While most governments are warning their residents against investing in cryptocurrency like Bitcoin, the state of Ohio seems to be embracing the concept. Starting this week, businesses in Ohio are now permitted to settle tax payments using Bitcoin.
Bitcoin is a cryptocurrency that is conducted on a public ledger, the “blockchain.” Digitally transferred, it exists only online. Similar to gold, it can have monetary value while also being a commodity, but it’s still its own currency.
It is also decentralized and not managed by a single entity, but rather a group of people who process transactions, called miners. Accordingly, it is not subject to government regulations when traded or spent, and you don’t need a bank to use it.
According to Route Fifty:
For many enthusiasts, part of the appeal of crypto has been the very fact that these currencies are not backed by governments. That makes it harder for politicians to manipulate currencies to their own ends, they say. But for the same reason, states have sought to sideline cryptocurrencies, comfortable to dismiss bitcoin as a passing fad.
So Ohio, and its treasurer Josh Mandel, see embracing them as a way to signal that the state is tech-savvy and forward-thinking. “I do see [bitcoin] as a legitimate form of currency,” Mandel told the Wall Street Journal.
OhioCrypto.com will only accept bitcoin for now, but its website adds that it “looks forward to adding more cryptocurrencies in the future.” All of the payments are handled by BitPay, a third-party service for blockchain payments. Only businesses operating in Ohio are able to pay taxes through the site for now, but it will eventually include individuals as well, the Journal reported.
Bitcoin has lost 40 percent of its market value over the last month, largely driven by panicked investors wanting to cut their losses. Trading at around $20,000 this time last year, the cryptocurrency is currently valued at $3,664.
With so much volatility in the market, Ohio said it would protect itself by using BitPay, which sets a fixed exchange rate in a 15-minute window. As part of the agreement, BitPay will be responsible for any price fluctuations that happen during that time, ensuring its customer, the state of Ohio, receives its fair share of taxes.
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