July 2, 2022
  • July 2, 2022

FOX 35 SURVEY: cryptocurrency confusion

By on May 17, 2021 0

Over the past few months, the cryptocurrency has exploded in popularity and value.

Bitcoin, Ethereum, Dogecoin – buyers go crazy for cryptocurrency. In the past year alone, the number of people blockchain wallet jumped over 20 million.

So why are so many people buying it? It’s confusing, but FOX 35 is here to clear things up.

WHAT IS CRYPTOCURRENCE?

Cryptocurrency is digital currency traded through the blockchain.

“It works without a central authority, so you don’t need to deposit money in the bank”, Ecodelogic Said project manager Neil Belliveau.

More and more companies are starting to accept Bitcoin, one of the most popular cryptocurrencies, as a payment method.

Telsa bought $ 1.5 billion worth of Bitcoin. Starbucks is teaming up with an app that will let you convert cryptocurrency to US dollars so that you can purchase items at its locations, and Paypal also allows people to use the cryptocurrency.

The “order with cyrpto” feature allows you to convert Bitcoin and other digital currencies into US dollars that Paypal uses to complete the transaction.

Even if you don’t buy items with cryptocurrencies, investors still buy it and watch it closely.

“People call it Gold 2.0, so people are using it as an alternative to gold and silver to be able to store their wealth,” David Derigiotis, along with Burns and Wilcox, told FOX 35.

Cryptocurrencies are decentralized, so no bank is involved. So how does it work? This is where the blockchain comes in.

“A block is just data, and it’s chained to the next block. So it constantly starts chaining one after another. There’s really no way to go back and edit or to change a block. So there is always a recording of everything, “said Belliveau.

Think about each block as you build the last. Whenever someone buys or sells, the blockchain counts, just like a bank would. It keeps track of every transaction. It is a digital register.

Unlike cash, you can’t see or touch cryptocurrency, so it’s up to you to keep an eye on it or risk losing it forever.

“If you’re looking to buy it and keep it, do your homework on where you’re going to keep that money and who you’re going to use an exchange,” said Stephan Boehringer, with Ecodelogic.

There are several exchanges for buying or selling cryptocurrencies. One of the most popular options is Coinbase. In the United States, he is required to keep deposits in his system guaranteed in US banks.

“Because they’re guaranteed in US banks, anyone who has money in Coinbase is actually FDIC protected because the FDIC insures these accounts up to $ 250,000 each,” Boehringer said.

If you choose to store your cryptocurrency on the internet, Derigiotis says you should take a few more steps to protect your coins.

“First, I would create an email address that is unique and specific for this account only. That way, if that email is involved in a data breach, any other place you visit online, it won’t. not directly affect your email address linked to your crypto account, “he said.” Configure multi-factor authentication. So you are going to log in with a password, which usually allows you to authenticate by the first means, then there will be a code via a second variant, whether or not it receives on your phone or using some type of ‘application. “

INVESTING IN CRYPTOCURRENCES

Once you’ve done your research and are still interested in buying cryptocurrency, you’re probably wondering when is a good time to buy?

When you think about investing, you can start to think about stocks. However, cryptocurrency is not the stock market.

“Crypto is more volatile,” Boehringer said. “I consider it to be more volatile than stocks, so you have to really understand what you have got a stomach for in an investment.”

However, high risk can lead to high reward.

“Ten years ago it was virtually nothing and today, or in April of this year, the economic impact of crypto, its overall value, is worth $ 2.2 trillion,” he said. said Boehringer.

Don’t throw your savings into cryptocurrency. Experts say you should only invest what you are prepared to lose.

Although cryptocurrency is completely virtual, it does have real tax consequences. If you choose to buy and sell, keep a record as it must be reported on your tax return.

“For tax purposes, virtual currency is treated as property and that means tax principles applicable to real estate transactions apply to transactions using virtual currency,” said Stephen Palley, partner at Anderson Kill.

According to the IRS, if you’ve held an investment for less than a year and it appreciates in value when you sell it, you will realize a short-term capital gain. These earnings are taxed as ordinary income.

“The main thing is that if you hold virtual currency for a year or less, you will have a short-term gain or loss,” Palley said.

If you hold a cryptocurrency for more than a year, it will be subject to capital gains tax rates. The way you receive the cryptocurrency can also be a factor.

