When Satoshi Nakamoto posted his paper on the internet entitled Bitcoin:A Peer-to-Peer Electronic Cash System in November 2008 very few people gave the idea a chance. When the Bitcoin network was introduced in January 2009 most viewed the project as doomed with skeptics labeling it a Ponzi scheme or money laundering platform. Whilst Bitcoin has been banned in China, it has been embraced in Canada and USA, with the setting up of regulatory frameworks in progress. With its acceptability gathering momentum at a phenomenal pace, Bitcoin pauses regulatory challenges to authorities on how to treat the cryptocurrency for tax and accounting purposes.
In May 2014 the USA Internal Revenue Services, (IRS) issued guidance on the treatment of Bitcoin by taxpayers. The summary being that Bitcoin and other virtual currencies are not money but capital assets meaning that the capital gains rules apply to any
gains or losses.
This article seeks to take an in-depth analysis into the Bitcoin world.
What is Bitcoin?
Definition: Bitcoin is a type of digital currency or cryptocurrency in which encryption techniques are used to regulate the generation of units of currency and verify the t…