A new part of the global economy is emerging, and there’s no doubt it’s making waves. Cryptocurrencies, also called “altcoins,” and “digital” or “virtual” currency, have been in popular media recently with the meteoric rise of Bitcoin, and fantastic collapse of one of it’s biggest exchanges: Tokyo-based Mt. Gox, which resulting in the loss of hundreds of millions of real US dollars for investors. What the long-term impact of virtual currency will be is not predicable, but currently cryptocurrencies are very risky, untested, and likely to fail. So have fun with them if you like, but don’t put in more money than you would gamble away in Vegas.
To complicate matter, on Tuesday 03/25/14 the US Internal Revenue Service (IRS) released a statement saying it would treat cryptocurrencies as property for tax purposes, meaning cryptocurrency holders would pay income or capital gains taxes when the virtual currency is traded for real currency. Their statement is here.
How many virtual currencies are there? A lot, and new ones continue to pop up. The coinwarz website currently (03/29/14) shows 112 (here).
I set out to get myself some altcoins, with the hopes they’ll someday go the way of bitcoin and allow me to quit my day job. I decided I’d go with Dogecoin (pictured above), because it’s cute, and seems to have a good online community.
My first task was to get a wallet to hold my dogecoins. I got (and to continue to get) most of my information from the dogecoin subreddit (http://www.reddit.com/r/dogecoin) and quickly found myself at the dogecoin tutorial dogecointutorial.com.
I got a wallet easily enough, but then found I wasn’t going to be able to just plunk down my credit card to become an instant doge-illionare (which would have cost me between $500 and $2,000, depending when I bought over the last 90 days). There is currently no legal online trading websites, although you could arrange a trade online with a stranger (sounds safe). I understand there are some escrow services out there but I haven’t checked those out yet.
I didn’t have the option to mine coins, since I’ve just this lowly laptop for all my computing needs, and honestly it can barely handle blogging. I’ve heard the faucets (places were people give out small quantities of altcoins to people just for showing up) are all dried up, so that only left me with one option: begging.
And beg I did, but fantastically my first beg post on the appropriate subreddit landed me 99 dogecoin, which after about 24 hours of wallet updating was there for me to see. btw 99 dogecoin is worth approximately 8 cents. 🙂
Next steps? Get more doge? Get some other virtual currencies? Sit on my doge and wait for it to go from 8 cents to $8 or maybe even $800,000? To the moon!