Experts agree virtual currency is here to stay, but some confusion lingers
COLUMBIA - Are you confused by the concept of crypto-currencies? Does Bitcoin baffle you? KOMU's Angie Bailey tries to answer some of the big questions.
First, what is it?
Bitcoin is one of the more popular of many, many types of crypto-currency, which
is virtual money that travels the world by computer without restrictions or conversion.
There's no regulated bank or government backing it. You can't hold crypto-currency in your hand and it's worth is based on whatever one is willing to pay.
Cyrpto-currencies became more mainstream because some big names like Paypal and Microsoft started accepting Bitcoin as a form of payment in 2014, then many more big names like Ebay, Expedia, Overstock.com and Dish Network have followed suit. That's when Wall Street started paying closer attention.
Financial advisor Jeff Kaufman at JK Financial said the traditional financial sector is planning now for how to best use crypto when it goes mainstream. There's an entirely new category of financial products being developed to eventually be an option for his investment clients called an exponential technology fund.
The blueprint for this fund includes crypto-currencies as an investment.
"It could be 1% or 2% or 5% of their portfolio," Kaufman said, but if things do continue to keep growing in the direction we're going, we need to be a part of that. We can't miss out on that."
Next question. How do you get it?
If you wanted to own some crypto-currency, you'd likely get a free account online through one of the crypto exchanges available in the United States. The biggest exchange is Coinbase, but Gocoin and Bitpay are also popular.
Each only offers some of the most popular types of currency and you pay via a connected traditional bank account or debit card.
If you buy some virtual money, be prepared, prices are very, very unstable. That means in a given day, week or month, the value can go up or down dramatically.
Bitcoin, for example, has gained a massive amount of value in the last year and then lost a huge chunk of that even more quickly in less than a month's time.
Despite the whiplash, comparing February 2017 to February 2018 numbers, Bitcoin is still up more than 700 percent.
Finally, how does crypto-currency actually work?
It doesn't matter if you're talking about Bitcoin or any of the several hundred other virtual currencies available, all crypto-currencies uses what's called a Blockchain to make sure the math of buying and getting paid checks out.
A Blockchain is very complicated computer program and it's been around almost 30 years. Things like digital contracts, electronic notaries or e-filing our taxes are all possible because of Blockchains.
With virtual money, the Blockchain is a massive, ever-growing, digital ledger of all of the transactions ever made for a particular crypto-currency and in what order those transactions happened.
If you pay your rent with Bitcoin, the Bitcoin blockchain makes sure you have enough coin in your account and then deposits it in your landlord's account.
Each digital transaction is encrypted with a one-time digital signature and works like a chipped credit card does. But crypto transactions clear in minutes instead of days and without paying any fees.
Crypro-currencies were created and designed to leave out the big banks of Wall Street and the government. Add the instability in value and the growing number of different coins being created, it's an environment ripe for a regulatory crack-down.
The Securities and Exchange Commission and the Internal Revenue Service are both trying to catch-up and scrambling to define their respective regulatory roles in relation to crypto-currency.
How to determine it's value and how to incorporate it into an owner's taxes are just the tip of the iceberg.
Regardless of if you love or hate the idea of virtual money, fear it or welcome it, experts on both sides agree a worldwide crypto-currency will some day be as common as debit cards and bank accounts are now.
COLUMBIA — Missourians who qualify under the newly expanded Medicaid qualifications will have to wait almost a year to... More >>
As COVID-19 continues to spread, KOMU 8 will continue to update you about impacts in the community. You can... More >>
WASHINGTON — Sen. Josh Hawley's bill to ban TikTok on government passed the U.S. Senate unanimously on Thursday, according to... More >>
JEFFERSON CITY —Four people have tested positive for COVID-19 following open testing at the Missouri Capitol. The state health... More >>
(CNN) -- Former First Lady Michelle Obama says she's suffering from a "low-grade depression." The reasons? The pandemic, race relations... More >>
LAKE OF THE OZARKS - An Illinois man was killed on the Lake of the Ozarks Sunday after a boating... More >>
HARTSBURG - The 2020 Hartsburg Pumpkin Festival will be canceled due to the COVID-19 pandemic. The festival was set to... More >>
BOONVILLE - A Boonville man pleaded guilty to child molestation Wednesday and was given 5 years probation. A grand... More >>
MEXICO - One 17 year-old died and another was hurt after they were shot during a fight Wednesday night. ... More >>
COLUMBIA – Thursday, small businesses can attend a meeting to learn how to apply for loans from the city. ... More >>
COLUMBIA - Following Tuesday's school board meeting, Columbia Public Schools' Superintendent Peter Stiepleman talked with KOMU 8's Emily Spain about... More >>
COLUMBIA — It's been almost one month since Columbia residents were told their recycling would no longer be picked up... More >>
JEFFERSON CITY — The Senate Committee on Transportation, Infrastructure, and Public Safety voted to approve a bill (SB1) to address... More >>
COLUMBIA— The Missouri State High School Activities Association has given fully online schools the opportunity to compete within in-person activities.... More >>