Just last week, Ohio will be the first state that will be accepting Bitcoin as a legitimate form of payment on state taxes.
Although electronic currency has been around as far back as 2008, it started to gain extreme popular presence in the recent years. Electronic currency, may also be known as "Bitcoin" is a type of cryptocurrency. There has been a growing number of controversial conversations on the legality of the use of bitcoin in purchasing, selling, and investing transactions. Much concern is towards what cryptocurrency can be backed up by and how government regulations, such as taxes come into play if it is considered a type of income. The idea and structure of cryptocurrency can be an extensive subject to discuss. However, today's post will simply focus on the simplified basics of how cryptocurrency works through blockchain and how one state is taking initiative of using Bitcoin to pay taxes as a way of supporting modern technology advancement.
For cryptocurrency to even be a working thing, blockchain is the backbone of it. blockchain, as explained in Coindesk's article, is like a Wikipedia where almost anyone can go in and make edits to a wiki page--not one person has control over the whole content. blockchain is similarly just that.
You may be thinking, what about security and privacy issues? blockchain provides encryption keys to authorized and verify users before a transaction is marked as successfully processed in the ledgers (of which is only viewable by the authorized and verified users). The picture below provides a basic visual understanding of how blockchain works in a financial situation:
For cryptocurrency to even be a working thing, blockchain is the backbone of it. blockchain, as explained in Coindesk's article, is like a Wikipedia where almost anyone can go in and make edits to a wiki page--not one person has control over the whole content. blockchain is similarly just that.
You may be thinking, what about security and privacy issues? blockchain provides encryption keys to authorized and verify users before a transaction is marked as successfully processed in the ledgers (of which is only viewable by the authorized and verified users). The picture below provides a basic visual understanding of how blockchain works in a financial situation:
While this may be too early to say, the process of using blockchain could eliminate the traditional dependence of physical intermediaries such as banks for financial-related activities. Transactions of the future could possibly all be done on the networks and we might just have a change in what we call our main currency. Again, this is just imaginary-speaking.
Of all the states in the U.S., Ohio's state treasurer Josh Mandel, firmly believes that blockchain would bring new business opportunities and technological advantages to the future. Unfortunately, this method of payment option is available only for businesses as of now. There is a slight incentive for users to pay via bitcoin because the processing fee is set to just 1% instead of 2.5%, if using credit cards. While the difference in percentage don't seem much, businesses that are involved in large-scale expenses could feel a savings from this. The use of blockchain was never really a new concept. It is the use of Bitcoin cryptocurrency as valid payments for items that is recently trying to gain acceptance. Although I am personally still skeptical of the value of the Bitcoin cryptocurrency (due to it's extreme volatility and undefine terms and regulations), I think Ohio's initiative is a great experimenting opportunity that we all could learn from regardless if it works or if it becomes a major flop. We'll have to see how it goes!
Published By: Dalena Nguyen
https://www.cnbc.com/2018/11/29/ohio-rolls-out-the-red-carpet-for-blockchain-businesses-by-accepting-bitcoin-this-tax-season.html
https://www.coindesk.com/information/what-is-blockchain-technology
Images are from Google search engine.
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