Cryptocurrency has gotten so popular that even your grandma called you last week to ask how she should invest in it. Along with this wild popularity comes a lot of misunderstanding – about what cryptocurrency is, what it is not, and what you can and can’t do with it. There are a lot of people who mistakenly believe this is a new legal and safe way to commit crimes, and in reality nothing could be further from the truth.
Cryptocurrency is considered property where the Internal Revenue Service is concerned. That means if someone is paying you in cryptocurrency, you still have to pay taxes on it as you would income because bartering property for services is a taxable activity. What’s more, if you buy or own cryptocurrency that goes up in value, you are responsible for paying capital gains taxes when you sell if your cryptocurrency has gone up in value.
Anonymity is another major draw of cryptocurrency that is also completely false. There are lots of people who think that if they set up their cryptocurrency addresses as anonymous, and while it may be more anonymous with some cryptocurrencies than with others, is there really any such thing as true anonymity online these days? Which brings us to the next issue – crime. Committing crimes with cryptocurrency is still a crime, even if it’s “not real money” or you think you are anonymous.
It’s also not super easy to use. You can be super wealthy in terms of cryptocurrency, but you have to be able to turn that into actual currency in order to spend it in most cases. Very few people accept cryptocurrency for normal business transactions, though there are some places known as “Bitcoin islands” where groups of businesses banded together to create destinations for people to spend their Bitcoin fortunes. These places are rare, though, and transactions are complicated, take a lot of energy, and can be very costly. Using cryptocurrency for everyday life is not a current reality at this point in time.
Cryptocurrency could end up being the future of money, though there are a lot of issues still to get worked out properly before that time comes. Learn more about myths and facts about cryptocurrency from this infographic. Are you ready to invest in the next frontier of money? At least learn what’s what so you can educate your grandma before she loses her life savings on the latest and greatest crypto fad.