What is a Bitcoin?
Bitcoin
noun: bitcoin; plural noun: bitcoins;
- a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
“bitcoin has become a hot commodity among speculators” - a unit of bitcoin.
“bitcoins can be used for online transactions between individuals”
– Oxford Dictionary reference
Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by lots of people running computers all around the world, using software that solves mathematical problems. But bitcoin isn’t based on gold; it’s based on mathematics. It’s the first example of a growing category of money known as “cryptocurrency”.
Bitcoins can be used to buy things electronically. In that sense, it’s like conventional dollars, euros, or yen, which are also traded digitally. BUT, bitcoin’s most important characteristic, and the thing that makes it different to conventional money, is that it is decentralized. No single institution controls the bitcoin network. This puts some people at ease, because it means that a large bank can’t control their money.
Can I Use Bitcoin to secure finance?
Essentially NO! There are many rules and the legality of your bitcoin activities will depend on who you are, where you live, and they are popular in many circles and have even incorporated an EFTPOS card, but Finance Companies in Australia will only deal with cold hard cash! The ATO do not have an answer on how to tax them.
And you will probably not be able to borrow funds to buy Bitcoins, but of course his is only a ageneral rule, and we recommend you talk to your Financial Adviser if you are interested in this at all.
The information out there is very plentiful, and if you are interested in learning about the Pro’s and Con’s, here are some useful links for you to read for your interest:
http://www.dailyreckoning.com.au/bitcoin-the-whole-story/2014/02/15/
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