COLUMBUS (WCMH) — Is cryptocurrency the money of the future, or is it the unicorn of the 21st century?
The number of investors into crypto currency continues to increase in a product that, unlike traditional money, does not have any regulations.
According to tech expert, Matt Curtain, not having the government involved is a plus but it comes with its drawbacks.
“You don’t have things like shutting down exchanges if there’s too much activity on it. So, you can have things like huge bubbles and the bubble can pop”, says Curtain. “You should treat it like any other kind of currency and any other kind of investment, you have to understand what you’re getting into.”
Kenneth Pelliott felt he knew what he was getting into. Pelliot says he is tech savvy and did his homework on Bitcoins.
“I wanted to see my money grow, I thought it had potential to make money so I invested at first $500,” said Pelliot. Things went south for him when he decided to place a coin in one of the free virtual wallets that are offered.
“When you download the app it says, we support this coin but when you open the app they don’t currently support it. So they’re telling him that when I sent the coin to them, that I wasn’t currently supported and therefore they got to do some behind the scenes to get it back to me or something. It’s bogus”, says Pelliot.
That’s one of the pitfalls of cryptocurrency, there’s no regulation or enforcement of rules, some call it the “internet wild west”. Unlike the US Federal Reserve, there’s no regulation, so Pelliot is convinced he will never see his money again.
“It’s just too easy for criminals to do what they do and then just like leave no trace a lot of times”, says Pelliot.
For those who are making a profit from cryptocurrency, just because there’s no written record, doesn’t mean the Internal Revenue Service is not interested.
“The fact that you don’t get a 1099 or W2 or anything like that doesn’t mean you don’t have to report it you do have to report it”, says local CPA, Ted Johnson. “If you receive profit from providing services, bitcoins or some other convertible virtual currency, then the fair market value at the time you receive that bitcoin or convertible currency, it’s income on your report”, says Johnson.
The most important thing about cryptocurrency is understanding how it operates. Like other investments, there are risks involved, it just doesn’t come with the protection that comes with traditional currency.
“If it’s not the kind of thing that you’re able to manage activity then make sure you have someone else who can manage it for you or don’t be invested there”, says Curtain.