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Cybercurrencies are most potent tool yet for tax avoidance

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By Chris Reed

Since cryptocurrencies debuted with Bitcoin in 2009, advocates have raved about their portability, their resistance to inflation and financial fraud, and the fact they aren't controlled by a government. Investopedia has the simplest explanation of how they work: "A cryptocurrency is a digital or virtual currency that is secured by cryptography, which makes it nearly impossible to counterfeit or double-spend. Many cryptocurrencies are decentralized networks based on blockchain technology ― a distributed ledger enforced by a disparate network of computers."

Their value is sustained by market demand, utility and relative scarcity ― the same as with gold in the pre-1971 era in which U.S. currency could be exchanged directly for the precious metal.

The virtual funds can be transferred directly from individuals to individuals without going through a financial institution or exchange. They were launched in 2009 by "Satoshi Nakamoto," a pseudonym for an individual or a group who still has not been firmly identified.

Cryptocurrencies are extraordinarily volatile, but as of this week were valued at $1.4 trillion in total holdings, according to Yahoo Finance. About half of that is in Bitcoin. Wait-and-hold investors have seen the value of a........

© The Korea Times

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