Hampton Community Virtual Currency

In order to complete your 2019 tax return, the IRS is asking, “At any time during 2019, did you receive, sell, send, exchange or otherwise acquire any interest in any virtual currency”. Most people don’t even know what that is. Currency, or money, is a medium, usually coin or paper that is perceived to have value. It hasn’t been that long since the United States gave our paper money its value by keeping the values it represented in a vault. A dollars’ worth of gold was placed there for every paper dollar the government printed. In theory, you could take that paper dollar to the bank and exchange if for an equivalent value in precious metal. They don’t do that anymore, but we still recognize that a $20 bill has value.

What the IRS is talking about is relative new development which got its foothold in Europe around 2012 on the internet as virtual currency. It is currency because it is perceived to have value. The perception is all important because changes in consumer confidence can swing the price in relation to the value of a dollar. This article is too small to get into all the complexities of blockchain networks and distributive ledgers, in fact, we won’t even adequately discuss the diff erences between digital, virtual, and crypto currencies. This article is just meant to acquaint you with the concept so you will have some understanding of the question you will be asked on this year’s tax return.

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