Bitcoin is the world’s new, mysterious virtual currency. I first learned about Bitcoins in an article assigned to my tax research class regarding IRS’s treatment of them for tax purposes. Bitcoins have become increasingly popular since they were first created in 2009 by an anonymous person. Created by users, Bitcoins serve as a reward to users that solve complex mathematical problems in code, also known as mining. So users mine Bitcoins, similar to the way a person would earn money. Interestingly, I have a friend who actually mined a lot of Bitcoins and then turned around and sold them on the market at a pretty high profit. This was interesting to me because as college students we are always looking for a way to make some quick money to pay for our weekends out in the greatest city ever (ATX). Well if you know how to mine data, maybe Bitcoins are of interest to you!

Lots of questions arise from Bitcoins, though. How should our government classify bitcoins? Are they a currency or are they an investment in property? If they are a currency then the IRS can tax them as ordinary income but if they are an investment then they will be taxed as capital assets. So what does classify a currency? Most importantly, it has to be backed by a government, which Bitcoin is adamant about not doing. Bitcoin wants to remain independent of banks and governments. Bitcoin wants to avoid all ties to make the use of Bitcoins simple, inexpensive, and universal. So where is Bitcoin headed in the future? Lots of businesses are now accepting Bitcoins as payment. How would you like to pay your tuition using Bitcoins? Well if you attend The University of Nicosia in Cypress you can pay for books, living, and school using them!

For all of the college students out there interested in unique ventures, keep an eye on Bitcoin! You may find that it is a good investment.