14
Jan
2021

The Lost Love: Bitcoin and the IRS

Everyone in this world likes to hear about love stories. A love story which has emotions and at the last a happy ending. But sometimes a love story doesn’t end with happiness because the love or emotions get a bit less to complete a story of love. The history of Bitcoin and the efforts made by the Internal Revenue Services “IRS” to know about the unknown reporters, let us see what will the IRS do in the future. And also know why the IRS and bitcoin lost their connection. If you are interested in bitcoin trading visit official site

The Beginning —

Satoshi Nakamoto, a computer programmer introduced the first digital currency back in 2009. The idea of developing such technology was to create an online payment transaction to each other which was not linked with any authorities or any governance. The bitcoin and all other digital currencies use a system called the blockchain. The blockchain is like a ledger which keeps all the records and details of every transaction that happens. Every single transaction detail like whom the transaction is being made, by whom it is made, which date, user identification and all the other details the blockchain stores. The user identification number provides the name of that user.

For example, I purchased a guitar and gave the payment of it to the seller by Bitcoins. The bitcoins get transferred from my virtual wallet to the seller’s virtual wallet. After that, the details of payment of $300, date 15th August 2020 and the user identification number 1829430 is recorded in the blockchain. The blockchain stores all the details about the public transactions but nobody can know that I purchased a guitar.

How Bitcoin and IRS could have worked together

All the details of every transaction are securely stored in the blockchain. The IRS could get details like capital, gains, calculate income, and all other important details of every transaction if they use the blockchain system. If the IRS gets access to the blockchain, they could compare all the transactions with the tax returns and that could be a problem for the users. They identify unknown or fake users.

  • Mt. Gox

Mt. Gox, the first bitcoin exchange in the world, was in Tokyo, Japan, and was founded back in the year 2010.  An online platform was similar to the stock exchange that helps customers to buy and sell the virtual currencies. About 70% of the bitcoin transactions took place by Mt. Gox got hacked in June 2011. The hackers hacked the computer of an employee of Mt. Gox. The hackers also fluctuated the prices of bitcoin and also purchased them from some random accounts. Near about $300 million valued bitcoins which were 850,000 bitcoins were stolen by the hackers.

  • Silk Road

Anything can be purchased by Bitcoins; Silk Road was named after the very popular and known route of online marketing between Europe and East Asia. A website when you were able to purchase drugs, guns and other illegal stuff without any identification. The founder Ross Ulbricht was known as “Dread Pirate Roberts” when the website was working. The website made Ulbricht a millionaire but lasted for three years. The users of the website and Ulbricht thought that everything that happened through the website had no information or identifications of anyone.

 Conclusion

As bitcoin is having a lot of problems, it has become a viable option for cash right in the beginning. Bitcoin has also been seen as a threat rather than a tool. Its use is being done to increase the reporting stability and accuracy both. Its which uses third-party data to identify both non – reporting and false reporting.

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