Coinbase is one of the most trusted, secure cryptocurrency wallets. It facilitates investing and dealing in cryptocurrency. Coinbase began in 2012 to allow anyone, anywhere, to easily and securely send and receive Bitcoin. It is a trusted and easy-to-use platform for accessing the crypto-economy.
We utilize this and another wallet in our marketing endeavors. You can too. Learn here how it works and how you can start with your very own wallet. Join now and watch it grow.
Physical currency
Before the onset of cryptocurrency, we thought of currency, i.e. money, in terms of what was minted or printed by a government entity. This money is “backed” by gold or silver or other physical objects of value. Each country or group of countries had its own currency.
For example the US dollar or Canadian dollar. And in Europe, the Euro. Great Britain uses the Pound. And other countries, Japan, China, India, UAE also have their own physical currency. These currencies are all represented by a printed paper or minted coin bearing the designation of the currency.
We are told that the currency is “backed” by “gold” or “silver”. But we never try to exchange the physical currency for its gold or silver equivalent. We just use them on faith for the trade or exchange of goods and services.
When the virtual cryptocurrency was first introduced back around 2014, the European Banking Authority described this virtual currency as a “digital representation of value”. It is a currency that is not issued by any country’s central bank or public authority. This “virtual” currency was unregulated.
Cryptocurrency Value
So how is the value of the cryptocurrency determined? To begin, a cryptocurrency has to be purchased using physical currency. Therefore, the initial value of the cryptocurrency is equal to the value of the physical currency.
But then the value begins to change. And its value is determined by supply and demand much like the value of a stock certificate on the Stock Market. However, the value of a stock certificate is based upon its worth in relation to the value of the physical entity it represents. The value of the physical entity can fluctuate based upon supply and demand. But with cryptocurrency it only represents itself. Not any other physical entity.
However, the worth of the cryptocurrency does fluctuate depending again on what it is deemed to be worth. This is determined by the worth the persons involved in the exchange deem it to be worth. Maybe the buyer just wants to own some Bitcoin, and he is willing to exchange a certain amount of physical currency for the ownership of one Bitcoin. This amount is determined by what the owner of the coin will exchange it for.
Just a simple example
Just for simplicity here, maybe the owner bought his coin for one American dollar. Maybe he actually bought two and is willing now to sell one. No one else who has Bitcoins are willing to sell any of theirs, but the customer really wants one and is willing to pay two American dollars for one. If the owner/seller is willing to accept $2 for one of his Bitcoins, then the value of all Bitcoins has now doubled.
Hundreds or maybe thousands of individuals globally own thousands of Bitcoins. We have just created an accounting nightmare. We must update the accounts owned by all of these people with their new worth. Hence, the development of the elaborate accounting process known as Blockchain. It registers ownership and maintains the accounts.
Blockchain for Cryptocurrency
Blockchain uses elaborate computer programs that are extremely secure. See our separate page describing the Blockchain process. It is promoted as storing records that are unchangeable. No one can physically access the record and alter them since the record does not exist on paper. And since the computer records are disbursed in bits and pieces, discernable only by the algorithms of the Blockchain programs, they cannot be hacked. These records are 100% secure.
Therefore, Virtual currency – cryptocurrency – is “digital money” that is issued and controlled by software developers and accepted as payment by willing parties. More and more today, major corporations are accepting cryptocurrency for the payment of goods and services. Companies like AT&T, Microsoft, and Expedia.
The world and the things around us are constantly changing. Not too long ago we did not even have ATM’s. Now today I don’t even have to define ATM as a banking Automatic Teller Machine. What? A machine that can give us currency from our bank account? You bet. The ATM does work and we all would be lost without them. So I guess that accepting virtual currency is also within our realm of comprehension.
Cryptocurrency ATMS
Yes, they already exist. Google “CoinATM” for a location near you. You can exchange physical currency for Bitcoins. You can make a deposit into your Wallet. And if you are already an owner of Bitcoin, you can send a payment using cryptocurrency. Now, even Bitcoins are beginning to break into that banking area.
The Challenge of the New Economy
Cryptocurrency is becoming more and more acceptable for the payment of goods and services. And with this, new challenges arise. People are using this form of payment for many things. But because of the volatility of the value of the cryptocurrency, one unit does not retain the same value. It is like a share of stock, it increases or decreases in value.
For us, we know that the actual value of a dollar inflates or deflates due to the economy. But one dollar is always equal to one dollar. However, we may only be able to buy more or less with this single dollar. But the value of a Bitcoin does not stay the same. Therefore, when you use it for “legal tender”, you need to record the actual value of the virtual currency at the time of the transaction.
Now the IRS becomes interested in Cryptocurrency
With the volume of transactions utilizing cryptocurrency as legal tender increasing, the IRS has become more interested in these virtual transactions. In fact, “virtual currency” transactions are a hot-button issue with the IRS.
Therefore, if you pay workers in cryptocurrency, you need to record the physical value of the payment at the time it is made. And you need to withhold equivalent income taxes for these wages.
Likewise, if you are buying business equipment, which you plan to depreciate, there are new rules. You need to do this accounting in physical/government currency based upon the actual value of the cryptocurrency at the time of purchase.
Gulp!! Now the IRS has become involved to add more complications. To assist you in documenting the actual value of a transaction, cryptocurrency exchanges like Coinbase will determine this value and record it for you.
Using the Coinbase Wallet
In summary, Coinbase is one of the most secure wallets available. And you can earn coins by referring friends to this site. Check out the Referral Link in the Menu. From Coinbase you can buy or sell cryptocurrency and also transfer coins to other people. While it may seem scary at first, we recommend sending a small amount the first time to be sure you have the recipient’s address correct. Transactions are non-refundable if you send them to the wrong address.
When you buy a new coin, do your research just as you would research a stock purchase in the Stock Market.
