dollars, Euros, and other real or virtual currencies.

Bitcoin can be digitally traded between users and can be purchased for, or exchanged into, U.S. Bitcoin is one example of a convertible virtual currency. Virtual currency that has an equivalent value in real currency, or that acts as a substitute for real currency, is referred to as вЂњconvertibleвЂќ virtual currency. Cryptocurrency is a type of virtual currency that utilizes cryptography to validate and secure transactions that are digitally recorded on a distributed ledger, such as a blockchain. In some environments, it operates like вЂњrealвЂќ currency (i.e., the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance), but it does not have legal tender status in the U.S. Virtual currency is a digital representation of value that functions as a medium of exchange, a unit of account, and/or a store of value.

Taxpayers transacting in virtual currency may have to report those transactions on their tax returns. Virtual currency transactions are taxable by law just like transactions in any other property.

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