middleman involved. A good number of bitcoin transactions are done this way. The only fees are fractions of pennies for those that dedicate their computers to processing these transactions.
Now some tech companies are giving their employees the option of being paid in bitcoin. What better way to technologically progress the millennial generation than to give them the option to be paid in bitcoin? I can see student workers or even professors having a portion of their wages being paid in bitcoin. Right now it is more like a stock option, but someday when it becomes a less volatile it will make spending money a lot easier since current trends point to digital money as the future. Why should people rely on debt cards or credit cards when they have the digital equivalent of cash?
Because of the fractionalization of bitcoin to the billionth, it would save people a ton of money for the same reasons that the dollar is fractionalized into cents. If you have to round up, you end up spending more. Someday even scholarships might pay students in bitcoin instead of money.
The IRS views bitcoin as property, not as currency, so it is taxed differently than income. As a result only capital gains are being taxed. Not that anyone necessarily bothers filing taxes on bitcoin; most bitcoin wallets aren’t tracked through any banking Institution or matched up with social security numbers. Some online storage sites such as Silicon Valley startup Xapo Inc. require some social security information to open an account.
Volatility remains a factor as bitcoin is infamous for its weekly price swings, which at the moment can be as much as $50.00 a week in terms of the price for a single bitcoin. Although there are problems, I remain a believer, though I own little to no bitcoin.
Those who are curious about bitcoin but don’t want to pay for it can get fractions of it for free through faucets where money is being made via advertising and filing out captchas. It gives the curious and the optimistic (such as myself) an introduction to the bitcoin economy.
