BITCOIN

There was a type of Bitcoin experiment many years ago that perhaps may portend the direction of cryptocurrency. In the 1970’s, business barter associations began to appear with an interesting construct. Whatever your business, you could supply your product or service to the association like currency in a bank account. So if you had an appliance business you could provide a television set with a market dollar amount (store of value). If you were a plumber, you could provide a few hours of plumbing service with a market dollar amount (store of value). All these item were kept in a public ledger (blockchain). So if the plumber wanted a television set or something else, he could activate the trade using the value of his hours he had contributed into his account. At some point, someone needing plumbing would trade for the plumbing service.

Everything was going well until the government discovered that these were hidden transactions outside of their purview and control. So the U.S. Treasury issued regulations to mandate the recording of these transactions with the dollar value and apply the sales tax. Within months, all the associations disappeared.

The present Bitcoin is not the same as the unit of a few years ago. Although the technology is the same, the value has changed. However, the real difference is that the government now requires the reporting of cryptocurrency and is tracking it. On the IRS 1040 tax return, you are required to report this type of information and you may have to pay a tax. There are significant penalties for the failure to disclose this information.

Government will never allow a competing currency. In this case, it appears that the government is interested in digital currency and intends to create their own. They are letting the market works things out and create a comfort level for its use. At some point, the government will rein in cryptocurrency as they put out their own.

Bitcoin remains a highly speculative investment. Ultimately, the government will control the transmission, commercialization and value of cryptocurrency.

There was a type