The top 7 things that potential clients ask professionals about Bitcoin - Position yourself as an authority by having answers for the most common ...
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The top 7 things that
potential clients ask
professionals about Bitcoin
Position yourself as an authority by having answers for the most common
questions that existing and potential clients have about using Digital Currencies.Introduction
Introduced in 2009, bitcoin and blockchain technology members hear from their clients. We have compiled them
have seen continued growth in market capitalization, user here with the “short answers” that will satisfy most curious
adoption, and venture capital investment. The newness of clients. Additional resources as well as DCC members
this technology and financial instrument has led to a bevy of who have expertise in the topic area are included for each
questions about its financial, technology, legal, regulatory, question that will provide further explanations if you require
and tax implications. More and more professionals find a deeper treatment of a specific topic.
themselves fielding these questions from existing and
potential clients. If you find that clients have increasingly complex or nuanced
questions OR if you wish to establish yourself as a leader in
Bitcoin and blockchain technologies can be very complex, the Bitcoin ecosystem and earn new clients, we encourage
so we found the top 7 questions that our professional you to pursue DCC certification.
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.1. Is Bitcoin legal for me to use?
Short Answer
Yes. In the United States, and the vast majority of countries around the world, Bitcoin is
More Questions?
completely legal to use for both individuals and businesses. In the US, several regulatory Here are some DCC members with
bodies have weighed in on Bitcoin and which financial regulations apply to its governance. expertise in this area.
The Financial Crimes Enforcement Network (FinCEN) has provided guidance on the Zachary Ziliak
Managing Partner
business requirements for using Bitcoin which is focused on Anti-Money Laundering Ziliak Law, LLC
Chicago, IL
through reporting and Know Your Customer (KYC) procedures. The IRS has also provided
clarification on how individuals and businesses should treat Bitcoin on their tax returns
(covered in question 4). David Gzesh
Principal
Gzesh Law, Ltd
Before guidance was issued, some considered Bitcoin a legal gray area. That concern Las Vegas, NV
has almost completely been eliminated in the US as regulators have clarified their
thinking. New York State has issued a framework specifically addressing Bitcoin and
Stuart Hoegner
digital currency, known as the “BitLicense,” that is slated to go into effect in mid-2015.
Lawyer & Accountant
Gaming Counsel
Professional Corporation
Additional Resources Toronto, Ontario
FinCEN Guidance, March 2013
IRS Guidance, March 2014
NYDFS BitLicense Draft
DCC Library
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.2. Should I be using Bitcoin?
Short Answer
Bitcoin is still very new and isn’t right for everyone. However, for many people and More Questions?
companies, Bitcoin offers a way to make payments or transfer funds which reduces Here are some DCC members with
expertise in this area.
friction and fees significantly. Bitcoin’s technology allows for both large and small sums
of money to be transmitted globally within seconds, with minimal fees, no matter how
Julia Patterson
much money is being sent. Since Bitcoin transactions don’t require third-parties, funds Sales/Marketing
BitPay
can be transferred at any time (even weekends and bank holidays) nearly instantly.
Atlanta, GA
Many companies now exist to help merchants quickly and easily accept bitcoin payments
with no exchange-rate risk. Meaning, merchants can accept payment in bitcoin (again, James Duchenne
CEO & Legal Counsel
with almost no fees at all), but receive the full price of the goods/services in dollars. Many SEiiAN Rewards Pty Ltd
merchants are encouraged to use Bitcoin as a payment option because, in addition to Houston, TX
low fees, chargeback fraud is completely eliminated.
Josh Riddle
CEO
Additional Resources Bitsie, LLC
Baltimore, MD
WeUseCoins - Merchant Benefits
Coinbase for Merchants
BitPay for Merchants
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.3. Why is Bitcoin’s price so volatile?
Short Answer
The volatility of Bitcoin’s price is largely a factor of its newness. Bitcoin is a new financial More Questions?
asset, new technology, and new ecosystem of companies, investors, and users. Observers Here are some DCC members with
expertise in this area.
have likened it to a gold-like inflation hedge, transactional currency, and pre-IPO tech
stock all rolled into one.
David Bensoussan
President
Gray Swan Asset
Price volatility, even extreme volatility, is a natural consequence of the fact that Bitcoin is
Management, Inc
so unique, new, and small compared to well-developed capital markets. For reference, Los Angeles, CA
the value of all Bitcoin as of May 2015 is less than $3.5 Billion - less than one tenth the
value of ride-sharing startup, Uber. As with any growth stock, small changes in people’s Adam Wyatt
Chief Analyst & Editor
perceptions of Bitcoin’s future adoption rate or other factors can have a very large BullBear Analytics
current impact on price. Typically, as the market capitalization of an asset rises, volatility Austin, TX
decreases, but only time will tell with Bitcoin.
Jack Tatar
Author & President
Additional Resources GEM Research Solutions
Pennington, NJ
Bank of America: Bitcoin - A First Assessment
Blockchain.info: Bitcoin Market Price History
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.4. How do I report Bitcoin on my taxes?
