The digital currency, Bitcoin, has a 94% year-to-date gain and is now worth nearly $2000 with estimates giving a single bitcoin the valuation of $1843. The extremely volatile digital currency has led to many people to compare it as a foreign exchange and even drawn comparisons to gold. In fact, a single unit of Bitcoin surpassed the dollar valuation of an ounce of gold this year, which is worth $600 per ounce. That said the cost of bitcoin had swung dramatically over the past year. Meanwhile gold has relatively been more stable.
Current estimates suggest that by the year 2110 we will reach the final supply of bitcoins and there will be theoretically 21 million digital bitcoins in existence -meaning the total value of digital coins at today’s market price is just under $39 billion. However, according to Bloomberg, the total valuation of gold stocks, which is currently 6 billion Troy ounces, is valued at $7.3 trillion with today’s current estimates.
That said, bitcoin has become the go-to currency due to its anonymous features. Many hackers and cyber attacks use bitcoins as a way to hold computer systems ransom and make money anonymously. Last March, hackers were reportedly holding Apple for ransom and demanding bitcoins and return.
Nevertheless, the Internal Revenue Service is keeping an eye on bitcoins. Last November, the IRS began an investigation into businesses and individuals who use bitcoins to avoid paying taxes. In fact, the IRS found two taxpayers who used separate Coinbase accounts to hide Bitcoin transactions as expenses on their tax returns. Consequently, the IRS argues that other users are also evading taxes through such fraud schemes.