Does the IRS know how to tax Bitcoins?

by Connor Livingston December 22, 2013, 6:20 AM 1.8k Views

It’s someone’s money and the IRS wants its cut. However, it doesn’t seem like anyone knows how virtual currencies are going to be handled by the tax authorities.

Despite a recent plunge, bitcoin has had a banner year. Now comes the hard part—figuring out the taxes on it. For the uninitiated, bitcoin is the most prominent of several “virtual currencies”—money that exists only online and isn’t backed by any government. Released in 2009 by an unknown person or group going by the name Satoshi Nakamoto, bitcoin is maintained by a decentralized network of computers, called “miners,” that process and verify transactions. As of Friday afternoon, the value of all bitcoins in circulation was nearly $8 billion, according to CoinDesk.

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Written by Connor Livingston

Connor Livingston is a tech blogger who will be launching his own site soon, Lythyum. He lives in Oceanside, California, and has never surfed in his life. Find him on Twitter, Facebook, and Pinterest.