Editor’s Note: In October of 2019, the Internal Revenue Service issued updated guidance regarding the tax treatment of digital currency (“cryptocurrency”) and associated activities. Editorial Advisor Michael Batts reviewed the IRS materials and determined all guidance in this article remains current and accurate.
Digital currency (sometimes called "cryptocurrency") is a big new thing, and lots of people are getting into it. And that makes digital currency very relevant for churches and nonprofit organizations.
But what is it?
Wikipedia defines "cryptocurrency" as a "digital asset designed to work as a medium of exchange that uses cryptography to secure its transactions, to control the creation of additional units, and to verify the transfer of assets." Bitcoin, created in 2009, was the first significant digital currency. Today, there is a growing number of others. Among the few highly recognized and used digital currencies today are Bitcoin, Bitcoin Cash, Ethereum, Litecoin, and Ripple.