When it comes to currency and financial developments around the world, one aspect of it always comes up in the conversation. It has been debated in the past; it is discussed at present, and will continue to be talked about in the future. It is cryptocurrency, especially the (in)famous Bitcoin.
Over time, there have been many privacy and security concerns raised against Bitcoin. Chief among them have been whether Bitcoin can be hacked out of storages and existing accounts, tracked by authorities, and/or taxed by the same. Let’s place each issue and discuss, bringing up recent, relevant news, in order to determine whether the concerns are genuine or misplaced.
Can Bitcoin be Hacked?
There have been some major Bitcoin hacking cases in the past, 3 of which are noteworthy. Following are the 3 cases:
• Mt. Gox, which was once the largest and most prominent marketplace for the cryptocurrency, was hacked in 2014, which resulted in around $460 million, or 750,000 Bitcoins being stolen. This caused the value of the cryptocurrency to fall drastically, to half in less than a year.
• The Bitstamp exchange was breached in January of 2015, with hackers stealing around 19,000 Bitcoins, or a sum of $5.1 million.
• Prior to the Mt.Gox hack, Bitcoinica was also breached and made to suspend operations and its exchanges. While reconstructing the exchange, the assets were put in Mt. Gox, which was subsequently hacked as well, resulting in the collapse of Bitcoinica.
To put it simply and without contributing to complexity; yes. However, security measures continue to improve and the cryptocurrency now enjoys relative safety.
Can Bitcoin be Tracked?
While the cryptocurrency is still quite untraceable, and holders can enjoy anonymity to some extent, there have been some cases of trails having been picked up and people being charged criminally.
• Ross Ulbricht, who created Silk Road, the Bitcoin exchange that was used to market over a billion dollars in drugs, was given the life sentence in February of 2015.
• Tomáš Jiříkovský, a Czech national, had his assets seized that very March. He was a suspect in the laundering of $40 million worth in Bitcoins.
Yes, to an extent, the cryptocurrency can be tracked. However, it is usually the biggest fraudulent acts that are extensively tracked and only the most prominent authorities have the capability to track them.
Can Bitcoin be Taxed?
Unfortunately for the majority of holders, Bitcoin is now being treated as a viable asset, which has led to it being taxed by the Internal Revenue Service, and some related authorities worldwide. Following are some cases in which Bitcoins can be taxed.
• If the holder who has mined Bitcoins, sells them to third parties.
• The sale of purchased Bitcoins to third parties.
• The purchase of services and/or goods through Bitcoins which have been personally mined.
• The purchase of services or goods through Bitcoins which have been purchased.
The cryptocurrency, when used for legal and safe purposes, is very viable, perhaps more so than fiat currencies and commodities. With new security measures and the rising value of Bitcoin, it is certainly beneficial to trade in the cryptocurrency, granted it is through legal and safe channels.