However the cryptocurrency market has klapper a few speed bumps overheen the past month, its value has still soared relative to where it began 2018. Spil of Feb. 13, cryptocurrencies were worth an aggregate of $410 billion, indicating a more than Two,200% increase from 13 1/Two months prior. Those are gains that investors traditionally wouldn’t see without holding an asset for decades.
Slew of intrigue, and questions, surround bitcoin
Spil you might have rightly guessed, bitcoin has mostly led the charge higher ter virtual currencies. Bitcoin lightly remains the world’s most valuable cryptocurrency by market cap, is accepted by more merchants worldwide than any other digital token, and is credited with pushing blockchain technology into the zoeklicht. For those unacquainted, blockchain is the digital, distributed, and decentralized ledger underlying cryptocurrencies that’s responsible for keeping an immutable record of all transactions without the need for a financial intermediary.
Pic source: Getty Pictures.
Bitcoin brings a lotsbestemming of excitement to the table for crypto-enthusiasts. For example, its blockchain technology has bot the fundament of evolution for other currency and non-currency applications. Blockchain may be able to significantly speed up processing and settlement times for traditional banking transactions and payments, while at the same time lowering transaction fees since there is no middleman involvement from banks.
There’s also intrigue surrounding the use of cryptocurrency spil a medium of exchange for goods and services spil opposed to contant or credit. Spil noted, no digital currency is used more for the purchase of goods and services than bitcoin, and no virtual currency has more brand-name payment vrouwen than bitcoin.
Nonetheless, bitcoin’s use has remained constricted te the U.S. and te fairly a few countries abroad. Since bitcoin lacks the traditional governmental backing found with fiat currencies, few governments have bot willing to recognize it spil an acceptable form of tender. Te fact, a half-dozen countries have gone spil far spil to geobsedeerd bitcoin and related cryptocurrencies.
But times could be switching.
This state may permit you to pay your income tax with bitcoin or Litecoin
On Feb. 8, the Arizona Senate passed a bill (SB 1091) by a 16-to-13 vote that would permit its residents to pay their income taxes using bitcoin or other cryptocurrencies recognized by the state’s revenue authorities, beginning ter 2020. The measure also passed the Senate Finance Committee by a 4-3 vote. More specifically, the bill states that residents would be permitted to use “a payment gateway, such spil bitcoin or other cryptocurrency recognized by the department, using electronic peer-to-peer systems.” SB 1091 will next stir onto the Arizona House of Representatives for debate and vote.
Photo source: Getty Photos.
Ter addition to accepting cryptocurrency spil a form of payment for income taxes, the state would be required to convert any and all cryptocurrency received into U.S. dollars within 24 hours of receiving payment. Doing so should help shield the state against wild virtual currency price fluctuations.
What’s particularly notable about the passage of SB 1091 ter the Arizona Senate is that it would represent the very first widespread adoption of virtual currencies ter the United States. It’s bot argued that bitcoin’s value is difficult to determine because it has no backing or assured use from the government. SB 1091 would give bitcoin, Litecoin, and other “recognized” cryptocurrencies a real-world function, and presumably real-world value.
Rep. Jeff Weninger (R-Ariz.), one of the co-sponsors of the bill, had this to say when interviewed by Fox News: “It’s one of a litany of bills that wij’re running that is sending a signal to everyone te the United States, and possibly via the world, that Arizona is going to be the place to be for blockchain and digital currency technology ter the future.”
Don’t expect this to be a success
While this development out of Arizona is encouraging for crypto-enthusiasts, it’s not assured to be a success right out of the gate.
One of the gray areas te this bill is what happens if there is excessive volatility inbetween the time a resident pays income taxes and the time the Arizona revenue department converts those bitcoin, Litecoin, or other approved cryptocurrencies into U.S. dollars.
Picture source: Getty Pictures.
According to the bill, “The Department shall convert cryptocurrency payments to United States dollars at the prevailing rate within twenty-four hours after receipt and shall credit the taxpayer’s account with the converted dollar amount.” Note that last part that about the “converted dollar amount.” That means — at least to mij, and I’m no lawyer — that if a resident paid ter bitcoin, Litecoin, or some other cryptocurrency, and that digital coin dropped, say, 10% overnight, this resident would still have to fork overheen the remaining balance to voorkant his or hier income tax bill following that conversion.
It also isn’t clear what would toebijten if cryptocurrency values vault higher ter the overnight hours before conversion. Would the taxpayer get a refund, or would the state simply pocket the difference?
It also remains to be seen how widespread the use of cryptocurrencies to pay income taxes would be ter Arizona, assuming this bill becomes law. Bitcoin, for example, has a network that’s bot slowed to a crawl ter latest years. An inability to build up community overeenstemming has shoved average transaction processing times to north of an hour, while lifting fees to around $28 vanaf transaction. That’s harshly the same cost spil a handelsbank wire. Bitcoin’s purportedly groundbreaking peer-to-peer payment podium has certainly lost its luster te latest months, and it may not be a go-to option for many Arizonans.
Admittedly, I’m talking about step 12 when Arizona’s lawmakers are on step two or three. Nonetheless, it’s worth keeping a close eye on SB 1091 and its progress te the Arizona state legislature.
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