Short Answer
This was an open question for early Bitcoin adopters that was finally addressed in the More Questions?
spring of 2014. The IRS issued specific guidance in March 2014 stating that bitcoin should Here are some DCC members with
expertise in this area.
be treated in the same manner as property, and went on to clarify a number of specific
circumstances. The guidance outlined special cases pertaining to Bitcoin mining, or the
Jake Benson
exchange of one virtual currency for another. Users of Bitcoin and other digital currencies CEO
Libra Services, Inc
should make sure they understand these issues if they are involved in these activities.
(Accounting)
San Francisco, CA
We encourage anyone who has remaining questions about tax reporting and Bitcoin
to consult IRS Notice 2014-21, or seek a DCC Certified professional accountant for Kirk Phillips
CPA, CMA, CFE
assistance. Invizibiz.biz
Philadelphia, PA
Additional Resources
Daniel Winters
IRS Guidance, March 2014 President
Find a DCC Certified Accounting Professional Global Tax Accountants
Bridgewater, NJ
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.5. What can I do with Bitcoin today?
Short Answer
More and more companies accept bitcoin as a form of payment alongside credit cards More Questions?
and PayPal, including: Dell, 1-800-Flowers, Microsoft, Overstock.com, Expedia, and many Here are some DCC members with
expertise in this area.
others. In addition to making purchases, people routinely use bitcoin to pay overseas
contractors, remit money across borders for very low fees, and even to tip each other in
Jad Mubaslat
online forums and social media. CEO
BitQuick.co
Columbus, OH
Bitcoin is also an emerging financial asset class, with a developing ecosystem of
exchanges, funds, and investment vehicles.
Alan Silbert
CEO
BitPremier
Additional Resources Boyds, Maryland
Map of merchants accepting Bitcoin at physical locations
Bitcoin Trading & Market Information: TradeBlock, Bitcoinity, BitcoinWisdom
Connie Gallippi
Exchanges and funds: itBit, Coinbase, Bitcoin Investment Trust Executive Director
BitGive Foundation
San Francisco, CA
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.6. Can I trust Bitcoin companies?
Short Answer
This is a common concern for many people as they become involved in the Bitcoin More Questions?
ecosystem. Much of the press surrounding the early days of Bitcoin included negative Here are some DCC members with
expertise in this area.
coverage of early Bitcoin companies that failed, were hacked, or which involved malicious
actors.
Joe Ciccolo
President
BitAML
But as the ecosystem has matured, companies with professional and seasoned
Chicago, IL
management teams, and often top-tier venture-capital backers, have emerged to replace
the first generation of Bitcoin companies. These companies are typically very focused on
security and compliance, and offer a vastly superior level of service to customers versus Tanaya Macheel
Journalist
what was the norm just a few years ago. New York, NY
Some well-respected companies within the Bitcoin ecosystem include payment
processors like BitPay and Coinbase, online bitcoin purchasing and storage sites like
Ryan Selkis
Circle, Coinbase, BitGo, and Xapo, and digital currency education providers such as the Director of Investments
Digital Currency Council. Additionally, itBit.com, a Bitcoin exchange based in New York, Digital Currency Group
New York, NY
secured a charter under NY banking law in May 2015.
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.7. What is the Blockchain?
Short Answer
The Blockchain is the core technical innovation that makes Bitcoin work. It allows an More Questions?
arbitrary group of computers distributed over any geographic area, to all use the same Here are some DCC members with
expertise in this area.
ledger and agree on which transactions were written to it at what time. Bitcoin uses this
blockchain protocol idea to keep track of every transaction that has ever occurred on
Judd Bagley
the bitcoin network, without any one middleman having to keep a single authoritative Director of Communications
Overstock.com
record of it all. This makes it almost impossible to fraudulently represent activity on the
Salt Lake City, UT
blockchain, providing a global, authoritative, irreversible record of events.
In addition to monetary transactions, people and companies are starting to use the Todd McDonald
Partner
blockchain to replace middlemen in a variety of industries. People are only just beginning R3
to explore the possibilities and implications of this, but some early uses include irrefutable New York, NY
global notary services, and stock-exchange settlement. In some cases, other blockchain
systems are being built outside of Bitcoin, but in most cases, and specifically in any case
Daniel McArdle
requiring the most reach and most security, applications are being built on top of Bitcoin’s Director of Curriculum
blockchain directly. Digital Currency Council
San Francisco, CA
Additional Resources
Wall Street Journal: Overstock.com’s Crypto Stock Exchange
Richard Brown on Blockchain and Bitcoin
The Digital Currency Council is the leading training and certification organization in the Bitcoin space. Please visit our website for more information. This guide
is informational and should not be considered investment, legal or tax advice. Before your advise your clients on Bitcoin, please seek additional training or
references. The Digital Currency council has professional training and certification courses, learn more about Bitcoin Training.You can also read