“If someone paid you in Bitcoin, the IRS would treat that as taxable income,” Palley said.

If you are new to cryptocurrency, be sure to speak to a professional tax preparer to make sure you understand all of the consequences.

MINING CRYPTOCURRENCE

You can buy cryptocurrency or earn it by mining it.

Even though cryptocurrency has been compared to gold, you don’t need to mine it. You just need a computer and some equipment. The computer you have must be able to solve extremely complex computational problems. You don’t have to be a computer genius, you just need the right equipment.

“I built these rigs that had six graphics cards, hung from a rack that was attached to a motherboard, and then to a connected power supply. You don’t even have a monitor connected, ”Aaron Jayjack, who operates the cryptocurrency, mentioned.

It can be an expensive hobby, however.

“My biggest mining cost, trying to keep my house cool. My electricity bill is normally $ 200-250, but at the peak of mining I was spending $ 700-800 during the months. summer because I used the air conditioning so much, ”Jayjack says.

Miners are paid in virtual currency to work primarily as an auditor. They must verify the legitimacy of transactions.

“When you mine, you vote with your machines on all transactions and make sure it all adds up,” Gabe Higgins, of Block spaces, mentionned.

One of the most popular cryptocurrencies to mine is Bitcoin. To earn Bitcoin, miners must verify a megabyte, or block, of transactions before they are even eligible to earn Bitcoin.

“You accumulate it after a block is finished because more than one person can participate in the mining of that block,” Belliveau said.

You must also be the first to complete this block. It’s a matter of luck.

“It’s definitely a numbers game, that’s what it boils down to.”

In addition to lining the pockets of miners and supporting the Bitcoin ecosystem, mining serves another vital purpose: how new Bitcoin is brought into circulation.

There is a limited supply of Bitcoin. This means that there will be a point where Bitcoin mining ends. The total number is capped at 21 million, but minors are not expected to reach that number until 2140.

Just because mining will end does not mean that transactions will no longer need to be verified. Miners will continue to verify transactions but will be paid by other means.

Bitcoin is not the only cryptocurrency that can be mined. You may need to hang on to it for a while.

“Maybe you only generate $ 10 a day of cryptocurrency. It’s more a long-term issue. It could be $ 10 a day now, but in 10 years it could be $ 100 or 1. $ 000 a day that you are actually operating, ”Jayjack mentioned.

FUTURE OF CRYPTOCURRENCE

“It is happening faster than I would have predicted.”

What started in 2009 as an underground obsession has turned into a mainstream discussion. The value of Bitcoin has increased over the past year. In 2021 alone, it has jumped by tens of thousands. On January 27, a Bitcoin was worth $ 30,000. Fast forward to May 12, it was $ 55,000.

“As of April of this year, the overall economic impact of crypto was $ 2.2 trillion,” Boehringer said. “This equates to the UK’s annual GDP.”

One of the biggest proponents of cryptocurrency is Elon Musk, CEO of Tesla and SpaceX. Tesla bought $ 1.5 billion worth of Bitcoin, then announced that you can use your Bitcoin to buy a car. The company has since pitched the idea due to concerns about the environmental impacts of Bitcoin mining.

Paypal also announced that it will start allowing cryptocurrency as payments. Customers will be able to convert cryptocurrencies like Bitcoin during payment.

Cryptocurrency is just the start.

“The blockchain is not just Bitcoin. Bitcoin is the premier use case. It is certainly the best known and most successful. There are several other use cases that continue to bubble up every day,” said Rosa Shores, CEO of BlockSpaces.

The blockchain technology that tracks Bitcoin transactions has the potential to turn our entire world into digital.

BlockSpaces is a blockchain company that helps companies integrate technology into their tracking and tracing platforms.

“We are currently working on a digital ID project at USF, as well as a potential pilot project for food supply chains,” Shores said.

Blockchain has the potential to make things, like buying a house, much simpler.

“Your bank can trigger a contract and you only need to provide parts of your ID that are needed to prove your loan, not necessarily something they don’t need. your first born, just bits of your information, ”Shores said. “Where there is not necessarily an intermediary who should guide you through the mortgage process.”

As the world grapples with the pandemic, technology could secure your vaccine data.

“With COVID identification, we are using blockchain in a way that applies to digital identification within this vaccine ecosystem,” Shores said.