7720 / What is bitcoin?
Bitcoin is a type of cryptocurrency1 (or virtual currency) that has an equivalent value in real currency (and can often act as a substitute for real currency) so that it is often referred to as a “convertible virtual currency.” It can be digitally traded between users or converted into other types of currencies (including U.S. dollars).
Cryptocurrencies are not “legal tender” of public debt in virtually all jurisdictions worldwide, specifically including the U.S. However, in late 2018, a web-based cryptocurrency tax payment portal, using third-party vendor BitPay (who converts Bitcoins to U.S. dollars), was set up by the Ohio State Treasurer to facilitate the payment of corporate taxes to the State of Ohio.2 Less than 10 months later in late 2019, a new Ohio State Treasurer halted the initiative and closed down the website portal, explaining that the prior Treasurer had not followed the proper Ohio processes to acquire the third-party vendor, lack of use of the process by taxpayers, and absence of an opinion from the Ohio Attorney General that such a procedure was proper.3
Cryptocurrency regulation has varied across worldwide jurisdictions, ranging from none to extensive. U.S. regulation has stepped up significantly, since then-SEC Chairman Jay Clayton’s “Statement on Cryptocurrencies and “Initial Coin Offerings” (ICOs) on December 11, 2017. In fact, to better clarify the regulatory agencies to be charged with the statutory authority for the regulation of digital assets (cryptocurrency), a bill, the “Crypto-Currency Act of 2020,” was introduced in March, 2020.4 The bill did not gain much traction in light of the pandemic and presidential election. Since then, the U.S. House of Representatives has passed a bill to create a crypto task force on digital assets.
1. See generally for background information on bitcoins and other cryptocurrencies, www.wikipedia.org/wiki/Bitcoin.
2. See https://thenextweb.com/news/ohio-suspends-bitcoin-tax-payment-system-no-one-cares-ohiocrypto#:~:text=Ohio%2C%20the%20first%20US%20state,longer%20pay%20in%20digital%20assets.