Then, with the purpose of understanding bitcoin dynamic, a summary of its evolution and the principal events that have caused its volatility is done. It all started in 2001 when economist Edward Castronova published an analysis of the burgeoning virtual economy of online game worlds, which he calculated to have a gross domestic product of about $135 million. At first, the IRS didn't take notice, but within a decade, the alternative barter economy was doing serious business with transactions valuing in the area of $200 million a year. The GAO report said that money earned through Bitcoin transactions may also be taxable -- the final decision on that matter being up to the IRS. As of May 1, 2013, there were 11 million bitcoins in circulation. Financial experts were likely embarrassed to miss the call on bitcoin which they commonly referred to as the next beanie babies, or tulip bulbs but may go down as the biggest investment story of their lifetime. Dibbell's story and other reports of people making their living auctioning off "World of Warcraft" and "EverQuest" characters and assets for real money spread like wildfire through online news sites and the blogosphere. Terdiman, Daniel. "IRS taxation of online game virtual assets inevitable." CNET News.

Since none of those items have cash value in the real world, any income or assets earned from the game cannot be taxed. But the learn more about bitcoinxxo.com intriguing part came next: After filing with the IRS, he tried to find out from various IRS employees if he was supposed to claim his castles and gold and other online assets that he hadn't converted to real-world dollars -- items that had never left the virtual world of "Ultima Online." Some of the IRS representatives found the question amusing; others gave it serious thought and could not offer Dibbell a definite response. It gained national attention in early 2006 when writer and gamer Julian Dibbell posed a fascinating question -- are my virtual assets taxable? The issue of taxing virtual currency drew the attention of the Congressional Joint Economic Committee, which asked the Government Accountability Office (GAO) to make recommendations to the IRS on how to proceed. Other scammers have turned their attention to creating quite sophisticated fake wallet apps that, once downloaded to a user's smartphone, can be used to steal critical account details. For example, if you sell a property in "Second Life" for 2 million Linden dollars, the IRS can argue that you realized a real-world profit of $7,905.

So if you sell a suit of armor to another player for a certain amount of gold, it's possible for the IRS to tax that transaction as income earned in the converted U.S. The MMORPG "Second Life" has established the exchange rate of Linden dollars to U.S. Since Linden dollars have an established cash value, the IRS can easily determine the real-world value of virtual transactions. U.S. dollars for virtual Linden dollars. The U.S. Congress is actually looking into the taxability of Mighty Rage Potion and Shrouds of Provocation. If you're looking to buy Epic Games, you can use Paytm, UPI, or any debit card to purchase them on our website. You can exchange Bitcoins through a computer without an intermediate bank or other financial institution. Once you acquire bitcoins -- through a convoluted "virtual mining" operation -- you can spend them on anything you want: cars, clothes or candy bars. What's the likelihood that any of us are going to be buying our groceries or paying our rent with bitcoins anytime soon? Securities and Exchange Commission (SEC) -- is" Bitcoin, an untraceable peer-to-peer currency. As the GAO explained in its report, Bitcoin is the ultimate open-flow system. There is no virtual world, like "Second Life or "World of Warcraft," within which Bitcoin transactions are confined.

If income from bartering is taxable by the IRS, argues the GAO, then income from certain virtual currency transactions should be taxable, too. If you trade someone an old TV (cash value about $40) for two hours of their window-washing services (worth $60 in the cash-based world), then you've technically earned $20 of taxable income. When someone asked if Texas is "Bitcoin Country," the governor smiled and agreed. Crypto mining currently consumes more energy than many small countries, according to the Cambridge Bitcoin Electricity Consumption Index. Chief Economist at NGP Energy Capital Management Dr. Anas F. Alhajji is a Managing Partner of Energy Outlook Advisors and was previously the Chief Economist at NGP Energy Capital Management. U.S. Government Accountability Office. Using third-party currency exchanges, some "World of Warcraft" users buy and sell virtual goods and gold using real U.S. But there are also third-party exchanges outside of "WoW" where players can buy and sell "WoW" assets for real money.