You can’t hold bitcoin in your hands or put it in your pocket like real money.
Digital currency is not likely to be the future of money in the U.S. Still, and it certainly shows promise for other ways of doing business that involve fewer transaction fees, more transparency, and faster processing times. In this article, you will know about bitcoins and how they affect the value of the American dollar. For more info, visit https://bitcoin-prime.app/.
6 ways bitcoin affects the American dollar
1. Bitcoin is considered as an asset by the U.S. Tax department
Bitcoin has already been declared dead many times, and yet, it continues to survive. Digital currency is not likely to be the future of money in the U.S. Still, and it certainly shows promise for other ways of doing business that involve fewer transaction fees, more transparency, and faster processing times.
In May 2014, the IRS issued Notice 2014-21 which declared that it would treat bitcoin as an asset or property for tax purposes.
It means people who buy digital currency should keep track of capital gains and losses when they use bitcoins to pay for goods and services. For example, if a person buys a bitcoin for $15 and sells it for $50, they have to pay capital gains tax on the difference.
2. One bitcoin equals one million bits
As of 2014, more than 100,000 merchants and vendors accepted bitcoin as payment, including WordPress, OkCupid, and Baidu. There is also a service called CoinGate, which helps you buy bitcoin in your shop for a small fee.
3. Bitcoin has no issuer
Bitcoin is not just a currency; it is also an investment option and, at the same time, a way to move money around quickly and anonymously without paying any fees to intermediaries such as Mastercard or Western Union. However, like other currencies, bitcoin fluctuates in value, and it is possible to lose money in a bitcoin investment.
4. Bitcoins can also be used for illegal activities
Although many businesses such as WordPress, Expedia, and even Subway accept bitcoins for payment, others do not because digital currency can be used for illegal activities. In addition, like cash or prepaid credit cards, if someone gets access to your bitcoins, they are gone for good without any way of getting them back.
5. Bitcoin price is much more stable than you think
Most people see bitcoin as a highly volatile currency that can quickly gain or lose value in a matter of days or even hours. However, this notion is incorrect because it is also relatively illiquid, although volatile in the bitcoin market.
If you take a look at Bitstamp’s price chart, you will see that the digital currency has stayed within a relatively narrow band for nearly six months now.
6. Bitcoin was used to help people in Cyprus
Bitcoin gained value during the banking crisis because people panicked and started buying digital currency to get their money out of banks. Although this did not affect the American dollar, it did affect other fiat currencies such as the Euro and the Yen because speculators were turning to bitcoin.
3 negative effects of bitcoin on the American dollar:
1. Bitcoin’s value is in free fall
If you take a look at CoinDesk’s bitcoin price index, you will see that the digital currency has lost almost 50% of its value in the past six months alone.
2. Bitcoin volatility is like a roller coaster
Most people see bitcoin as a highly volatile currency that can quickly gain or lose value in a matter of days or even hours. However, this notion is incorrect because it is also relatively illiquid, although volatile in the bitcoin market.
If you take a look at Bitstamp’s price chart, you will see that the digital currency has stayed within a relatively narrow band for nearly six months now.
3. Speculators are using bitcoin
Although bitcoin is called the “currency of the Internet,” it doesn’t behave like other currencies because they are not being traded as heavily or bought and sold as frequently as bitcoin is. The supply of digital currency is also limited, which means that it can appreciate value very quickly.
Conclusion
A central bank does not regulate bitcoins, and they can be exchanged for other currencies and used as a form of payment on several websites, including WordPress and Reddit.
