For many people, cryptocurrencies are mysterious entities that defy explanation. As more people get interested in it and try their hands at investing in digital coins, learning about what it is and how it works has gained importance. Since Bitcoin launched in 2009, the cryptocurrency world has changed a lot. Let’s take a look at some surprising facts most people don’t know about cryptocurrencies.
Bitcoin Isn’t Unlimited
If you thought you could purchase unlimited Bitcoin, you’re wrong. Cryptocurrencies are limited resources. That’s why the value of Bitcoin is trending up as its supply goes down. Savvy investors know that the total numbers of Bitcoins and altcoins will max out. For Bitcoin, the magic number is 21 million.
Bitcoin’s Founder Uses a Pseudonym
Nobody knows who Satoshi Nakamoto really is. Some people think it’s an acronym for a consortium of technology companies. Others think it is just one person. According to urban legend, the name comes from four Asian technology companies: Samsung, Toshiba, Nakamichi, and Motorola.
Digital Coins Can’t Be Banned
More than one country has floated the idea of banning cryptocurrencies. Even if a government did want to ban them, it can’t. Anybody can get a cryptocurrency wallet. While governments can regulate the wallets, the market itself cannot be stopped. A few countries have eliminated individuals’ and businesses’ rights on using cryptocurrencies. Those nations are Algeria, Bangladesh, Bolivia, Cambodia, Ecuador, and Nepal.
There Are 5,000 Flavors
Just about everybody wants in on the action when it comes to cryptocurrencies. That’s one of the reasons why more than 5,000 different cryptocurrencies exist in early 2022. Most of those currencies have little value and have no hope of attaining much value. However, every coin was founded with the hope that it would be the next big deal, like a diamond in the rough. There are some creatively named coins, including Coinye, which was named after Kanye West.
Most Coins Are Mined In China
Just like most consumer goods bought in the United States are made in China, most cryptocurrencies are mined in China. Mining is the process of verification of a transaction before the coin is added to the blockchain ledger. This part of the industry is highly profitable. As of early 2022, China controls about 75% of the world’s mining network.
The IRS Wants to Know About It
Depending on where you live, cryptocurrencies may be rated as a mainstream investment. As such, tax authorities want to collect their dues. Most countries expect investors to pay taxes on cryptocurrency profits just like they would on real estate, gold, stock, or bond profits. The United States is one of the countries that taxes digital coin profits. The IRS won a case against Coinbase. The judgment required Coinbase to provide the IRS with the details of 14,000 users who conducted more than $20,000 in business during the years 2013 through 2015. Even if you don’t declare your profits from selling or trading digital coins, the exchanges and platforms are obligated to report the transactions to the IRS. The taxman will come for their share of the money sooner or later.