Feb 24, 2021
Last week Bitcoin crossed $58,000 per coin. This extremely volatile digital currency has been becoming increasingly popular and getting more media attention than ever. Despite the scrutiny that comes with popularity, the technologies and concepts involved in Bitcoin are fascinating. We dedicated this episode to diving deep into what cryptocurrencies are, how they work, and whether they could be good investments. Stay tuned until the end of the episode, where Grant explains what you should keep in mind if you have plans to get involved in Bitcoin.
[01:16] Interest in Bitcoin – How the interest in Bitcoin increased over the recent years and how being radically open-minded to new opportunities can be beneficial to a financial professional.
[04:42] Decentralized Currency – How the blockchain technology paved the way to creating digital currencies that aren’t controlled by any central bank.
[07:53] How Cryptocurrency Works – Grant dives into how computers and complex mathematical operations are combined to create Bitcoin.
[13:33] General Ledger - The way Bitcoin transactions are recorded is built around a fascinating concept called the “General Ledger.” Grant explains how this process works.
[15:51] Benefits of Cryptocurrency – How cryptocurrencies and blockchain technology solve some of the problems we have with traditional currencies and some of the qualities of cryptocurrencies that make them attractive.
[25:44] Arguments Against Bitcoin – Disadvantages, limitations of and possible risks of using Bitcoin and other cryptocurrencies.
[32:49] Gold, Dollars and Bitcoin – How the US dollars were once linked to gold reserves, why people weren’t allowed to have large amounts of gold until 1971, and how this story relates to cryptocurrencies.
[36:35] Taxation – IRS has already taken measures to apply tax to cryptocurrencies by treating them as assets. Grant reviews how this affects the usability of Bitcoin and other cryptocurrencies.
[39:32] Does Bitcoin Belong in My Portfolio? – Grant shares his take on whether it’s a good idea to have cryptocurrencies in your portfolio and what you should be concerned about if you’re considering buying Bitcoin.
Resources:
IRS - Frequently Asked Questions on Virtual Currency
Transactions:
www.irs.gov/individuals/international-taxpayers/frequently-asked-questions-on-virtual-currency-transactions