Bitcoin is MANY things: A Commodity. Money. Digital gold. A technology.
Bitcoin is complex. The easy way is to think about Bitcoin as a foreign currency, that lives out in the open, on the Internet. It is operated as a network of many volunteers in many countries.
Like other currencies, bitcoin can be used to buy/sell things with, or held as an asset. The underlying blockchain technology can also be used for other things. The U.S. Government now defines Bitcoin as a commodity and regulates it as such. The German Government calls it a unit of account. Our suggestion: Try not to think of Bitcoin as only one thing to the exclusion of others.
Most people will not be affected at all by Bitcoin
Bitcoin's introduction changes a some things for only some people/businesses
- The brokerage and banking industries now have new opportunities.
- The remittance industry has an opportunity for extra fees, by adapting.
- Certain cashflow-sensitive industries have the opportunity to save money on interest.
- Certain cashflow-sensitive industries have the opportunity to save money on interest.
A person can use Bitcoin as a payment method without owning it, and thus risk-free.
These payment methods are facilitated via 3rd Party Bitcoin Service Providers (BSPs), who absorb all the risk of price fluctuation.
These payment methods are facilitated via 3rd Party Bitcoin Service Providers (BSPs), who absorb all the risk of price fluctuation.
Merchants who choose to accept Bitcoin as a payment method can still accept credit cards, yet pay substantially less in fees for Bitcoin than they do for credit card processing. The reduced costs comes from the fact that the customer cannot retract a Bitcoin payment after the fact.
Bitcoin is also less risky for the merchant than cash: Cash in the register drawer is subject to various risks. Bitcoin receipts on the other hand, do not pass through the drawer. They become a deposit directly to the bank account the very next day.
The following should be obvious, but will be said anyway: 1. Those who use Bitcoin for illegal purposes break the same laws as they would with other money; and several such lawbreakers have already gone to jail. 2. If contract payment terms are defined in Bitcoin (as opposed to, say, U.S. Dollars), both sides are taking a gamble as to the eventual price of Bitcoin, but ultimately any disclosures/books must be reported in regular currency as per applicable law. 3. Even if the terms of a contract are defined in Bitcoin, an exemption from taxes may or may not be created - consult your tax attorney for details. 4. If you do choose to own Bitcoin, price appreciation of Bitcoin that you own may create a tax liability - again - you must consult your tax attorney for details.
